In The Know

HRSA’s Civil Monetary Penalties Rule: Finalized, but Postponed

Clients have been asking for our take on the Health Resources and Services Administration (“HRSA”) 340B Drug Pricing Program Ceiling Price and Civil Monetary Penalties Rule (the CMP Rule) from May 22, 2017, until October 1, 2017.

This Rule, if and when it becomes effective, imposes monetary penalties on manufacturers of up to $5,000 for each “instance” of “knowing and intentional” overcharge of a covered entity. The Rule defines an “instance” as an order, by NDC, regardless of the quantity or units ordered. It doesn’t really define what a “knowing and intentional” overcharge is, but the Rule does provide examples of what might be a knowing and intentional overcharge, as well as examples of what is not a knowing and intentional overcharge.

Some of the behaviors defined as not knowing or intentional include: isolated, inadvertent miscalculation; sales to covered entities that did not identify themselves as 340-B covered entities at the time of purchase; and sales during the estimated pricing period for a new drug, provided the manufacturer offers the entity a refund for any overpayment once the 340B ceiling price is calculated.

Last week, for the third time, HRSA delayed the effective date of the CMP Rule. (The previous delays were (1) in January, complying with Trump’s executive memorandum delaying implementation of new Rules for 60 days; and (2) in March, delaying implementation until May and seeking comment on further delay.)

While it isn’t clear at this point whether the CMP Rule will become effective, it is useful to be ready for it when, and if, it does. As always, it is our pleasure to help you navigate this ever-changing landscape.

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