April 26, 2013—The Health Resources and Services Administration (HRSA) might have to significantly reduce the number of audits of 340B covered entities it plans to perform this year due to automatic federal spending cuts that began on March 1.
During a December meeting of hospital pharmacists, Office of Pharmacy Affairs (OPA) Director Cmdr. Krista Pedley said there would be between 200 and 400 audits during fiscal year 2013—a huge increase from the 51 done in fiscal 2012.[ms-protect-content id=”2799″] The fiscal year began Oct. 1. At a meeting of drug manufacturer representatives in mid-March, she said 30 audits were in progress and that HRSA had doubled its number of auditors in the field, from 10 to 20.
OPA’s 340B audit plans, however, may have been upended by the recent automatic, across-the-board cuts. Congress and the White House set them in motion back in 2011 after failing to reach an agreement on deficit reduction. If the impasse continues, about $1.2 trillion will be “sequestered” from federal defense and domestic discretionary program over 10 years. The cuts for fiscal 2013 will total around $85 billion.
OPA’s parent agency, the Health Resources and Services Administration (HRSA), is having its funding reduced by $605 million for the remainder of fiscal 2013. Because the cuts began five months into the fiscal year, they are being concentrated into seven months instead of being spread out over 12.
More than one person familiar with OPA’s audit plans says that, due to sequestration, OPA now intends to conduct only between 50 and 75 covered entity audits during the entire fiscal year, of which 30 are already underway.
Asked for comment on the reported reduction, an agency spokesperson said: “HRSA conducts both risk-based and target audits. While a final number of audits for FY 2013 had not yet been determined, a number of audits have already been conducted.”
Groups affected by the cuts are beginning to raise their voices. For example, in response to a 2 percent reduction in their Medicare Part B outpatient drug reimbursement, many private oncologists have stopped accepting new Medicare patients and are sending them to hospitals instead. Earlier this week, more than 100 members of Congress sent a letter to the Centers for Medicare and Medicaid Services asking it to apply the 2 percent cut only to the reimbursement that oncologists receive for their professional services and not to the reimbursement they receive for the cost of the drugs they administer.[/ms-protect-content]