February 5, 2014—Hospitals and health care centers vary in how they ensure compliance with 340B requirements for prescriptions filled at contract pharmacies, leading to different decisions about patient eligibility, the Department of Health and Human Services Office of Inspector concludes today in a much-anticipated report.[ms-protect-content id=”2799″]
The report also found that 22 of the 30 entities studied prevent duplicate discounts by not dispensing 340B-purchased drugs to Medicaid beneficiaries through their contract pharmacies. Two others that do dispense such drugs to Medicaid patients reported having methods for avoiding duplicate discounts.
OIG also found that a majority of the providers studied (18 out of 30) offered the discounted 340B price to uninsured patients in at least one of their contract pharmacy arrangements, often via a discount card that the patient gives to the pharmacist.
Finally, OIG said that 25 of the 30 covered entities reported that they monitor their contract pharmacy arrangements internally to detect potential diversion or duplicate discounts. Few, however, said they retain independent auditors for their contract pharmacy arrangements as recommended in Health Resources and Services Administration (HRSA) guidance.
The study’s release comes as nearly a thousand 340B stakeholders gather in San Diego for the 340B Coalition annual winter conference. Its author, Adam Freeman of OIG’s Office of Evaluation and Inspections in Chicago, is scheduled to speak about his findings at the meeting on Feb. 7.
The study is the federal government’s first in-depth look at 340B contract pharmacy since HRSA published guidance in March 2010 permitting covered entities to contract with more than one outside pharmacy to dispense drugs to their eligible patients.
Health care providers say multiple contract pharmacy arrangements improve patient access to affordable medications and enhance covered entities’ ability to stretch scarce resources, serve more patients, and provide more comprehensive services. Drug manufacturers and other 340B critics counter that the contract pharmacy program has increased the volume of drugs purchased at 340B discounts beyond what Congress intended.
In a recent statement on its website, HRSA’s Office of Pharmacy Affairs (OPA) reported that 18 percent of 340B covered entities use contract pharmacies, and of those, 75 percent have fewer than five contract pharmacy arrangements.
HRSA has said that its forthcoming comprehensive regulation for the 340B program will address the definition of an eligible patient and compliance requirements for contract pharmacy arrangements. OPA Director Cmdr. Krista Pedley is expected to discuss the regulation and the OIG study when she speaks at the 340B Coalition meeting via a video feed tomorrow Feb. 6.
The study’s finding that covered entities differ about which prescriptions are 340B eligible “suggests a lack of clarity on how HRSA’s patient definition should be applied in contract pharmacy arrangements,” OIG said. “Covered entities appear to have differing interpretations of what HRSA guidance requires; some may also have chosen to apply more stringent criteria in the absence of a clear directive.”
Contract pharmacy arrangements “also create complications in preventing duplicate discounts,” OIG said. Companies hired by covered entities to help manage contract pharmacy arrangements “reported difficulties” in identifying beneficiaries covered by Medicaid managed care organizations, OIG noted, “and some covered entities that do dispense 340B-purchased drugs to Medicaid beneficiaries through their contract pharmacies did not report a method to avoid duplicate discounts.”
Safety Net Hospitals for Pharmaceutical Access issued a statement applauding the study and saying it was looking forward to clearer guidance from HRSA in its upcoming comprehensive regulation.
“Since 2010, the Health Resources and Services Administration (HRSA) has enabled hospitals and health centers to partner with community pharmacies to expand access to pharmaceutical care,” the group said. “HRSA’s contract pharmacy policy, which enjoys broad bipartisan support, enables patients to access medications and other important health care services closer to home. The contract pharmacy program has enabled providers to ‘stretch scare federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.’ Thanks to these additional resources, hospitals and clinics are able to continue or expand important indigent care initiatives such as free drug programs, medication therapy management, and clinics targeting conditions such as diabetes, heart disease, and cancer.”
“We applaud the Department of Health and Human Services Office of Inspector General for conducting a study on contract pharmacies and support strong oversight over the program,” the statement continued. “The report underscores the challenges that stakeholders face when implementing the contract pharmacy program, which is in need of clearer guidance. We look forward to HRSA’s upcoming comprehensive 340B program regulation, which is expected to address many of these issues.”
A group of Republican Senate and House lawmakers who have voiced concerns about lax enforcement of 340B program requirements released statements today in response to the report.
“Congress expects the discounts to go to low-income patients, but according to this report, that isn’t always happening because of the complexities that have developed around this program,” said Sen. Charles Grassley (R-Iowa). “Maintaining program integrity is fundamental to the work of every federal agency. In this case, HRSA needs to faithfully execute its responsibilities or account for why it can’t do so.”
“This report from HHS’s own watchdog raises serious questions about whether the 340B program is serving its core mission to help the uninsured,” added Rep. Joe Pitts (R-Pa.), the chairman of the House Energy and Commerce Subcommittee on Health. “This report underscores the need for strong oversight so that the program is best suited to help those most in need.”[/ms-protect-content]