February 2, 2015—The Obama administration is seeking $24.73 million to run the 340B drug discount program in the fiscal year that begins in October – more than double this year’s funding level. The request came in the proposed fiscal year 2016 budget that the President sent to Congress today. [ms-protect-content id=”2799″]
The administration is asking Congress to boost appropriated funding for the Health Resources and Services Administration Office of Pharmacy Affairs by $7 million, from its current $10.23 million to $17.23 million. It proposed to boost that by another $7.5 million, to $24.73 million, from a user fee on 340B drug purchases.
In its annual budget justification to Congress, the Health Resources and Services Administration said it is “strongly committed” to addressing issues that the Department of Health and Human Services Office of Inspector General and the Government Accountability Office have raised about 340B program. “Specifically, the OIG has recommended that HRSA provide covered entities access to ceiling price information and improve oversight of 340B pricing; both activities are underway and will continue to be a top priority in [fiscal years] 2015 and 2016,” HRSA said in the document.
HRSA continued: “GAO has recommended that HRSA provide additional clarity around the definition of a patient eligible to receive 340B drugs as well as eligibility of certain hospitals, which will be addressed in guidance to be finalized in FY 2016 and enforced through audits and other oversight activities. Resources to support these activities are also reflected in this request.”
Elsewhere in the budget proposal, HRSA says it has set a target of five audits of drug manufacturers in fiscal 2016; it has conducted one such audit to date. HRSA also said it has set a target of 300 covered entity audits; it is on track to conduct 200 this fiscal year.
“In previous years and with limited funding, HRSA had focused only on audits of manufacturers with specific allegations,” the budget document notes. “With additional funding, HRSA will conduct additional audits of manufacturers, adding random audits to its oversight strategy. In addition, HRSA is committed to investigating every allegation received regarding manufacturer compliance. Funding in FY 2016 will support investigation of allegations of overcharges and limited availability of drugs to 340B entities.”
Other highlights from HRSA’s budget justification include:
340B price verification. “Funds requested in FY 2016 will be used to maintain a system for all manufacturers to submit 340B price information, allowing regular spot checks of prices and any necessary follow up on pricing errors.”
Refunds and credits. “Funding in FY 2016 will be used to facilitate refunds and credits to entities who were overcharged by participating manufacturers.”
Pricing system. “Funding in FY 2016 will be used to continue to implement a system whereby covered entities can access 340B ceiling price information via a secure website.”
Civil monetary penalties. “HRSA will implement, per statutory authority, civil monetary penalties for manufacturers and covered entities. For manufacturers, HRSA can impose up to a $5,000 penalty to manufacturers for each instance of knowingly and intentionally overcharging a covered entity. HRSA can require covered entities to pay monetary penalties to manufacturers when violations are found to be systematic and egregious.”
Compliance management tool. “HRSA has made investments in an integrated system of compliance tracking for covered entities and manufacturers, enabling enhanced communication across the Office of Pharmacy Affairs to ensure that all covered entities and manufacturers are in compliance with 340B program requirements. HRSA expects full implementation of this system in FY 2016. Funding in FY 2016 will be used to will support ongoing maintenance and improvements to this system.”
Administrative dispute resolution process. “HRSA will continue to implement an administrative process for the resolution of claims by covered entities that they have been overcharged for drugs purchased and claims by manufacturers of violations, including appropriate procedures for the provision of remedies and enforcement of such process through mechanisms and sanctions.” [/ms-protect-content]