May 25, 2018

Senate HELP Hearing on 340B Calls Attention to Oversight Issues

The Senate Health, Education, Labor and Pensions (HELP) Committee recently held a hearing entitled, “Examining Oversight Reports on the 340B Drug Pricing Program” to coincide with the release of findings from the U.S. Government Accountability Office (GAO) regarding their efforts to improve oversight for the program. Most of the witness testimony focused on the lack of proper oversight by the Health Resources and Services Administration (HRSA) due to lack of authority to offer needed guidance in the form of rulemaking.

Here are some of the highlights from the hearing:

  • Per GAO findings, HRSA has started conducting systemic audits of 340B covered entities
    • Senator Kaine (D-VA) asked for HRSA to consider conducting systemic audits of drug manufacturers to ensure compliance
  • Ann Maxwell, Assistant Inspector General for Evaluation and Inspections, Office of the Inspector General, U.S. Department of Health and Human Services (HHS) suggested that HRSA should directly share 340B ceiling prices with providers and states to increase transparency
  • Per GAO findings, HRSA needs to clarify the definition of eligible patients and hospitals for participation in the 340B program
    • HRSA submitted guidance to clarify these items but withdrew this in January 2017 upon a directive for all pending federal guidance to be postponed during change in administration
  • Debra Draper, Director, Health Care Team, GAO, noted that the 340B program has grown substantially since its inception and there needs to be clarification on what the intent of the program is
    • Defined intent by HRSA is to: “stretch scarce Federal resources as far as possible” but some interpret this as aiding low-income patients although this is not explicitly stated
  • Senator Murry (D-WA) and Senator Cassidy (R-LA) called attention to the lack of formal guidance to ensure that savings from 340B program are passed on to uninsured and underinsured persons
    • Covered entities are currently not restricted in how they can use their savings
  • Per GAO findings, HRSA needs to further clarify their nondiscrimination guidelines
  • Per Maxwell, HRSA needs to be granted broad rulemaking authority to properly carry out oversight of 340B program

As a follow-up, Chairman Alexander (R-TN) announced there will be another hearing on the 340B program later in the year in which HRSA officials will be asked to testify. This is not surprising considering the increased attention on the 340B program which was also highlighted in the Department of Health and Human Services’ (HHS) recently released “American Patients First” blueprint to address drug pricing. Many of the suggestions offered in the Senate HELP Committee hearing mirror those described in the drug pricing blueprint released on May 11.

HHS released a formal request for information (RFI) on May 16 to garner stakeholder input on the 340B program’s growth, eligibility, duplicate discounts and the impact of implementing potential changes to these areas. In terms of growth, HHS is soliciting input on if the expansion of the 340B program has affected list prices and/or led to cross-subsidization in the commercial sector. HHS is also seeking comments on some of the unintended consequences of the 340B program. Under eligibility, HHS is seeking commentary regarding changing the definition of “patient” or modifying requirements that covered entities are subject to. Lastly, under duplicate discounts, HHS wants feedback on if the current process for identifying and preventing duplicate discounts is effective and what additional oversight is needed. The comment period for the RFI will close on July 16.

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