by admin | May 29, 2014 4:01 pm
May 29, 2014—The nation’s major drug companies gave White House officials a 16-page document last week detailing changes they want to see made to the 340B drug discount program in the forthcoming comprehensive 340B regulation. [ms-protect-content id=”2799″]
Pharmaceutical Research and Manufacturers of America’s proposals would greatly reduce the number of patients eligible to receive 340B discounted drugs, the locations where 340B prescriptions could be written, and the number of medical professionals who could prescribe them.
“It is increasingly clear that the [340B] program has deviated significantly from its mission as the program has become unmoored from the [340B] statute and Congressional intent,” PhRMA wrote in the document it gave to the Office of Management and Budget during a May 22 meeting. “At the same time, the program has expanded exponentially without the necessary guardrails to ensure that the program fulfills its purpose.”
The drug industry group met with OMB last week to discuss the Health Resources and Services Administration’s forthcoming 340B program “mega-reg.” The document it brought spelling out its position on 340B was a copy of a June 28, 2013 letter it sent to Cmdr. Krista Pedley, the director of HRSA’s Office of Pharmacy Affairs. OMB posted a copy of the previously undisclosed letter to Cmdr. Pedley on its Reginfo.gov website. At the same time, OMB updated the site to say that the 340B mega-reg’s anticipated release has been pushed back a month, from June to July.
In the letter to Cmdr. Pedley, PhRMA said the 340B program’s problems can be traced to:
“The significant cracks in the program’s foundation will continue to spread and exert additional pressure on the program if it continues to grow untethered from its original mission,” PhRMA said.
Hospitals and other safety-net health care providers should be allowed to give 340B-discounted drugs only to “uninsured individuals … who receive outpatient medical care on an ongoing basis at the covered entity’s facilities from a physician who is an employee or independent contractor who is subject to oversight or control by the covered entity,” PhRMA wrote. The definition is explicitly intended to exclude referral arrangements.
In another part of the letter, it said “the opportunities for ‘arbitrage’ from the profit covered entities may receive from the difference between the 340B price and the price they charge insurers for drugs sold to patients who have insurance … creates perverse disincentives that may not serve the program’s purpose as intended.”
Health care providers enrolled in 340B reject PhRMA’s premise that the program was intended to be limited to uninsured indigent patients. They argue that 340B was created to reduce their drug costs, enabling them to serve more vulnerable patients and improve patient services.
For example, the 340B Coalition, which represents community health centers, AIDS clinics, safety-net hospitals, hemophilia treatment centers, and family planning clinics, takes the position that 340B supports their mission “in serving low-income, uninsured and under-insured patients, while reducing federal and state health care expenditures….340B providers translate their savings into reduced-price drugs for patients, expanded comprehensive health services, and serving more patients unable to pay for their care.” If the program were restricted to just uninsured patients, there would be little incentive to participate, providers say.
The hospital groups America’s Essential Hospitals, Children’s Hospital Association, and Safety Net Hospitals for Pharmaceutical Access similarly take the position that Congress intended for 340B to lower their outpatient drug costs, reducing the costs of their operations and allowing them to stretch their scarce resources so that they can serve more needy patients and provide more needed services within their communities.
This reading of 340B’s intent was endorsed by the full Senate Appropriations Committee last summer in the companion report to its fiscal 2014 spending bill for labor, health, and education programs. 340B, it said, is “more than simply an individual discount program” and “was designed to help safety net providers maintain, improve, and expand patient access to healthcare services generally.”
Elsewhere in its letter to HRSA, PhRMA said that, to qualify for 340B pricing, hospital outpatient facilities should be “provider-based” as set forth for Medicare hospital certification purposes, in addition to the current requirement that these facilities must appear as reimbursable on the hospital’s most recently filed Medicare cost report.
PhRMA also told HRSA it should require covered entities to keep written copies of their 340B patient-definition policies and procedures and to provide them to drugmakers on demand, without a manufacturer having to initiate an audit or show that it has reasonable cause to believe the entity has violated program rules.
Also in the letter, PhRMA said “HRSA’s creation and the proliferation of [340B] contract pharmacy arrangements have exacerbated the program’s distortions and deviations.” PhRMA said it is notable that the 340B statute does not mention such arrangements. Their number, it continued, “has increased dramatically and is expected to increase exponentially, with no evidence that the benefits of these arrangements flow chiefly to uninsured patients.”
PhRMA’s meeting with OMB came the day before a federal district judge ruled in PhRMA’s favor in its lawsuit against HRSA’s 340B orphan drug exclusion regulation. The judge agreed with PhRMA’s argument that the rule should be vacated because Congress never specifically authorized HRSA to engage in such rulemaking.
The orphan drug exclusion ruling has caused a number of commentators to speculate about what effect, if any, it might have on HRSA’s ability to promulgate the mega-reg.
In a Dec. 12, 2013 filing in the orphan drug case, PhRMA argued that, while Congress failed to authorize HRSA to issue rules related to the orphan drug exemption, it did authorize rulemaking “to implement program integrity measures, both as to drug manufacturers that miscalculate the 340B price and as to 340B entities that violate statutory restrictions against billing Medicaid for 340B drugs and transferring 340B drugs to anyone but ‘patients’ of 340B covered entities.”
PhRMA added that, in its opinion, HRSA has authority from Congress to promulgate rules to impose civil monetary penalties for certain violations of 340B requirements and to establish and implement an administrative process for the resolution of claims by covered entities. PhRMA, however, notably omitted contract pharmacy from its list of matters that it believes HRSA can regulate.
In his ruling in the orphan drug matter, U.S. District Judge Rudolph Contreras said that within the 340B statute, Congress “specifically authorized rulemaking in three places: (1) the establishment of an administrative dispute resolution process, (2) the ‘regulatory issuance’ of precisely defined standards of methodology for calculation of ceiling prices, and (3) the imposition of monetary civil sanctions.”
Others that met with OMB in May about the 340B mega-reg include:
Source URL: https://340bemployed.org/phrma-lays-down-markers-for-340b-mega-reg/
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