- The 340B Drug Pricing Program took center stage at the Senate's HELP panel for the third time in several months on Tuesday, this time turning the focus to audits of hospitals and drug manufacturers conducted by the Health Resources and Services Administration. HRSA Director Krista Pedley said that in the past five years, 12 of 600 program manufacturers faced audits compared to 981 of 12,700 of hospitals, also known as covered entities.
- The director said no findings of wrongdoing were yielded in any of the 12 audits of manufacturers, whereas 60% of the audits of covered entities resulted in repayment to manufacturers.
- Pedley also said legislation is needed to give HRSA authority to increase oversight over the program and the pricing transparency many hospitals have been asking for. Earlier this month, the Trump administration pushed back a rule on 340B that would impose penalties on manufacturers that charge above the ceiling price.
As the 340B program has grown in size since its creation in 1992, so have questions over its contemporary purpose and the lack of transparency surrounding oversight and rules for participants. Entities covered by 340B are in the dark when it comes to knowing how much their competitors are paying for the same drugs.
An industry fight between pharmas and hospitals has ramped up in the past year, especially after the Trump administration drastically cut the discounts drugmakers are required to give 340B hospitals.
Ann Maxwell, assistant inspector general for evaluation and inspections at the HHS Office of Inspector General, told HELP at a hearing last month that "providers just pay what they are charged" and have to trust that pharmaceutical companies are providing the discount mandated by 340B.
When asked if transparency can be achieved through any means outside of legislation, Pedley told lawmakers that legislation is the only way her agency can obtain the authority it needs for proper oversight and to make the program transparent.
HRSA last year published a final rule setting civil monetary penalties for drug manufacturers that fail to make their drugs available to or are overcharging entities covered under 340B, but earlier this month the Trump administration pushed the rule on ceiling prices and penalties back to July 2019. It's the fifth time implementation of penalties for pharmaceutical companies have been delayed.
To date, no manufacturer has been penalized for overcharging. Troubled by the lack of consequences for the pharmaceutical industry, Democrats lined up on Tuesday to question HRSA's auditing history and emphasize the outsized number of audits of hospitals compared to drug manufacturers.
"Integrity, transparency, and accountability are critical to any program," Sen. Patty Murray, D-Washington, said. "We can strengthen the 340B program by increasing accountability for drug companies that currently have very little."
Pedley noted while no issues have been found in any of the 12 manufacturer audits, covered entities are at "higher risk" for audit because they are subject to more program requirements, whereas manufacturers are only required to charge at or below the drug ceiling price. Pedley said HRSA also targets covered entities that have known issues.
"We do everything we can as it relates to manufacturers," she said. Unlike covered entities, Pedley said no manufacturer has been re-audited to date.
Sen. Bill Cassidy, R-Louisiana, harped on whether or not hospitals are using savings generated by 340B on expanding services to low-income patients. Pedley said HRSA has "no data on how covered entities use their savings."
The HRSA director later said a 2011 Government Accountability Office report outlining how entities use 340B savings showed investments in ensuring vulnerable populations are covered by charity care.