The 340B program’s major compliance focus has historically been targeted at covered entities and whether those covered entities are in full compliance with program requirements, but there are also requirements for drug manufacturers that seem to be underexamined, and in many cases, do not receive near the scrutiny of the covered entity compliance requirements. Manufacturer’s 340B compliance is just as important and this year, Health Resources and Services Administration (HRSA) appears to be moving forward on drafting guidance for manufacturers as well as increasing manufacturer audits and imposing civil monetary penalties for overcharging providers.
Providing covered outpatient drugs to 340B covered entities at no greater price than the 340B ceiling price is a statutory obligation for manufacturers but the ceiling price is not always easily accessible for examination. The pricing calculation is complex and changes quarterly, so discrepancies occur. It is important for covered entities to have access to 340B ceiling price information to ensure they are not being overcharged. You may recall in one of the studies done by the OIG in June 2005, 14% of total purchases made by 340B entities included in the OIG’s sample exceeded the 340B ceiling prices, resulting in projected overpayments of $3.9 million for that month. If the 340B ceiling price were more transparent, the majority of the covered entities and manufacturers would be able to work together and correct any pricing miscalculations. However, the lack of transparency has created difficulty among stakeholders.
HRSA is required by the Affordable Care Act to collect information from the manufacturers in order to verify the accuracy of 340B ceiling prices and then make those ceiling prices available to covered entities. According to Office of Pharmacy Affairs Director, Commander Krista Pedley, HRSA expects to operationalize a system to provide ceiling prices by the end of FY 2015 to improve program transparency. HRSA intends to spot check and analyze sales transactions for pricing data trends to assess manufacturer’s compliance.
In February 2015, before the 340B Coalition in San Francisco, Cmdr. Pedley stated that HRSA was drafting regulations for civil monetary penalties (CMP) for manufacturers and on April 8, 2015, HRSA sent the Office of Management and Budget (OMB) its proposed rule setting standards for CMPs on drug manufacturers that knowingly and intentionally charge healthcare providers more than the 340B ceiling price. The monetary sanctions are not to exceed $5,000 per instance. The rule also defines standards and methodology for the calculation of 340B ceiling prices to verify accuracy. HRSA published a notice in the September 2014 Federal Register announcing plans to collect pricing information from manufacturers and requested comments on the burden of the information collection before sending the proposed rule to the OMB.
On April 22, HRSA published in the Federal Register a request for comments on the manufacturer pricing data request as well as the renewal of existing information collections including collections related to covered entities' recertification and registration, contract pharmacy registration, and the manufacturer pharmaceutical pricing agreement (PPA) . The request states, “previously approved collections are substantially unchanged, except that HRSA has transitioned completely to online versus hard copy forms”. HRSA is proposing to collect the average manufacturer price, unit rebate amount, package sizes, national drug code (NDC), period of sale (year and quarter), and manufacturer-determined 340B ceiling price for each NDC produced by a manufacturer subject to a PPA.
Cmdr. Pedley also stated at the 340B Coalition in February 2015 that HRSA, in partnership with the OIG, is currently auditing a manufacturer. Ann Maxwell, Assistant Inspector General for Evaluations and Inspections for the OIG, also stated this in March 2015 when she appeared before Congress. HRSA has been developing their protocol for conducting manufacturers’ audits and according to the FY 2016 President’s budget, the Office of Pharmacy Affairs did make provisions for 5 manufacturer audits. Both Pedley and Maxwell said that more audits of drug manufacturers are to come.
Covered entities are awaiting information on the outcome of the first manufacturer audit and optimistic the 340B ceiling prices will be available to them in the near future. As hospitals follow the intent of this program to use the 340B drug savings to expand and improve care, they need access to the information and tools that will allow them to work more efficiently. Transparency in 340B ceiling prices is one of those critical tools. Hopefully, with the increase in manufacturer audits and the implementation of civil monetary penalties, the result will be greater manufacturer compliance and increased transparency.
READ MORE ON THE 340B DRUG PRICING PROGRAM...
