New 340B drug rule sets drugmaker fines

Consumer health groups are praising Health and Human Services’ (HHS) new rule on the Medicaid 340B drug discount program, which sets a ceiling on drug prices.

According to the new rule, if pharmaceutical manufactures “knowingly and intentionally” overcharged providers for drugs, they face fines of up to $5,000 per incident. The rule also sets ceiling prices for covered outpatient drugs, and manufacturers must ensure that their distributors give providers the 340B ceiling price.

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The new rule goes into effect April 1, 2017.

The rule “should help prevent the drug industry from overcharging America’s 340B health providers for life-saving medicines,” said Randy Barrett, vice president of communications for 340B Health. “It’s a welcome development in light of public outrage about the unsustainable cost of prescription drugs.”

By specifying how ceiling prices should be calculated, the regulation “will help ensure those prices are right”, Barrett added. While 340B sales account for a small percentage (2.6%) of the overall US drug market, better regulation of drug pricing is important, according to 340B Health.

Related: Hearing ups pressure on drugmakers’ prices

Another benefit of the rule is the requirement for drugmakers to offer refunds for overcharges on new drugs instead of requiring covered entities to request refunds, Barrett said.

Meanwhile, several comments on the rule argued that HHS “does not have rulemaking authority to issue a binding ceiling price regulation”, HHS wrote in the final rule. However, the agency does have the statutory authority to develop the “precisely-defined standards and methodology for the calculation of 340B ceiling prices,” HHS wrote.

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