The Biden administration yesterday repealed Trump administration final rules that it said hindered the U.S. Health and Human Services Department’s (HHS) ability “to issue guidance, bring enforcement actions, and take other appropriate actions that advance the department’s mission.”
Under ex-President Trump, the U.S Health and Resources Administration (HRSA) said its “authority to enforce certain 340B policies contained in guidance is limited unless there is a clear violation of the 340B statute.”
“Guidance is not legally enforceable,” HRSA told 340B Report in July 2020 about its 340B contract pharmacy guidelines. 340B Report had contacted the agency to respond to Eli Lilly’s decision to stop offering 340B pricing on Cialis to 340B entities in the contract pharmacy setting. HRSA’s controversial position at the time was viewed by many stakeholders as an invitation for drug manufacturers as well as covered entities to more aggressively challenge the widely accepted parameters of the 340B program. Since that time, 17 additional drug manufacturers have defied HRSA and have moved forward on placing restrictions on the use of 340B pricing in the contract pharmacy setting.
At least one federal district judge that is ruling on the enforceability of the contract pharmacy program has stated that HRSA’s position undermined the government’s ability to enforce the contract pharmacy rules.
In December 2020, HRSA likewise told the Government Accountability Office it issued audit adverse findings to 340B covered entities only when information obtained during an audit “presents a clear and direct violation of the 340B statute, as guidance does not provide appropriate enforcement capability.”
It is unknown if yesterday’s action means HRSA will be freer now to enforce its 340B guidance when an entity or drug manufacturer hasn’t clearly broken the law. It has asked Congress for years to authorize it to make enforceable rules for the whole 340B program. Its current 340B regulatory authority is constrained to three areas: ceiling prices, manufacturer civil monetary penalties, and administrative dispute resolution.
HHS announced it repealed the two rules in the July 25 Federal Register. Former HHS Secretary Alex Azar promulgated both during the Trump administration’s last days. Both implemented executive orders that Trump signed in October 2019.
The first executive order required all federal agencies, not just HHS, to treat guidance documents as legally non-binding and to publish all their guidance on a website. The second executive order created new requirements about the standards (including those spelled out in guidance) that HHS agencies rely on to bring administrative enforcement actions, make decisions, and enforce punishments.
The Biden administration revoked both executive orders on Inauguration Day 2021 and instructed HHS to rescind Azar’s final rules. HHS formally announced last October that it would repeal the rules.
In a related development, HHS today formally withdrew a related Trump administration final rule would have pulled the plug on nearly every HHS regulation on its 10th anniversary. The department posted its notice it was withdrawing the rule in late May. Ex-HHS Secretary Azar issued the rule on the Trump administration’s last day.
