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HRSA Finalizes Rule Requiring Health Centers to Share 340B Discounts

The Health Resources and Services Administration (HRSA) finalized a rule requiring federally qualified health centers (FQHCs) in the 340B Drug Pricing Program to pass drug discounts on to certain low-income patients as a condition of receiving federal grant funding.

The final rule implements a requirement from a July 2020 executive order directing the Department of Health and Human Services to issue rulemaking to allow FQHC patients to purchase drugs at 340B prices. The final rule applies to insulin and injectable epinephrine. In the final rule, HRSA defines the types of organizations required to pass on the 340B discounts and the patients who are covered by this requirement.

While the rule was to take effect on Jan. 22, it is currently on hold for at least 60 days and being reviewed under a Biden administration freeze of all pending regulations issued by the Trump administration.

The rule states the new requirement applies to 340B covered entity FQHCs and subrecipients that receive funding through section 330(e) of the Public Health Service Act. Under Section 330(e), HRSA provides grant funding to FQHCs and subgrantees through the Health Center Program. As part of the application process for federal grants under the Health Center Program, these FQHCs must show they maintain written practices to make insulin and injectable epinephrine available to low-income patients at or below the price for which the drug was purchased, plus a minimal administration fee. The administration fee is intended to cover dispensing fees, counseling costs, and other charges related to the patient receiving the drug. HRSA points to Medicaid dispensing fees as one possible guideline for determining acceptable dispensing fees under the rule.

As mandated by the July executive order, the requirement to pass on 340B discounts applies to low-income patients who have high cost sharing for the relevant drugs, are uninsured, or have a high unmet deductible. HRSA defines low-income patients as individuals and families with annual incomes at or below 350 percent of the federal poverty level. HRSA ties the definition of patient to the agency’s standing definition of a patient of a 340B covered entity. Specifically, patients who receive no services from the FQHC other than being dispensed a drug to be self-administered or administered at home are not considered patients of the FQHC for purposes of the final rule.

Contact Senior Director of Policy Erin O’Malley at eomalley@essentialhospitals.org or 202.585.0127 with questions.

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About the Author

Shahid Zaman is a senior policy analyst at America's Essential Hospitals.

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