Today the House Energy and Commerce Committee released it's report with many suggestions for congress regarding the 340B Drug Discount Program. We have some initial insights from the report to share.
You can view a full copy of the report here. Here are some of the of the sections that interested us:
HRSA should soon finalize and begin enforcing regulations in each of the three areas in
which it currently has regulatory authority, including the 340B Alternative Dispute
Resolution process, the imposition of civil monetary penalties against manufacturers that
knowingly and intentionally overcharge a covered entity for a 340B drug, and the
calculation of ceiling prices.
We agree! This has been long overdue and manufacturers keep pushing current administration to postpone the regulation
CE Impact: Positive, but minimal. Increased price transparency and access will allow us to verify 340B prices we are getting in a more systematic way.
Congress should give HRSA sufficient regulatory authority to adequately administer and
oversee the 340B program, including the ability to improve program integrity, clarify
program requirements, monitor and track program use, and ensure that low-income and
uninsured patients directly benefit from the 340B program.
Increased authority could lead to more regulations and more audits.
CE Impact: Potentially significant. Increased risk of audits and unknown broadened scope of audit in comparison to current practice. Potential requirements to extend 340B price directly to more patients.
Congress should require certain covered entities to conduct independent audits of
program compliance, and should determine what such audits should assess and evaluate.
This is currently best practice, but not a requirement yet.
CE Impact: If your CE already has an independent external audit, this will impact you minimally. If your CE does not currently utilize an independent external auditor in your compliance plan, we suggest you start looking now. Our audit services are open to all CEs. We are confident that the scope of our audit will be sufficient even when there is more clarification on what these audits should entail.
All covered entities should perform independent audits of their contract pharmacies at
regular intervals to ensure 340B program compliance.
This is currently considered “an expectation” but not a requirement yet.
CE Impact: Minimal. Most CEs already perform external independent audits of contract pharmacies. If your CE does not, please take a look at our services page. A vast majority of HRSA audit findings are related to contract pharmacy.
Congress should equip HRSA with more resources and staff to conduct more rigorous
oversight and more effective management of the 340B program.
More resources will mean more audits
CE Impact: Potentially significant. Increased risk of audits.
Congress (and HHS to the degree possible) should take steps to identify and reduce
duplicate discounts for drugs paid for under Medicaid managed care.
Long overdue provision, but unclear which direction it will take and where the responsibility will be placed as far as protecting against duplicate discounts. CMS puts the burden on the state agencies and MCO’s to prevent duplicate discounts, but HRSA (due to lack of authority over the state agencies) typically places that responsibility on the CEs For simplicity sake, the states can potentially prohibit use of 340B drugs for MCO’s in contract pharmacies, but that is not an ideal solution for many CEs.
CE Impact: Potentially significant. Clear direction from HRSA would facilitate better decisions and remove uncertainty and unnecessary risk.
Congress should evaluate whether the permissible scope of HRSA’s audits should be
expanded to cover other features of the program.
While HRSA audits are pretty broad in scope at the moment, we think the main concern with expanding the scope is for HRSA to look at accounting for how 340B savings are used in covered entities. The report specifically mentions: “For example, as previously noted, HRSA does not examine whether a covered entity is sharing program revenue with its contract pharmacy. Similarly, HRSA does not examine how covered entities use program savings”.
CE Impact: Medium. Accounting for 340B savings may require an additional cost center that will be dedicated specifically to the 340B program and will track savings, their impact and any 340B compliance related expenses. This provision may also change the required fee structure in contract pharmacies. It is unclear if percentage based fees (both dispensation and administrative fees) will be considered revenue sharing.
HRSA should work toward ensuring that it audits covered entities and manufacturers at
the same rate.
We agree. Price calculations are extremely complex and manufacturers should be undergoing just as many audits as the covered entities.
CE Impact: Minimal. Manufacturer audits may potentially lead to 340B price recalculations and refunds.
Congress should clarify the intent of the 340B program to ensure that HRSA administers
and oversees the 340B program in a way that is consistent with that intent. In doing so,
Congress also should evaluate how developments in the health care landscape over the
past 25 years have affected, if at all, the structure and goals of the 340B program.
The vagueness of the intent of the program is what is causing the biggest concern amongst 340B stakeholders since it’s subject to interpretation. We assume that “evaluating developments in the health care landscape over the past 25 years have affected, if at all, the structure and goals of the 340B program” would take Congress some time and it is unclear which direction the intent of the program would go.
CE Impact: Potentially significant depending on future definition of the program’s intent. The intent of the program, if altered, could mean use of the 340B savings for low-income and uninsured patients only thus significantly reducing the scope and 340B program benefit.
Congress (or HRSA where HRSA already has authority to make such changes) should
promote transparency in the 340B program, including ensuring that covered entities and
other relevant stakeholders have access to ceiling prices and requiring covered entities to
disclose information about annual 340B program savings and/or revenue.
Access to ceiling prices is crucial and would provide a much needed increase in transparency. Sharing program savings may provide valuable insights provided that metrics used will be universal across all entities and relevant to program’s intent. This information should also include costs of running 340B compliance program or savings provided should be net of these costs, as well as include payer mix for reference.
CE Impact: Depends. If your CE already is transparent and tracking 340B savings, there will not be much impact. If your CE does not, this is something you should be tracking to prepare. We believe this will be happening.
Congress should consider whether an inpatient metric remains an appropriate measure for program eligibility, or whether metric based on outpatient population is more appropriate.
While the concern is valid the report doesn’t provide any viable alternatives to what the metric for participation should be.
CE Impact: Unknown. If your entity runs on the fine line of qualifying, this could mean some entities will no longer qualify to participate in the program.
Congress should establish a mechanism to monitor the level of charity care provided by
covered entities. This should include a clear definition of charity care such that the data
can be used to fairly compare care provided across entities.
The provision would provide better understanding of the 340B program and potentially improve program's perception and provide a better picture of all the work and services provided by 340B program entities.
CE Impact: Minimal. Depending on metrics selected for reporting, most CEs likely track all these data metrics currently. Again, transparency would only validate CEs mission and everyday effort to serve the underserved.
