January 14, 2014—House and Senate negotiators have signed off on a federal spending bill for the fiscal year that runs through September that would more than double the Health Resources and Services Administration (HRSA) Office of Pharmacy Affairs’ (OPA) budget, including $6 million for new 340B program integrity efforts. [ms-protect-content id=”2799″] Congress could pass the bill by late this week.
OPA’s appropriation would rise from its current $4.4 million to $10.2 million. An explanatory document released with the bill last night by the House Rules Committee says the agreement “provides $6,000,000 to implement a new program integrity effort within the 340B drug pricing program.” Within 45 days after the bill is passed, OPA is required to brief the House and Senate Appropriations Committees “regarding the plans to strengthen program oversight to ensure compliance with existing requirements.”
“Further, the briefing should address the timetable for issuing new regulations that address compliance concerns” raised by both the Department of Health and Human Services (HHS) Office of Inspector General (OIG) and the Government Accountability Office (GAO), the document said.
Under the agreement, the 340B program would receive $5.76 million more in fiscal 2014 than the $4.47 million sought by the Obama administration.
The additional money would be an appropriation, rather than revenue collected from a user fee on 340B purchases. The administration had proposed such a fee for the past several years. The idea had support in the Senate but never gained traction in the House.
HRSA has said on multiple occasions that it would not implement a number of 340B program integrity improvements required by the Affordable Care Act (ACA) until it received adequate funding from Congress. It expected those funds to come from the proposed user fee. Congress is poised now to give HRSA additional appropriated funds, rather than the ability to collect user fee revenues, to carry out those mandates.
The unimplemented requirements are aimed mainly at drug manufacturer compliance. They were drawn largely from a series of OIG reports in the mid 2000s on manufacturer overcharging of 340B covered entities. These 340B program improvements include:
- Availability of 340B prices. 340B covered entities are supposed to have access through the OPA website to the actual 340B ceiling prices verified by HHS.
- 340B pricing accuracy. HRSA was required to develop a system to ensure accurate pricing by manufacturers; to perform spot checks of manufacturer sales transactions and inquire into the cause of pricing discrepancies; and to ensure corrective action.
- Dispute resolution process. HRSA was required within 180 days of ACA’s enactment to issue regulations establishing a formal dispute resolution process for 340B covered entities and drug manufacturers. HRSA issued an advance notice of proposed rulemaking in 2010 but took no further action.
- Manufacturer civil monetary penalties. HRSA was similarly required to issue regulations imposing monetary sanctions (not to exceed $5,000 per instance) on drug manufacturers who intentionally charge a covered entity a price above the 340B ceiling price. As with dispute resolution, it issued an advance notice of proposed rulemaking but took no further action.
- Mandatory credit or refund process. HRSA was required to establish procedures for manufacturers to issue refunds to covered entities and to oversee those refunds when there is an overcharge. Manufacturers also are supposed to explain to HRSA why and how the overcharge occurred and how refunds are to be calculated and issued.
- Covered entity annual recertification. 340B covered entities were required to annually update their information in the 340B database. OPA implemented this requirement in 2012.
On a related front, OIG issued a June 2011 report that called on HRSA and the Centers for Medicare and Medicaid Services (CMS) to improve their guidance on how covered entities should bill Medicaid for 340B drugs. OIG recommended that CMS require states to create written 340B policies; that HRSA share 340B ceiling prices with states; and that the two agencies work together to improve the accuracy of the 340B Medicaid Exclusion File.
In addition to its 340B compliance mandates, ACA instructed GAO to conduct a comprehensive study of the 340B program. GAO’s 2011 report called on HRSA to begin auditing covered entities; to review manufacturers’ plans to restrict distribution of drugs at 340B prices; to further specify its 340B nondiscrimination guidance for cases in which distribution of drugs is restricted; to further specify the criteria that hospitals that are not publicly owned or operated must meet to be eligible for the 340B program; and to finalize new, more specific guidance on the definition of a 340B patient.
HRSA has already implemented most of these GAO recommendations, most notably audits of covered entities. It has said it will address the 340B patient definition in its planned comprehensive 340B regulation, currently scheduled for release in proposed form in June.
Safety Net Hospitals for Pharmaceutical Access, which represents 1,000 hospitals enrolled in 340B, said it welcomed the movement in Congress to bolster OPA’s funding. “We are pleased to see the additional funding for the Office of Pharmacy Affairs in the 2014 budget deal,” said SNHPA President and CEO Ted Slafsky. “We urge the agency to use it to implement long overdue provisions to ensure that pharmaceutical manufacturers are complying with 340B program requirements.”
Pharmaceutical Research and Manufacturers of America and the Biotechnology Industry Organization had not responded to requests for comment at publishing time. [/ms-protect-content]