HHS is poised to rescind Trump administration regulations that have added to doubt about the authority of HHS guidance documents, including for 340B.

In Important Development, HHS Close to Rescinding Trump-era Rule that Undercuts its Sub-Regulatory Power

The U.S. Health and Human Services Department (HHS) is poised to rescind Trump administration regulations that have added to doubt about the authority of HHS guidance documents, including those for the 340B program.

During the Trump administration, the U.S Health and Resources Administration (HRSA) repeatedly said it was hamstrung in enforcing the 340B rules such as contract pharmacy requirements due to fact the rules were spelled out in federal guidance rather than through regulations.   

The White House Office of Management and Budget (OMB) on Tuesday cleared HHS to revoke the Streamlining HHS Guidance Practices regulations that ex-Secretary Alex Azar issued during his last days in office. Azar’s regulation carried out ex-President Trump’s October 2019 executive order requiring federal agencies to “treat guidance documents as non-binding both in law and in practice, except as incorporated into a contract.”

Azar’s regulation bars HHS from issuing guidance that creates legal obligations not grounded in law or regulation, or from using guidance to force anyone to do anything not required by law or regulation. It also requires the Health Resources and Services Administration (HRSA) and all other HHS agencies to identify all their guidance, post the documents in an online repository, and add this disclaimer to each document: “The contents of this document do not have the force and effect of law and are not meant to bind the public in any way, unless specifically incorporated into a contract. This document is intended only to provide clarity to the public regarding existing requirements under the law.”

“Significant” HHS guidance must be cleared first by OMB under the rule, followed by a 30-day public notice and comment period. The rule also set up a procedure for interested parties to petition HHS to withdraw or modify guidance documents.

HHS in March froze an associated rule that the Trump administration issued during its last days that would give practically all HHS regulations just a 10-year lifespan. To be extended, regulations would have to be assessed and reviewed under criteria established in the rule. A lawsuit has been filed to vacate the rule.

Congress has granted HHS power to issue 340B program regulations in just three areas: (1) calculation of 340B ceiling prices, (2) manufacturer civil monetary penalties, (3) and administrative dispute resolution.

HRSA lacks authority to issue regulations regarding 340B contract pharmacy. HRSA and HHS’s interpretations of what the 340B statute requires of manufacturers regarding contract pharmacy—as expressed in in guidance documents, legal advisory opinions, and letters informing manufacturers that they have broken the law—are at the heart of the six lawsuits drug manufacturer have filed against HHS and HRSA over 340B contract pharmacy.

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