57230 Federal Register / Vol. 75, No. 181 / Monday, September 20, 2010 / Proposed Rules 

Massachusetts, and Rhode Island are 

control strategy SIPs, and they contain 

2008 motor vehicle budgets for VOCs 

and NOX by nonattainment area. Table 

4 contains these VOC and NOX

transportation conformity budgets in 

units of tons per summer day: 

TABLE 4.—CONFORMITY BUDGETS IN

THE CONNECTICUT, MASSACHUSETTS, AND RHODE ISLAND RFP 

PLANS

Area name 

2008 Transportation conformity 

budgets 

(tons/day) 

VOC NOX

NY–NJ–CT area (CT 

portion) ...................... 29 .7 60 .5 

Greater Connecticut ..... 28 .5 54 .3 

Bos-Law-Wor (E. MA) 

area ........................... 68 .30 191 .30 

Springfield (W. MA) 

area ........................... 11 .80 31 .30 

Providence .................... 24 .64 28 .26 

EPA issued letters on June 2, 2008 to 

Connecticut, March 7, 2008 to 

Massachusetts, and June 16, 2008 to 

Rhode Island in which we stated these 

budgets were adequate for use in 

transportation conformity 

determinations. Additionally, EPA 

published announcements of these 

adequacy findings in the Federal 

Register on June 12, 2008 for 

Connecticut (73 FR 33428), March 18, 

2008 for Massachusetts (73 FR 14466), 

and June 30, 2008 for Rhode Island 

(36862). In today’s action, we are 

proposing approval of the 2008 

conformity budgets for VOC and NOX

for the areas shown in Table 4 above. 

Connecticut and Rhode Island 

increased their projected 2008 motor 

vehicle emission estimates slightly to 

provide a buffer to their transportation 

conformity budgets. Connecticut 

increased its 2008 motor vehicle 

emission estimates by 2 percent, and 

Rhode Island by 0.5 tons/day. Doing so 

made meeting the 2008 RFP emission 

target slightly more difficult to achieve. 

However, both of these states were able 

to meet their respective RFP targets even 

after increasing their projected 2008 

motor vehicle emission estimates. These 

increases are reflected in the budgets 

shown above in Table 4, and were also 

used in the projected, controlled 2008 

emission estimates shown in step 7 of 

Tables 3 a, b, and e. The Connecticut 

and Rhode Island 2008 motor vehicle 

conformity budgets are approvable 

because these states were able to show 

that they can meet their 2008 RFP 

emission target levels even after 

providing these buffers to their budgets. 

IV. Proposed Action 

EPA’s review indicates that the 2002 

base year emission inventories, RFP 

plans, transportation conformity 

budgets, and contingency plans 

submitted by Connecticut on February 

1, 2008, Massachusetts on January 31, 

2008, and Rhode Island on April 30, 

2008 to meet, in part, their obligations 

under EPA’s 1997 8-hour ozone 

standard meet the requirements for 

these programs. Therefore, EPA is 

proposing to approve these listed 

components of the state’s submittals as 

revisions to each state’s SIP. 

Additionally, EPA is proposing 

approval of three rules adopted by 

Connecticut that will reduce VOC 

emissions in the state. It should be 

noted that each states’ submittal also 

included other SIP elements, most 

notably attainment demonstrations for 

EPA’s 1997 8-hour ozone standard, but 

EPA is not acting on those other 

components at this time. Additional 

details regarding the state’s submittals 

and EPA’s review of these submittals is 

contained in the technical support 

document (TSD) prepared for this 

action. The TSD is available in the 

docket for this action. EPA is soliciting 

public comments on the issues 

discussed in this proposal or on other 

relevant matters. These comments will 

be considered before taking final action. 

Interested parties may participate in the 

Federal rulemaking procedure by 

submitting written comments to the 

EPA New England Regional Office listed 

in the ADDRESSES section of this Federal 

Register. 

V. Statutory and Executive Order 

Reviews 

Under the Clean Air Act, the 

Administrator is required to approve a 

SIP submission that complies with the 

provisions of the Act and applicable 

Federal regulations. 42 U.S.C. 7410(k); 

40 CFR 52.02(a). Thus, in reviewing SIP 

submissions, EPA’s role is to approve 

state choices, provided that they meet 

the criteria of the Clean Air Act. 

Accordingly, this proposed action 

merely approves state law as meeting 

Federal requirements and does not 

impose additional requirements beyond 

those imposed by state law. For that 

reason, this proposed action: 

• Is not a ‘‘significant regulatory 

action’’ subject to review by the Office 

of Management and Budget under 

Executive Order 12866 (58 FR 51735, 

October 4, 1993); 

• Does not impose an information 

collection burden under the provisions 

of the Paperwork Reduction Act (44 

U.S.C. 3501 et seq.); 

• Is certified as not having a 

significant economic impact on a 

substantial number of small entities 

under the Regulatory Flexibility Act (5 

U.S.C. 601 et seq.); 

• Does not contain any unfunded 

mandate or significantly or uniquely 

affect small governments, as described 

in the Unfunded Mandates Reform Act 

of 1995 (Pub. L.104–4); 

• Does not have Federalism 

implications as specified in Executive 

Order 13132 (64 FR 43255, August 10, 

1999); 

• Is not an economically significant 

regulatory action based on health or 

safety risks subject to Executive Order 

13045 (62 FR 19885, April 23, 1997); 

• Is not a significant regulatory action 

subject to Executive Order 13211 (66 FR 

28355, May 22, 2001); 

• Is not subject to requirements of 

Section 12(d) of the National 

Technology Transfer and Advancement 

Act of 1995 (15 U.S.C. 272 note) because 

application of those requirements would 

be inconsistent with the Clean Air Act; 

and 

• Does not provide EPA with the 

discretionary authority to address, as 

appropriate, disproportionate human 

health or environmental effects, using 

practicable and legally permissible 

methods, under Executive Order 12898 

(59 FR 7629, February 16, 1994). 

In addition, this rule does not have 

tribal implications as specified by 

Executive Order 13175 (65 FR 67249, 

November 9, 2000), because the SIP is 

not approved to apply in Indian country 

located in the state, and EPA notes that 

it will not impose substantial direct 

costs on tribal governments or preempt 

tribal law. 

Dated: September 9, 2010. 

Ira W. Leighton, 

Acting Regional Administrator, EPA New 

England. 

[FR Doc. 2010–23402 Filed 9–17–10; 8:45 am] 

BILLING CODE 6560–50–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

42 CFR Chapter I 

340B Drug Pricing Program 

Manufacturer Civil Monetary Penalties 

AGENCY: Health Resources and Services 

Administration, HHS. 

ACTION: Advance notice of proposed 

rulemaking and request for comments. 

SUMMARY: Section 602 of Public Law 

102–585, the ‘‘Veterans Health Care Act 


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Federal Register / Vol. 75, No. 181 / Monday, September 20, 2010 / Proposed Rules 57231 

of 1992’’ enacted Section 340B of the 

Public Health Service Act (PHSA). 

Section 340B implements a drug pricing 

program by which manufacturers enter 

into an agreement to sell covered 

outpatient drugs to particular covered 

entities at a price not exceeding the 

amount determined under a statutory 

formula. Manufacturers are required by 

section 1927(a) of the Social Security 

Act to enter in agreements with the 

Secretary that comply with section 340B 

if they participate in the Medicaid Drug 

Rebate Program. Section 7102(a) of the 

Patient Protection and Affordable Care 

Act (Affordable Care Act) (Pub. L. 111– 

148) requires the Secretary of HHS to 

develop and issue regulations for the 

340B Drug Pricing Program (340B 

Program) establishing standards for the 

imposition of sanctions in the form of 

civil monetary penalties for 

manufacturers that knowingly and 

intentionally overcharge a covered 

entity for a 340B drug. As HHS never 

has had civil monetary penalty 

authority that addresses manufacturing 

overcharging of the 340B Program, these 

regulations present a number of issues 

that have the potential to impact 

stakeholders. Accordingly, the Health 

Resources and Services Administration 

(HRSA) is issuing this advance notice of 

proposed rulemaking (ANPRM) to 

solicit public comment on multiple 

issues regarding the implementation of 

this requirement. These comments will 

be used to help draft a proposed rule 

that will be published in the Federal 

Register for public comments. 

DATES: Submit electronic or written 

comments by November 19, 2010. 

ADDRESSES: Comments in response to 

this ANPRM should be marked 

‘‘Comments on the Civil Monetary 

Penalties’’ and sent to Mr. Bradford R. 

Lang, Public Health Analyst, Office of 

Pharmacy Affairs (OPA), Health 

Systems Bureau (HSB), Health 

Resources and Services Administration 

(HRSA), 5600 Fishers Lane, Parklawn 

Building, Room 10C–03, Rockville, MD 

20857. Comments may also be e-mailed 

to: opacmp@hrsa.gov. 

FOR FURTHER INFORMATION CONTACT: CDR 

Krista Pedley, Director, Office of 

Pharmacy Affairs (OPA), Healthcare 

Services Bureau (HSB), Health 

Resources Services Administration 

(HRSA), 5600 Fishers Lane, Parklawn 

Building, Room 10C–03, Rockville, MD 

20857. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Affordable Care Act introduces a 

number of changes to the 340B Program. 

The Affordable Care Act creates several 

new categories of eligibility for program 

participation and provides a number of 

tools for improving program compliance 

by manufacturers and covered entities. 

As one of the many changes created by 

the Affordable Care Act, section 7102(a) 

amends section 340B(d) of the PHSA to 

require the Secretary of HHS to provide 

for the imposition of civil monetary 

penalties against manufacturers. As 

amended by the Affordable Care Act, 

section 340B(d)(1)(B)(vi) of the PHSA 

provides for: 

(vi) The imposition of sanctions in the 

form of civil monetary penalties, 

which— 

(I) Shall be assessed according to 

standards established in regulations to 

be promulgated by the Secretary not 

later than 180 days after the date of 

enactment of the Patient Protection and 

Affordable Care Act; 

(II) Shall not exceed $5,000 for each 

instance of overcharging a covered 

entity that may have occurred; and 

(III) Shall apply to any manufacturer 

with an agreement under this section 

that knowingly and intentionally 

charges a covered entity a price for 

purchase of a drug that exceeds the 

maximum applicable price under 

subsection (a)(1). 

Section 7102(a) of the Affordable Care 

Act requires the Secretary of HHS to use 

funds appropriated under section 

340B(d)(4) of the PHSA to provide for 

improvements in compliance by 

manufacturers and covered entities. The 

Affordable Care Act also includes 

provisions to improve covered entity 

compliance and the imposition of 

sanctions. These provisions addressing 

sanctions for covered entities will be 

addressed separately. 

The 340B Program creates complex 

relationships, not only between drug 

manufacturers and covered entities, but 

also involves, among others, 

wholesalers, group purchasing 

organizations, pharmacies, and state 

Medicaid agencies. Changes to the 340B 

Program have the potential to alter these 

complex relationships. Prior to 

enactment of the Affordable Care Act, 

HRSA did not have civil monetary 

penalty authority for the 340B Program. 

This ANPRM is being issued to gather 

comments to consider in the 

development of these regulations. 

II. Request for Comments 

The purpose of this document is to 

obtain information and public comment 

on how to efficiently and effectively 

implement the civil monetary penalties 

authorized Section 7102(a) of the 

Affordable Care Act. Although HRSA 

has identified several issues and areas 

where HRSA believes comment would 

be particularly helpful, comments may 

be submitted on any issues directly 

relevant to the implementation of the 

specified requirements. 

Areas for which HRSA is expressly 

seeking comment include: (1) Existing 

Models; (2) Threshold Determination; 

(3) Administrative Process Elements; (4) 

Hearing; (5) Appeals Process; (6) 

Definitions; (7) Penalty Computation; (8) 

Payment of Penalty; and (9) Integration 

of Civil Monetary Penalties with Other 

Provisions in the Affordable Care Act. 

Commenters are requested to specify 

as clearly as possible which statutory 

provision they are commenting on and 

provide a rationale for their proposals. 

1. Existing Models 

HRSA is seeking comments regarding 

any aspects of other existing models for 

civil monetary penalties that can be 

adapted to the 340B Program. While the 

340B Program has not had civil 

monetary penalty authority in the past, 

HHS has experience with creating and 

implementing civil monetary penalties 

in a number of other contexts. Certain 

portions of these other civil monetary 

penalty authorities can provide useful 

insight as HRSA implements the 340B 

Program civil monetary penalty 

authority. 

HRSA is currently reviewing the civil 

monetary penalty authority exercised by 

the OIG, Federal Aviation 

Administration, Treasury, Food and 

Drug Administration, United States 

Department of Agriculture, Federal 

Deposit Insurance Corporation, and 

CMS to determine what portions of 

these authorities may be adapted for the 

340B Program. Specifically, HRSA is 

reviewing the October 2005 DHHS 

Office of Inspector General report 

‘‘Deficiencies in Oversight of the 340B 

Drug Pricing Program’’ (OEI–05–02– 

00072) which recommended that HRSA 

consider as a model the Centers for 

Medicare and Medicaid Services’ (CMS) 

statutory authority to enforce the 

Medicaid rebate program, pursuant to 

section 1927(b)(3)(C)(i) of the Social 

Security Act, and seek similar 

authorities with respect to enforcement 

of the 340B Program. HRSA is also 

contemplating the use and adaptation of 

the procedures codified at 42 CFR part 

1003, which includes procedures for the 

imposition of civil monetary penalties 

by the OIG. As such, please comment on 

the extent to which provisions similar to 

42 CFR part 1003 should be applied in 

civil monetary penalty regulations 

applicable to manufacturers. HRSA is 

seeking information on other existing 

regulations or procedures on civil 

monetary penalties that may provide 

additional guidance specifically relating 


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57232 Federal Register / Vol. 75, No. 181 / Monday, September 20, 2010 / Proposed Rules 

to manufacturers and civil monetary 

penalties. 

2. Threshold Determination 

HRSA welcomes comments on when 

the civil monetary penalty provision 

should be applied. HRSA is 

contemplating an oversight process 

incorporating a variety of elements to 

gather and consider grounds for 

applying the penalty provision. These 

include, but are not limited to, the 

amount of the overcharge, the frequency 

of the overcharge, the compliance 

history of the manufacturer in question, 

and the number of covered entities 

affected. The Affordable Care Act 

provides HRSA with a range of new 

compliance tools. HRSA may use this 

information to determine when it is 

most appropriate to utilize its civil 

monetary penalty authority and when it 

is more appropriate to utilize its other 

available compliance mechanisms. 

3. Administrative Process Elements 

HRSA is seeking comments on the 

administrative processes that would 

best administer civil monetary penalties 

tailored to meet the unique context of 

the 340B Program. Systems must be 

created to address how civil monetary 

penalty claims will be processed, what 

type of notice should be required for 

proposed determinations, what 

involvement should be available to 

overcharged covered entities, and what 

type of notice should be given to third 

parties and the public, etc. HRSA 

invites comments on the applicability of 

the particular administrative procedures 

in 42 CFR part 1003 and the 

appropriateness of additional 

procedural elements. 

4. Hearing 

Civil monetary penalty systems 

typically offer the opportunity for a 

hearing. HRSA is inviting comments on 

the manner in which such a hearing 

would be structured. HRSA is 

considering a large number of issues 

involved in creating a fair and efficient 

hearing process, including, but not 

limited to: Decision-making individual 

or make-up of the decision making 

body; ex parte contacts; prehearing 

conferences; discovery; subpoenas; fees; 

form, filing, and service of papers; 

motions; sanctions; burden of proof; 

evidence; and post-hearing briefs. 

5. Appeals Process 

HRSA is considering under what 

circumstances (if any) exist with respect 

to establishing an appeal review process 

and who should hear such an appeal. 

HRSA is also considering which types 

of matters may be appealed. HRSA also 

invites comments on how the civil 

monetary process should interact with 

the administrative dispute resolution 

process required by section 340B(d)(3). 

6. Definitions 

There are a number of key terms 

needing a clearly established definition 

in administering this provision in a fair 

and efficient manner: 

a. ‘‘Instance’’—HRSA believes that 

‘‘instance’’ in this context could 

potentially be defined either as a per 

unit of drug and/or per commercial 

transaction. If an entity purchases 100 

units of a particular drug in a single 

transaction, should this constitute 100 

instances or a single instance? HRSA 

also contemplates including instances of 

refusing to sell a covered outpatient 

drug in violation of the pharmaceutical 

pricing agreement to be subject to a 

penalty where a covered entity has 

purchased the drug outside the 340B 

Program at a price greater than the 

ceiling price. 

b. ‘‘Knowing and intentional’’—HRSA 

contemplates a standard whereby 

knowing and intentional can be inferred 

from the circumstances. For example, 

the knowledge and intent of employees 

or agents of a manufacturer may be 

attributed to the company as a whole. In 

cases where the ceiling price is known 

by the manufacturer, the manufacturer 

knows that a purchaser is a covered 

entity, and the covered entity is 

knowingly charged a price in excess of 

the ceiling price, a finder of fact would 

be able to infer intentionality of the 

violation even in cases where no single 

individual had knowledge of all of these 

elements. HRSA anticipates there may 

be circumstances where repeated 

violations could be considered to be 

knowingly and intentional if, for 

example, a manufacturer repeatedly 

miscalculates a ceiling price or 

otherwise establishes a system where 

overcharges are a highly probable 

consequence. 

7. Penalty Computation 

In cases where there is a finding that 

a manufacturer has knowingly and 

intentionally charged a covered entity 

an amount in excess of the ceiling price, 

HRSA contemplates application of 

variable penalties under the statute. 

HRSA proposes the following criteria 

for consideration: (i) Previous record of 

overcharging; (ii) timeliness of response; 

(iii) cooperation and good faith; (iv) 

number of covered entities impacted by 

the overcharges; (v) impact on patient 

access; (vi) economic loss to covered 

entities; (vi) economic gain to the 

manufacturer; and (vii) relative 

economic impact on manufacturer as to 

sufficiency to deter. In determining the 

penalty, discretion would be given to 

the deciding official or body. 

Furthermore, HRSA contemplates that 

there may be circumstances under 

which a penalty may be waived for 

reasons of equity or other good cause. 

8. Payment of Penalty 

Once a penalty is assessed there are 

a number of methods for transferring the 

penalty to the government. HRSA 

expects to have the application of 

interest from the date of the overcharge. 

HRSA also contemplates the ability to 

adjust the amount of the penalty. To the 

extent that a penalty payment or an 

assessment is not paid in a timely 

manner, a civil action could be pursued 

by the government. 

9. Integration of Civil Monetary 

Penalties With Other Provisions in 

Affordable Care Act 

In addition to the compliance tools 

already available to HRSA, such as 

audits and alternative dispute 

resolution, the Affordable Care Act 

provides HRSA with many additional 

tools to monitor compliance. These 

additional tools include establishing 

procedures to verify the accuracy of 

ceiling prices, creating processes for 

manufacturers to refund overcharges, 

selective auditing of manufacturers, and 

providing access to ceiling price 

information. To ensure its most effective 

use, the new civil monetary penalty 

authority must be used in conjunction 

with these other compliance tools. 

HRSA anticipates that information 

gathered from these other compliance 

tools will be useful in civil monetary 

penalty actions and also that 

information gathered in civil monetary 

penalty actions will be useful in 

implementing these other compliance 

tools. HRSA invites comments 

concerning the relationship between 

civil monetary penalties and other 

oversight mechanisms, such as dispute 

resolution, spot audits, and others. 

While these nine areas were identified 

for comment, we welcome comments on 

any other issues that stakeholders 

believe are relevant to implementing an 

effective process for civil money 

penalties. 

Dated: September 14, 2010. 

Mary K. Wakefield, 

Administrator. 

[FR Doc. 2010–23461 Filed 9–17–10; 8:45 am] 

BILLING CODE 4165–15–P 


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