[Federal Register Volume 82, Number 52 (Monday, March 20, 2017)]
[Rules and Regulations]
[Pages 14332-14334]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-05491]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
42 CFR Part 10
RIN 0906-AA89
340B Drug Pricing Program Ceiling Price and Manufacturer Civil
Monetary Penalties Regulation
AGENCY: Health Resources and Services Administration, HHS.
ACTION: Interim final rule; further delay of effective date with
comment.
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SUMMARY: The Health Resources and Services Administration (HRSA)
administers section 340B of the Public Health Service Act (PHSA), which
is referred to as the ``340B Drug Pricing Program'' or the ``340B
Program.'' The January 5, 2017 final rule sets forth the calculation of
the ceiling price and application of civil monetary penalties, and
applies to all drug manufacturers that are required to make their drugs
available to covered entities under the 340B Program. This interim
final rule delays the effective date of the final rule published in the
Federal Register (82 FR 1210, (January 5, 2017)) to May 22, 2017.
Commenters are also invited to provide their views on whether a longer
delay of the effective date to October 1, 2017, would be more
appropriate.
DATES: As of March 20, 2017, the effective date of the final rule
published in the Federal Register (82 FR 1210, January 5, 2017) is
further delayed to May 22, 2017. Comments on the delay of the effective
date to May 22, 2017, as well as comments on alternatively delaying the
effective date further to October 1, 2017, must be submitted on or
before April 19, 2017.
ADDRESSES: You may submit comments, identified by the Regulatory
Information Number (RIN) 0906-AA89, by any of the following methods.
Please submit your comments in only one of these ways to minimize the
receipt of duplicate submissions. The first is the preferred method.
Federal eRulemaking Portal: http://www.regulations.gov.
Follow instructions for submitting comments. This is the preferred
method for the submission of comments.
Email: [email protected]. Include 0906-AA89 in the
subject line of the message.
Mail: Office of Pharmacy Affairs (OPA), Healthcare Systems
Bureau (HSB), Health Resources and Services Administration (HRSA), 5600
Fishers Lane, Mail Stop 08W05A, Rockville, MD 20857.
All submitted comments will be available to the public in their
entirety. Please do not submit confidential commercial information or
personal identifying information that you do not want in the public
domain.
FOR FURTHER INFORMATION CONTACT: CAPT Krista Pedley, Director, OPA,
HSB, HRSA, 5600 Fishers Lane, Mail Stop 08W05A, Rockville, MD 20857, or
by telephone at 301-594-4353.
SUPPLEMENTARY INFORMATION:
I. Background
In September 2010, HHS published an advanced notice of proposed
rulemaking (ANPRM) in the Federal Register, ``340B Drug Pricing Program
Manufacturer Civil Monetary Penalties'' (75 FR 57230, (September 20,
2010)). HHS subsequently published a notice of proposed rulemaking
(NPRM) in June 2015 to implement civil monetary penalties (CMPs) for
manufacturers who knowingly and intentionally charge a covered entity
more than the ceiling price for a covered outpatient drug; to provide
clarity on the requirement that manufacturers calculate the 340B
ceiling price on a quarterly basis; and to establish the requirement
that a manufacturer charge a $.01 (penny pricing policy) for drugs when
the calculation equals zero (80 FR 34583, (June 17, 2015)). The public
comment period closed in August 2015, and HRSA received approximately
35 comments. After review of the initial comments, HHS reopened the
comment period (81 FR 22960, (April 19, 2016)) to invite additional
comment on specific areas of the NPRM: 340B ceiling price calculations
that result in a ceiling price that equals zero (penny pricing); the
methodology that manufacturers utilize when estimating the ceiling
price for a new covered outpatient drug; and the definition of the
``knowing and intentional'' standard to be applied when assessing a CMP
on manufacturers who overcharge a covered entity. The comment period
closed May 19, 2016, and HHS received approximately 70 additional
comments.
On January 5, 2017, HHS published a final rule in the Federal
Register (82 FR 1210, (January 5, 2017)) and comments from both the
NPRM and the reopening notice were considered in the development of the
final rule. The provisions of that rule were to be effective March 6,
2017; however, HHS issued a subsequent final rule (82 FR 12508, (March
6, 2017)) delaying the effective date to March 21, 2017, in accordance
with a January 20, 2017, memorandum from the Assistant to the President
and Chief of Staff, entitled
[[Page 14333]]
``Regulatory Freeze Pending Review.'' \1\ In the January 2017 final
rule, HHS recognized that the effective date fell in the middle of a
quarter and that stakeholders needed time to adjust systems and update
their policies and procedures. As such, HHS stated that it intended to
enforce the requirements of the final rule at the start of the next
quarter, which began April 1, 2017. However, after further
consideration and to provide affected parties sufficient time to make
needed changes to facilitate compliance, and because there are
substantive questions raised, we intend to engage in longer rulemaking.
In addition, HHS believes that it is important to ensure that this
rulemaking--as well as the implementation of this rule--is coordinated
with and takes into consideration overall 340B Program implementation.
HHS has therefore decided to delay the effective date of the final rule
to May 22, 2017, and is inviting comments on whether to delay that date
further to October 1, 2017. As the effective date of the final rule has
been moved to May 22, 2017, and may be further delayed, enforcement
will be correspondingly delayed. HHS believes that the delay of the
effective date is necessary to consider questions of fact, law, and
policy raised in the rule, consistent with the ``Regulatory Freeze
Pending Review'' memorandum. In addition, HHS believes that the delay
of the effective date is necessary to provide regulated entities
sufficient time to implement the requirements of the rule.
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\1\ See: https://www.whitehouse.gov/the-press-office/2017/01/20/memorandum-heads-executive-departments-and-agencies.
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II. Good Cause for Interim Final Rulemaking
Under Section 553(b) of the Administrative Procedure Act (APA) (5
U.S.C. 551 et seq.), a general notice of proposed rulemaking is not
required when an agency, for good cause, finds that notice and public
comment thereon are impracticable, unnecessary, or contrary to the
public interest. Pursuant to 5 U.S.C. 553(b)(3)(B), HHS finds that good
cause exists to waive normal rulemaking requirements for the immediate
delay of the effective date to May 22, 2017. HHS believes that a
notice-and-comment procedure, in this limited instance, is
impracticable, unnecessary, and contrary to the public interest.
In order to promote the public interest in fulfilling the
``Regulatory Freeze Pending Review'' memorandum instruction to agencies
to review substantial questions of fact, law, and policy in regulations
not currently in effect, HHS feels that it is necessary to delay
immediately the effective date of this rule. In addition, the January
20, 2017, Executive Order entitled, ``Minimizing the Economic Burden of
the Patient Protection and Affordable Care Act Pending Repeal,''
specifically instructs HHS and all other heads of executive offices to
utilize all authority and discretion available to delay the
implementation of certain provisions or requirements of the Patient
Protection and Affordable Care Act.\2\ The January 2017 final rule is
based on changes made to the 340B Program by the Patient Protection and
Affordable Care Act. It is impracticable to gather comments prior to
the effective date of March 21, 2017. HHS continues to be concerned
that the previously announced effective date for the January 2017 final
rule does not allow for a sufficient amount of time to consider the
regulatory burdens that may be posed by this issuance and does not
provide regulated entities sufficient time to come into compliance with
the requirements of the rule.
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\2\ See: https://www.whitehouse.gov/the-press-office/2017/01/2/executive-order-minimizing-economic-burden-patient-protection-and
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The provisions of the APA that ordinarily require a notice of
proposed rulemaking do not apply here because public health, safety,
and welfare could be harmed by allowing the final rule to go into
effect without a delay. There are substantive questions raised, and HHS
will be further considering questions of fact, law, and policy
presented by the rule consistent with the ``Regulatory Freeze Pending
Review'' memorandum. In this unique circumstance, allowing the
regulation to become effective while further consideration is ongoing,
prior to further proper consideration of all the relevant facts, would
exacerbate the burdens conveyed in comments submitted in the prior
rulemaking. Requiring manufacturers to make targeted and potentially
costly changes to pricing systems and business procedures in order to
come into compliance with a rule that is itself subject to further
agency consideration and for which there are substantive questions
raised would be disruptive. Given the comments, it appears that
objections regarding the timing and challenges of compliance with the
rule, 82 FR 1211, as well as other objections to the rule, may not have
been adequately considered, thereby requiring additional time and
public comment before the rule goes into effect. Providing a public
comment period before delaying the effective date is impracticable
given the impending deadline.
HHS also finds that good cause exists for immediate implementation
of this interim final rule and waiver of the Administrative Procedure
Act's 30-day delay in the effective date. The 30-day delay is normally
intended to give affected parties time to adjust their business
practices and make preparations before a final rule takes effect.
Because the action being taken delays the effective date to May 22,
2017, at the earliest, a 30-day delay in effect of this action is
unnecessary. The effective date delay will permit those subject to the
rule extra time to comply with the rule until at least May 22, 2017.
III. Regulatory Impact Analysis
HHS has examined the effects of this interim final rule as required
by Executive Order 12866 on Regulatory Planning and Review (September
30, 1993), Executive Order 13563 on Improving Regulation and Regulatory
Review (January 8, 2011), the Regulatory Flexibility Act (Pub. L. 96-
354, September 19, 1980), the Unfunded Mandates Reform Act of 1995
(Pub. L. 104-4), and Executive Order 13132 on Federalism (August 4,
1999).
Executive Orders 12866 and 13563
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 is supplemental to and reaffirms the principles,
structures, and definitions governing regulatory review as established
in Executive Order 12866, emphasizing the importance of quantifying
both costs and benefits, of reducing costs, of harmonizing rules, and
of promoting flexibility. Section 3(f) of Executive Order 12866 defines
a ``significant regulatory action'' as an action that is likely to
result in a rule: (1) Having an annual effect on the economy of $100
million or more in any 1 year, or adversely and materially affecting a
sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or State, local, or Tribal
governments or communities (also referred to as ``economically
significant''); (2) creating a serious inconsistency or otherwise
interfering with an action taken or planned by another agency; (3)
materially altering the budgetary impacts of entitlement grants, user
fees,
[[Page 14334]]
or loan programs or the rights and obligations of recipients thereof;
or (4) raising novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the Executive Order. A regulatory impact analysis (RIA) must be
prepared for major rules with economically significant effects ($100
million or more in any 1 year), and a ``significant'' regulatory action
is subject to review by the Office of Management and Budget (OMB).
HHS does not believe that the proposal to delay the effective date
of the January 5, 2017, final rule will have an economic impact of $100
million or more, and is therefore not designated as an ``economically
significant'' interim final rule under section 3(f)(1) of the Executive
Order 12866. Therefore, the economic impact of having no rule in place
related to the policies addressed in the final rule is believed to be
minimal, as the policies would not yet be required or enforceable.
The Regulatory Flexibility Act (RFA)
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) and the
Small Business Regulatory Enforcement and Fairness Act of 1996, which
amended the RFA, require HHS to analyze options for regulatory relief
of small businesses. If a rule has a significant economic effect on a
substantial number of small entities, the Secretary must specifically
consider the economic effect of the rule on small entities and analyze
regulatory options that could lessen the impact of the rule. HHS will
use an RFA threshold of at least a 3 percent impact on at least 5
percent of small entities.
For purposes of the RFA, HHS considers all health care providers to
be small entities either by meeting the Small Business Administration
(SBA) size standard for a small business, or for being a nonprofit
organization that is not dominant in its market. The current SBA size
standard for health care providers ranges from annual receipts of $7
million to $35.5 million. As of January 1, 2017, over 12,000 covered
entities participate in the 340B Program, which represent safety-net
health care providers across the country. HHS has determined, and the
Secretary certifies, that this interim final rule will not have a
significant impact on the operations of a substantial number of small
manufacturers; therefore, we are not preparing an analysis of impact
for this RFA. HHS estimates that the economic impact on small entities
and small manufacturers will be minimal. HHS welcomes comments
concerning the impact of this interim final rule on small manufacturers
and small health care providers.
Unfunded Mandates Reform Act
Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires
that agencies prepare a written statement, which includes an assessment
of anticipated costs and benefits, before proposing ``any rule that
includes any Federal mandate that may result in the expenditure by
State, local, and Tribal governments, in the aggregate, or by the
private sector, of $100 million or more (adjusted annually for
inflation) in any one year.'' In 2013, that threshold level was
approximately $141 million. HHS does not expect this rule to exceed the
threshold.
Executive Order 13132--Federalism
HHS has reviewed this interim final rule in accordance with
Executive Order 13132 regarding federalism, and has determined that it
does not have ``federalism implications.'' This interim final rule
would not ``have substantial direct effects on the States, or on the
relationship between the national government and the States, or on the
distribution of power and responsibilities among the various levels of
government.'' This interim final rule would not adversely affect the
following family elements: Family safety, family stability, marital
commitment; parental rights in the education, nurture, and supervision
of their children; family functioning, disposable income or poverty; or
the behavior and personal responsibility of youth, as determined under
Section 654(c) of the Treasury and General Government Appropriations
Act of 1999.
Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires
that OMB approve all collections of information by a federal agency
from the public before they can be implemented. This interim final rule
is projected to have no impact on current reporting and recordkeeping
burden for manufacturers under the 340B Program. This interim final
rule would result in no new reporting burdens. Comments are welcome on
the accuracy of this statement.
Dated: March 13, 2017.
James Macrae,
Acting Administrator, Health Resources and Services Administration.
Approved: March 15, 2017.
Thomas E. Price,
Secretary, Department of Health and Human Services.
[FR Doc. 2017-05491 Filed 3-17-17; 8:45 am]
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