September 17, 2013—The forthcoming comprehensive regulation for the 340B drug discount program will not include provisions that Congress added to the program in 2010 but did not explicitly fund, Health Resources and Services Administration (HRSA) Office of Pharmacy Affairs (OPA) Director Cmdr. Krista Pedley said last week at a major meeting of drug manufacturers in Chicago.[ms-protect-content id=”2799″]
Speaking on Sept. 10 during the annual Medicaid Drug Rebate Program summit, Pedley said the proposed rule that HRSA plans to issue for notice and comment in June 2014 will cover the 340B patient definition, 340B contract pharmacy, and other “foundational elements.” It will not, however, include “some of the items” that Congress added to 340B in the Affordable Care Act of 2010 but “that we were not funded to do,” she said.
While Pedley did not say so specifically, it is believed she was referring to the 340B program integrity provisions in ACA aimed mainly at protecting covered entities and improving drug manufacturers’ compliance. They include imposing monetary sanctions on manufacturers that intentionally overcharge covered entities and establishing a mandatory and binding administrative dispute resolution process.
HRSA issued advanced notices of proposed rulemaking for manufacturer monetary penalties and mandatory dispute resolution in September 2010 but has taken no action since. ACA directed the Secretary of Health and Human Services to implement these and other program enhancements but HRSA has declined to do so, saying Congress must first provide funds to enable it to carry out the new duties.
“In order to take our efforts further, we are not going to be able to do so unless we are resourced appropriately,” Pedley said. The Obama administration has proposed a 0.1 percent user fee on 340B drug purchases to finance these and other 340B program improvements but the proposal has stalled in Congress. Manufacturers would not have to collect the fees but they would have to provide HRSA with sales transaction data to enable the agency “to ensure that the entities are paying the appropriate amounts,” Pedley said.
Other 340B program integrity elements in ACA that HRSA has not implemented include: defining standards and methods for calculating 340B ceiling prices; making 340B ceiling prices available to covered entities through a secure website; developing systems to verify the accuracy of those prices and standard procedures for the provision of refunds; performing spot checks of sales transactions; and auditing drug manufacturers.
On that last topic, Pedley said HRSA has been “working through” an unspecified number of allegations of program noncompliance against manufacturers. “Some of those things can be resolved but some we’re finding we may not be able to resolve and we are looking at a specific situation that may result in an audit,” she said. It would be the first audit of a manufacturer in the program’s history.
HRSA, meanwhile, is on target to conduct a total of 94 audits of covered entities in the fiscal year that ends Sept. 30, Pedley reported. As of Sept. 10, the number stood at 82, she said. HRSA conducted 51 covered entity audits in fiscal 2012. Combined with the new projection for this year, that would bring the grand total to 145.
Covered entities have agreed with HRSA final findings in 42 of the 51 audits that were conducted in 2012, Pedley said. Of that group of 42, she said:
- 62 percent of these entities are hospitals
- 43 percent of these audits had no findings
- 26 percent found one or more instances of drugs being dispensed or administered to ineligible patients, by an ineligible provider, or at an ineligible site
- 33 percent found problems related to preventing Medicaid rebates from being paid and 340B discounts from being provided on the same drugs
- 31 percent found errors in the 340B covered entity database.
Pedley said the results are “not surprising” because the entities were chosen for audits based on criteria indicating a higher risk of program violations, such as volume of purchases and number of contract pharmacy arrangements. “We really want to go after those sites that we believe are at higher risk,” Pedley said of HRSA’s audit strategy.
Pedley also addressed the following in her talk:
- HRSA has begun notifying manufacturers by email every quarter whenever it has evidence that a covered entity purchased covered outpatient drugs after it was no longer eligible to participate in 340B.
- There has been an increase in the number of covered entities self-disclosing that they believe they have violated a program rule. HRSA will be posting information about self-disclosure procedures on its website soon.
- Before registering a contract pharmacy in the 340B database, HRSA now requires confirmation from the relevant covered entity’s 340B authorizing official.
- HRSA’s new list of orphan drugs that may be excluded from 340B pricing “clearly still needs some work,” Pedley said, adding that the agency would like to tie individual National Drug Code numbers to products on the list.[/ms-protect-content]