The E&C Committee held a hearing July 18, 2017, with witnesses from the Office of Pharmacy Affairs, the Government Accountability Office and the Office of Inspector General. The committee asked pertinent questions administered under oath to the following individuals regarding the 340B program and oversight:
Captain Krista Pedley, Director, Office of Pharmacy Affairs, HRSA, HHS;
Erin Bliss, Assistant Inspector General, Office of Evaluation and Inspections, Office of Inspector General, U.S. Department of Health & Human Services;
Debra Draper, Director, Health Care, Government Accountability Office
The purpose of the hearing was to review HRSA’s oversight of the 340B Drug Pricing Program, and how the program specifically impacts patients, providers, manufacturers and other stakeholders. You can view the two-hour hearing HERE.
At current issue is the drastic expansion of the 340B program through an increase in eligibility to additional categories of hospitals, the quadrupled number of participating unique covered entities (hospitals and child sites), number of contract pharmacies and amount of savings on 340B drugs.
Additionally, despite the expansion, annual HRSA audits remain steady, at or below 200 since 2012 and the audit findings show a “high level of non-compliance by covered entities” in the areas of duplicate discounts, incorrect reporting and diversion to ineligible patients and facilities.
Noting the above, the committee aimed to examine:
How has HRSA’s oversight changed to reflect the growth of the 340B program in recent years?
How effective is HRSA’s oversight in detecting and resolving non-compliance with 340B program regulations?
Does HRSA currently have the regulatory authority it needs to successfully oversee the 340B program?
How has the 340B program affected patient care?
Tim Murphy, Chairman of the Oversight and Investigations Subcommittee, acknowledged in his opening statement that the 340B program is vital to many covered entities’, and noted that entities reinvest savings directly into patient care through expanding services and providing discounted drugs. Of concern are instances of errors and misuse which must be corrected. Whether those instances are outliers or the norm, they must be investigated and resolved to protect the integrity of the 340B program as it was intended. He continued to say that while HRSA has made improvements to oversight efforts, “the agency simply may not have the resources to adequately safeguard the program.” He notes that at the current level of audits, HRSA is only auditing 1.6% of covered entities annually, with 63-82% found non-compliant with one or more program requirements. Read the entire statement HERE.
Energy and Commerce Committee Chairman, Greg Walden, stressed in his opening remarks that lack of transparency hinders HRSA’s oversight capabilities. “While the purpose of the program is to ‘stretch scarce resources as far as possible,”…neither the 340B statute nor HRSA guidance explains how 340B providers must use savings from the program.” He also noted HRSA’s lack of regulatory authority limits oversight of the 340B program. He called for oversight without unnecessary burdens to safety-net providers. Both Chairman Murphy and Chairman Walden acknowledged HRSA’s timely production of information and documents pursuant to the Committee’s request last month. Read the entire statement HERE.
Captain Pedley, Director of Office of Pharmacy Affairs, gave an opening statement where she reiterated the scope of covered entities and associated sites under the purview of OPA, within HRSA, including disproportionate share hospitals, FQHC’s, Ryan White clinics, and hemophilia centers, and the more than 600 manufacturers which participate in the program.
Captain Pedley noted expansion of the 340B program created additional calls for oversight and strengthening safeguards. She indicated HRSA has diligently worked to implement the recommendations of the Office of Inspector General and the Government Accountability Office to correct program vulnerabilities. All but two of the eight recommendations of the OIG and GAO have been addressed within HRSA’s statutory authority. Two recommendations still remain open:
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to clarify hospital eligibility requirements
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conclusive definition of a 340B patient
HRSA issued a proposed 340B Omnibus Guidance in August 2015 to address these issues and it was withdrawn upon request from the current administration. Regulations on ceiling price calculation and civil monetary penalties for manufacturers are scheduled to take effect October 1, 2017. The President’s FY 2018 Budget commits to developing a legislative proposal to improve 340B. HRSA’s response is “specific legislative authority to conduct rulemaking for all provisions in the 340B statute would be more effective for facilitating HRSA’s oversight over, and management of, the 340B program.”
Captain Pedley described HRSA’s program integrity initiatives including initial certification, annual recertification and program audits of covered entities for compliance. HRSA publishes a full summary of audit findings on the OPA’s website in another demonstration of transparency and to educate other covered entities on potential flags for audit. HRSA uses the audits to develop resources to improve overall program integrity. Likewise, HRSA is engaged in manufacturer oversight, conducting audits of manufacturers with the same processes and procedures as covered entities. HRSA verifies manufacturers that participate in Medicaid sign a pharmaceutical pricing agreement, verifies the accuracy of 340B ceiling prices and makes those prices available to the covered entities.
Captain Pedley finished her opening remarks by thanking the OIG and GAO for their commitment to strengthening the program and said HRSA is looking forward to working with Congress to enforce program requirements and increase transparency on how covered entities use the program to benefit low-income and uninsured patients. Read the entire statement HERE.
Erin Bliss, Assistant Inspector General for Evaluation and Inspections of the Office of Inspector General, which oversees HRSA’s operation of the 340B program, gave her statement on HRSA’s implementation of OIG recommendations. OIG has given multiple recommendations for improvement of program vulnerabilities. Some have been addressed but some still exist which impede program oversight. OIG notes a “lack of transparency that prevents accurate payments by 340B providers, State Medicaid programs, and pharmaceutical manufacturers; and a lack of clarity regarding program rules that creates uncertainty and results in uneven program implementation and limited accountability.”
OIG recommends increasing transparency for payment accuracy by:
sharing the 340B ceiling prices with providers so they know they are paying the correct price,
sharing the 340B ceiling price with State Medicaid programs as well as what Medicaid claims are for 340B-purchased drugs, to ensure they are paying providers correctly, and
showing which Medicaid claims are for 340B-purchased drugs to guarantee that Medicaid programs receive all drug rebates that they are entitled and to prevent duplicate discounts
OIG has identified two specific areas of clarification needed:
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the definition of an eligible patient and
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to address whether 340B providers must offer discounted 340B prices to uninsured patients
Lastly, OIG encouraged Congress to “consider statutory changes to support increased clarity in program goals and requirements and more effective oversight.” Read the entire statement HERE.
Debra Draper, Director, Health Care, Government Accountability Office, noted that HRSA has implemented many of the GAO suggestions from the 2011 report. However, the GAO finds there is still a lack of clarification on two issues:
- the definition of patient eligibility
- the definition of hospital eligibility
Without specificity, covered entities could interpret the patient definition too broadly and include non-eligible patients. Similarly, without specificity on hospital definition, a contract could be issued to provide services to low-income individuals not on Medicaid or Medicare. Another relevant question to consider is how much care must be provided by the covered entity before the individual is considered an eligible patient. GAO notes that HRSA attempted to address these issues in the proposed Omnibus Guidance but then withdrew the guidance from the OMB review per the current administration’s memorandum directing agencies to withdraw any guidance and regulation not taken effect. Read the entire statement HERE.
In part 2 of this E&C committee 340B hearing series, we will address the key takeaways and recommendations. Be sure to subscribe to our blog by clicking the image below so that you don’t miss a beat...
