The 340B Congressional Hearing that was scheduled for March 5th, and cancelled due to a snowstorm, was rescheduled and held yesterday March 24th at 10am EST. Ms. Diana Espinosa from HRSA, Ms. Ann Maxwell from the OIG, and Dr. Debra Draper from the GAO appeared as witnesses at the hearing and were asked to give a 5 minute summary of their submitted written testimony. The subcommittee members then moved on to a Q&A session to further understand the functionality of the 340B program and its current impact. While there were a few members that questioned the actions of HRSA and the 340B program with skepticism and derision, the overall hearing proved to be positive, enlightening, and educational for house members.
The main areas of inquiry focused on intent, use of savings by the covered entity, growth in the 340B arena, patient definition, and authoritative deficiencies. Members of Congress still have 10 days to submit follow up questions. Here are the highlights of additional subject matter discussed during the hearing that was not included in the submitted written testimonies.
INTENT
Despite what is STILL being written after this hearing adjourned (I can’t count how many times it was stated during the hearing by lawmakers and by the witnesses themselves during the hearing and in their written testimonies) either by those who are trying to stifle the 340B program by just turning a deaf ear or those that didn’t even watch the hearing, but the intent of the program is to stretch scarce federal resources for the covered entity so it can continue to help ALL individuals in need, regardless of their situation. Dr. Draper from the GAO responded to a question about how entities qualify for the 340B program and in doing so, thought the bigger question that needed to be answered was, “What is the intent of the 340B program? There is a lot of uncertainty or lack of clarity around what is this program intended to do. In our prior work, when we issued our 2011 report, there were a lot of varying interpretations on what the 340B program was. HRSA talks about the program and the purpose of the program is to enable covered entities to stretch scarce federal resources to reach more patients and provide more comprehensive services and this was based on the committee report for the House Energy and Commerce … when this was first created in 1992. Others believe that this is a program to assist low income individuals to obtain needed medications and while it does that, there is NO criteria in terms of patient eligibility and there is NO criteria related to level of income, so it can benefit anyone, any level of income as long as they meet the other criteria for an eligible patient.”
USE OF SAVINGS
Ms. Ellmers from North Carolina stated that one recent report claimed it found that the level of charity care provided by DSH hospitals enrolled in the 340B program is lower than the national average of all hospitals and asked Ms. Espinosa if HRSA collected information from hospitals about how they used the programs dollars and how they support the poor and indigent patients in a manner that reconciles to the 340B program’s intent to serve as a safety net program. Ms. Espinoza responded by saying, “The statute for the 340B program does not impose any requirements on how savings are used by covered entities and as such, HRSA has not systematically collected that information because it has not been tied to a statute.” Ms. Ellmers went on to ask if HRSA would support requirements for additional transparency for the DSH hospitals with regards to the use of the 340B savings of which Ms. Espinoza responded, “I think we would need to see those requirements, I can’t speak hypothetically, but certainly, we would support greater clarity to hospital eligibility and that is one of the items that we are including in our omnibus guidance that we will release later this year.” Dr. Draper who was also questioned on the use of savings by Ms. Ellmers stated that most of the covered entities the GAO had interviewed were in fact using the savings accordingly and consistent with their missions.
GROWTH
In response to Mr. Butterfield from North Carolina when he asked what HRSA attributed the exponential growth in the 340B program to, Ms. Espinoza replied, “In general there has been a decentralization of health care with care being provided in more sites, and then there is also that we, in the 340B program, have beginning in 2012, changed the way that we were accounting for eligible entities and so we started counting not only the organization but also all of its sites. That was done to also bolster our oversight effort, so that we know all the sites that were using 340B. So that was somewhat of a technical aspect but it does make the numbers go up, but I should note that since there have been several comments about the growth in 340B that over the last several years the 340B sales have remained at about 2% of overall pharmaceutical sales so while the number of entities has increased the sales of 340B as a proportion of pharmaceutical sales has stayed about 2%.”
PATIENT DEFINITION AND RULEMAKING AUTHORITY
As we are all patiently waiting for the mega-guidance and the items addressed therein, it was brought forth in the hearing that maybe there are some items in this omnibus guidance that might be more easily addressed and could be addressed separately with greater speed. Mr. Griffith from Virginia proposed getting some of the simple things done quickly, more specifically patient definition. He was not impressed that the GAO came out with their report in 2011 and now it’s 2015 and there is still no clarity on patient definition, regardless of the setback in HRSA’s rulemaking authority. He stated, “If the court said you didn’t have authority …. I would think that we would give you authority to define what a 340B patient is if y’all wanted to ask for it.”
Although rulemaking authority wasn’t an issue that was addressed often, it was something that caught my attention. When HRSA was asked what Congress could do to help promote the integrity of the 340B program, Ms. Espinoza responded only by saying, “I think Congress has already been quite supportive of HRSA’s activities, as I mentioned the additional resources that we got beginning in 2014 were real boosts to our program integrity efforts... the President’s budget for fiscal year 2016 also requests additional funding for 340B to continue to modernize our oversight practices as well as to enhance and expand them.”
The written testimonies submitted by the witnesses from HRSA, the OIG (Office of the Inspector General), and the GAO (Government Accountability Office), were made available for download on the Energy and Commerce website. Below we have summarized each testimony and given the link to the full testimony for each witness as well as the hearing, as long as they are available.
Testimony: Ann Maxwell – Assistant Inspector General for Evaluation and Inspections for the OIG, HHS
Ms. Maxwell describes intent, calculation of 340B price, and the numerous deficiencies that were found in the early 2000s on HRSA’s oversight of the program. These deficiencies included inaccurate information, lack of systematic monitoring, and also that HRSA lacked the necessary tools to deal with compliance violations. She states that HRSA in response to the OIG’s reports, significantly strengthened their oversight and Congress took action as well to give HRSA the tools it needed to enforce compliance.
OIG recommends:
Increased transparency in 340B ceiling prices and Medicaid claims for 340B purchased drugs. HRSA has made improvement on ceiling price transparency but more action is needed.
HRSA share 340B ceiling prices with 340B providers and State Medicaid agencies
HRSA improve tools and guidance to help states and drug manufacturers identify which Medicaid claims have received the 340B discount
Clarifying 340B program rules to support oversight and strengthen program integrity
Clarifications on patient definition as it applies to prescription level transactions
Further guidance on how 340B discounts should apply to uninsured patients at contract pharmacies
Testimony: Debra A. Draper, Director, Health Care for the U.S. Government Accountability Office (GAO)
Ms. Draper states the purpose of the program was to stretch scarce federal resources to reach more eligible patients and provide more comprehensive services. She covers background, program structure, operation, and key program requirements. Although many changes have been made since the 2011 report came out, Ms. Draper goes over the 2011 report that the GAO issued and the problems that were found. In the report, four recommendations were made to improve program oversight including (1) conducting selective audits of covered entities to deter potential diversion (2) further specify its nondiscrimination guidance for cases in which distribution of drugs is restricted and require reviews of manufacturers’ plans to restrict distribution of drugs at 340B prices (3) finalize new, more specific guidance on the definition of an eligible patient, and (4) issue guidance to further specify the criteria that hospitals that are not publicly owned or operated must meet to be eligible for the 340B program. HRSA implemented two of the four recommendations of the GAO in the fiscal year 2012 and had planned on implementing the other two in the omnibus mega-regulation in the fiscal year 2014 however, due to the district court ruling that stated HRSA lacked statutory rulemaking authority under the 340B statute except in three specified areas, HRSA withdrew plans to implement the other two recommendations at the time, but stated that they will be addressed in the proposed guidance later this year.
Testimony: Diana Espinosa, Deputy Administrator, Health Resources and Services Administration (HRSA)
In the testimony of Deputy Espinosa, she addresses the recommendations of the OIG and the GAO, and the steps that HRSA has taken, and continues to take, to strengthen its oversight of the 340B program. Increasing the number of audits, enhancing the focus on compliance, improving IT systems to effectively track entity and manufacturer compliance, developing tools and resources for entities to improve overall integrity, verifying the accuracy of the 340B ceiling price and working towards providing more transparency to the entities using a secure system, and developing the omnibus proposed guidance, are some of the areas that HRSA has addressed in order to maximize oversight and manage compliance in the 340B program. HRSA shares the goal of ensuring strong oversight and will use the full extent of the agency authorities in its efforts to do so.
http://energycommerce.house.gov/hearing/examining-340b-drug-pricing-program
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