Program Income Rules Still Apply During a Public Health Emergency
By Elizabeth 'Issie' Karan

The COVID-19 epidemic has placed unprecedented challenges on the U.S. economy and healthcare system. In the coming weeks and months, many institutions and organizations may find themselves in unexpected positions, financially and otherwise. As hemophilia treatment centers (HTCs) and their host institutions assess budgetary impacts, we wanted to remind Hemophilia Alliance members of resources describing restrictions on spending federal funds.

First, the Maternal and Child Health Bureau (MCHB) has stated that all factor replacement revenue, whether or not the HTC is a 340B covered entity, is program income and subject to the applicable rules and guidance. (See MCHB, Hemophilia Treatment Center Manual for Participating in the Drug Pricing Program Established by Section 340B of the Public Health Service Act, 2005). As such, regardless of how your HTC obtains factor under the 340B program (i.e. through a hospital versus a grantee designation), all savings must be treated as program income.

Second, host institutions may charge for indirect costs (e.g. overhead) associated with the HTC’s operations but still must comply with 45 CFR Part 75 in doing so. The Hemophilia Alliance Legal Team described these requirements in detail in this letter. Importantly, any costs charged to a federal grant must be allocable, reasonable, and allowable.

If you have questions regarding the use of program income, particularly to support activities outside of the HTC, please contact us.