Tuesday, April 19, 2016

CMS reopens 340B policy discussion; defines "Knowing and Intentional"

340B pricing policy remains under debate and CMS continues to look for ways to make the 340B program more rational.   On April 19, 2016, CMS reopened a comment period for 2015 rulemaking that is not yet finalized (here).  Three topics are in play.  (A) How CMS will handle situations where current pricing rules and discounts result in negative, $0.00, or $0.01 pricing.  (B) How CMS will handle pricing o the launch of a drug (e.g. before ASP reporting has kicked in).   (C) How CMS will apply penalties to entities that charge a 340B covered entity a price that is "knowingly and intentionally" hire than the bona fide 340B price.

CMS is reopening comment on the latter issue because it had not previously defined "knowing and intentionally."  CMS is considering the definition below.  If you don't like it, you can write them and let them known until May 19.  CMS text after the break.

HHS is considering whether ‘‘knowing and intentional’’ should be further defined. If the terms are defined, possible definitions could be: (1) Actual knowledge by the manufacturer, its employees, or its agents of the instance of overcharge; (2) willful or purposeful acts by, or on behalf of, the manufacturer that lead to the instance of overcharge; (3) acting consciously and with awareness of the acts leading to the instance of overcharge; and/or (4) acting with a conscious desire or purpose to cause an overcharge or acting in a way practically certain to result in an overcharge. 
Manufacturers do not need to intend specifically to violate the 340B statute; but rather to have knowingly and intentionally overcharged the 340B covered entity. HHS understands that this is difficult to demonstrate. As such, HHS is soliciting input on circumstances in which the requisite intent should and should not be inferred. In particular, HHS would like to solicit comment on the concept that manufacturers would not be considered to have the requisite intent in the following circumstances: 
• The manufacturer made an inadvertent, unintentional, or unrecognized error in calculating the ceiling price; • A manufacturer acted on a reasonable interpretation of agency guidance; or • When a manufacturer has established alternative allocation procedures where there is an inadequate supply of product to meet market demand, as long as covered entities are able to purchase on the same terms as all other similarly-situated providers. 
HHS welcomes comments regarding other situations where the requisite intent may or may not be demonstrated. Because of the scope of the proposed rule, and since we have specifically requested the public’s comments on various aspects of the rule, we believe that it is important to allow ample time for the public to consider these approaches to these specific policies in the proposed rule. Therefore, we have decided to reopen the comment period for an additional 30 days. HHS believes that a 30-day period is sufficient and balances the interests of encouraging public participation in the rulemaking process with the desire to not unnecessarily delay key decisions about rulemaking. This document announces the reopening of the comment period to end May 19, 2016.   [81 FR 22960-61].