HHS Freezes Rule Affecting Community Health Center’s 340B Drug Discounts

January 22, 2021Legal Alerts

The Biden administration implemented a regulatory rule freeze affecting all federal agency rules that had not gone into effect as of Jan. 20, 2021.  At its core, the regulatory rule freeze requires all pending final rules to be delayed at least 60 days in order for the Biden administration to review and opine on the necessity and scope of affected rules. During this delay period, the administration may review, revise, and possibly rescind federal administrative rules.

Pursuant to the regulatory rule freeze, the Department of Health and Human Services (HHS) has frozen a final rule that would have blocked community health centers (i.e., federally qualified health centers) from receiving future grant funding unless the health centers provided a complete pass-through of 340B discounts on insulin and epi-pens to low-income patients (the 340B Insulin Pass-Through Rule).  Community health centers staunchly opposed the 340B Insulin Pass-Through Rule, arguing that it would have added significant bureaucratic obligations to centers’ operations while making a relatively minimal impact on the costs of drugs provided to center patients. The 340B Insulin Pass-Through Rule was slated to go into effect today, Jan. 22, 2021.

As a result of HHS’ freeze, the effective date of the 340B Insulin Pass-Through Rule has now been delayed until at least March 22, 2021. While there is currently no indication whether the Biden administration will ultimately rescind or revise the 340B Insulin Pass-Through Rule, the delay offers community health centers additional time to develop plans to comply with the 340B Insulin Pass-Through Rule.

If you or your organization may be impacted by the 340B Insulin Pass-Through Rule or are interested in learning how to comply with the rule, please contact Dinsmore’s health care practice attorneys.