June 24, 2018

Recently Introduced Bill Seeks to Clarify Intent of 340B Program

In keeping with the ongoing Congressional attention on everything related to pharmaceuticals, another bill aimed at improving the integrity of the 340B program – Stretching Entity Resources for Vulnerable (SERV) Communities Act or H.R. 6071 – was recently introduced in the House. In her press release, Representative Matsui (D-CA), the bill’s primary sponsor, stated the bill’s chief purpose was to clarify the intent of the 340B Program and expand its reach to help address the ongoing opioid epidemic.

Highlights of H.R. 6071

  • Clarifies that the 340B program is meant to provide discounts from drug manufacturers to covered entities to help provide comprehensive care to vulnerable communities
    • Providing free or discounted drugs to patients is not the only purpose of program
  • Savings from the 340B program do not have to be provided directly to patients – the covered entity must assess how to best use their savings
  • Codifies the definition of patient under the 340B program as originally defined by Health Resources and Services Administration (HRSA) in 1996
    • Addresses concerns that the Secretary of the U.S. Department of Health and Human Services (HHS) had the authority to apply this definition more narrowly than intended
  • Ensures that public and private payors can’t discriminate against covered entities with respect to reimbursement
  • Direct HHS Secretary to seek parity between audits of covered entities and drug manufacturer
  • Requires HRSA to publish website detailing manufacturer ceiling list prices for covered outpatient drugs within 90 days of enactment of this bill and implement the Civil Monetary Penalties (CMPs) for instances of manufacturer noncompliance
  • Extends 340B program eligibility to Substance Abuse and Mental Health Services Administration (SAMHSA) grantees under the Community Mental Health Services and Substance Abuse Prevention and Treatment programs
  • Reverses cut in reimbursement for purchase of Part B drugs furnished under the Medicare Hospital Outpatient Prospective Payment System (OPPS) November 2017 rule that went into effect in January 2018

H.R. 6071 has received support from numerous trade associations such as America’s Essential Hospitals, American Hospital Association, Association of American Medical Colleges, The Children’s Hospital Association and 340B Health. However, given that Congress is currently focused on opioids, don’t expect any bills regarding 340B to be brought to the floor for a vote in the coming weeks. Action on 340B should increase after opioid legislation makes its way through the legislative process but it is unclear what will be included in any measure considered by Congress.

The Senate Health, Education, Labor and Pensions (HELP) Committee has held a series of hearings related to the 340B program with the most recent occurring on June 19. In the latest hearing, Captain Krista Pedley, Director, Office of Pharmacy Affairs, testified on behalf of the Health Resources and Services Administration (HRSA) – the federal agency tasked with 340B oversight. She reiterated the need for HRSA to be granted general rulemaking authority as noted by others in a previous hearing. Perhaps the biggest take away was that HRSA would like to take steps to implement parameters around how covered entities can use savings from the 340B program, but some senators thought that might be too limiting and recommended proposing legislation that simply requires entities to report on how they used their savings.

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