Forthcoming HHS Regulatory Actions and Opportunities Relevant for Pharmaceutical Manufacturers for the Rest of this Year and Next

Pharmaceutical manufacturers need to note some key forthcoming regulatory actions and opportunities which the Department of Health and Human Services (“HHS”) has recently published. Meena Datta and Catherine Starks give a bird’s eye view of the key points, the key dates and the stage which each new rule has reached.

Earlier this month, the Office of Information and Regulatory Affairs (OIRA) released its annual Fall 2023 Unified Agenda of Regulatory and Deregulatory Agenda (the “Agenda”). The Agenda details actions that Federal administrative agencies “plan to issue in the near and long term,” including several by the Department of Health and Human Services (“HHS”) which are relevant to pharmaceutical manufacturers. Below we include high-level summaries of certain of those HHS actions, organized by anticipated publication date. In short, two major drug pricing rules are anticipated – one yet this year – along with a potential proposal for new Federal Anti-Kickback Statute (“AKS”) safe harbors, and a potential proposal to make certain revisions to the exclusion authority of HHS, Office of Inspector General (“OIG”). More detailed Sidley Updates will follow if and as these anticipated regulatory actions unfold. We look forward to supporting your efforts with identifying pitfalls and opportunities with these likely actions as we head into 2024.

According to the Agenda abstract, the key items, in order of anticipated publication date, are:

Agency	Title	Stage of Rulemaking	Summary	Anticipated Publication Date
HRSA	340B Drug Pricing Program; Administrative Dispute Resolution	Final Rule	This final rule will revise the Administrative Dispute Resolution final rule currently in effect (which we discussed in a Sidley Update) and will apply to all drug manufacturers and covered entities that participate in the 340B Drug Pricing Program. The Office of Management and Budget (“OMB”) received this final rule for review on October 16, 2023.	December 2023
OIG	Health Care Programs: Fraud and Abuse; Revisions to the Office of Inspector General’s Exclusion Authorities	Proposed Rule	This proposed rule addresses exclusion authorities of the OIG and seeks to, among other things: Authorize exclusion of manufacturers that misclassify outpatient drugs, fail to correct such misclassifications, or provide false information or data related to drug pricing or product information; Modify or eliminate various aggravating and mitigating factors used to set the length of an exclusion; and Modify public notice requirements. The OMB has not yet received this proposed rule for review.	May 2024
CMS	Misclassification of Drugs, Program Administration and Program Integrity Updates Under the Medicaid Drug Rebate Program	Final Rule	This rule “finalizes requirements related to manufacturers’ misclassification of covered outpatient drug products under the Medicaid Drug Rebate Program (MDRP)…beneficiary protections, [and] MDRP program integrity and administration changes.” The related Proposed Rule (discussed in a Sidley Update) was released in May 2023 and also addressed the following proposals: Revising the CMS’s prior guidance and requiring manufacturers to “stack” cumulative price concessions provided to different entities when determining Best Price; Revising the CMS’s definition of “manufacturer” for purposes of the National Drug Rebate Agreement (“NDRA”) to purportedly “clarify” that all labelers associated or affiliated with a manufacturer must have an NDRA in effect in order to satisfy the statutory requirement for the manufacturer to have an NDRA in effect; Defining “market date” for purposes of Average Manufacturer Price calculations as “the date on which the [covered outpatient drug] was first sold by any manufacturer.” OMB has not yet received this final rule for review.	June 2024
OIG	Medicare and State Health Care Programs: Fraud and Abuse; Establishment of New Safe Harbors Under the Federal Anti-Kickback Statute	Proposed Rule	This proposed rule would propose safe harbors under the AKS to protect: Certain bona fide mental health and behavioral health improvement or maintenance programs provided by hospitals, ambulatory surgical centers, community health centers, rural emergency hospitals, skilled nursing facilities, or similar entities, as determined by the Secretary, to physicians or other clinicians; Certain evidence-based contingency management programs for the treatment of substance use disorders. OMB has not yet received this proposed rule for review.	August 2024

Agency

Title

Stage of Rulemaking

Summary

Anticipated Publication Date

HRSA

340B Drug Pricing Program; Administrative Dispute Resolution

Final Rule

This final rule will revise the Administrative Dispute Resolution final rule currently in effect (which we discussed in a Sidley Update) and will apply to all drug manufacturers and covered entities that participate in the 340B Drug Pricing Program.

The Office of Management and Budget (“OMB”) received this final rule for review on October 16, 2023.

December 2023

OIG

Health Care Programs: Fraud and Abuse; Revisions to the Office of Inspector General’s Exclusion Authorities

Proposed Rule

This proposed rule addresses exclusion authorities of the OIG and seeks to, among other things:

Authorize exclusion of manufacturers that misclassify outpatient drugs, fail to correct such misclassifications, or provide false information or data related to drug pricing or product information;
Modify or eliminate various aggravating and mitigating factors used to set the length of an exclusion; and
Modify public notice requirements.

The OMB has not yet received this proposed rule for review.

May 2024

CMS

Misclassification of Drugs, Program Administration and Program Integrity Updates Under the Medicaid Drug Rebate Program

Final Rule

This rule “finalizes requirements related to manufacturers’ misclassification of covered outpatient drug products under the Medicaid Drug Rebate Program (MDRP)…beneficiary protections, [and] MDRP program integrity and administration changes.”

The related Proposed Rule (discussed in a Sidley Update) was released in May 2023 and also addressed the following proposals:

Revising the CMS’s prior guidance and requiring manufacturers to “stack” cumulative price concessions provided to different entities when determining Best Price;
Revising the CMS’s definition of “manufacturer” for purposes of the National Drug Rebate Agreement (“NDRA”) to purportedly “clarify” that all labelers associated or affiliated with a manufacturer must have an NDRA in effect in order to satisfy the statutory requirement for the manufacturer to have an NDRA in effect;
Defining “market date” for purposes of Average Manufacturer Price calculations as “the date on which the [covered outpatient drug] was first sold by any manufacturer.”

OMB has not yet received this final rule for review.

June 2024

OIG

Medicare and State Health Care Programs: Fraud and Abuse; Establishment of New Safe Harbors Under the Federal Anti-Kickback Statute

Proposed Rule

This proposed rule would propose safe harbors under the AKS to protect:

Certain bona fide mental health and behavioral health improvement or maintenance programs provided by hospitals, ambulatory surgical centers, community health centers, rural emergency hospitals, skilled nursing facilities, or similar entities, as determined by the Secretary, to physicians or other clinicians;
Certain evidence-based contingency management programs for the treatment of substance use disorders.

OMB has not yet received this proposed rule for review.

August 2024

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.

Forthcoming HHS Regulatory Actions and Opportunities Relevant for Pharmaceutical Manufacturers for the Rest of this Year and Next

Meenakshi Datta

Catherine Y. Starks

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Meenakshi Datta

Catherine Y. Starks

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