HHS freezes rule targeting community health centers’ drug discounts

The Biden administration on Thursday delayed a rule that would block community health centers from receiving future grant funds unless they charge low-income patients the acquisition price for insulin and Epi-Pens, plus an administration fee.

HHS signed off on the rule in December, shortly before former President Donald Trump left office. It aims to lower patients’ out-of-pocket costs by forcing community clinics to pass on their 340B drug discounts. The rule requires federally qualified health centers to give their discounts to the uninsured, patients with high cost-sharing for insulin or Epi-Pens or a high unmet deductible.

It was originally slated to take effect Jan. 22, but HHS delayed it until Mar. 22. The Biden team could eventually withdraw the rule to prevent it from taking effect at all.

Community health centers, patient advocates and other groups pushed back on the rule when HHS proposed it last year, saying the changes were unnecessary and could do more harm than good. The National Association of Community Health Centers has said the rule reflects “a fundamental misunderstanding” of federally qualified health centers and the 340B program. And providers worried the regulation could reduce patients’ access to care by cutting deeper into community health centers’ thin operating margins.

The rule’s pause follows a Wednesday memo from White House Chief of Staff Ron Klain directing agencies to freeze any new regulations ushered in during the end of Trump’s term.

The pause will allow the incoming administration “to review any regulations that the Trump administration tried to finalize in its last days,” according to a statement. “This action will allow the Biden administration to prevent any detrimental so-called ‘midnight regulations’ from taking effect while ensuring that urgent measures in the public’s interest can proceed.”

Republican lawmakers have expressed concern about expanding the 340B drug discount program. But their complaints have generally centered around hospitals, not community health clinics. Federally qualified health centers are legally required to reinvest any savings from 340B in community services, a standard that does not apply to hospitals.

Experts say the rule probably wouldn’t make much of a dent in drug prices because it wouldn’t affect most providers or patients. HHS admitted as much in its final rule, saying it would have “minimal economic impact.”

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