340B scrutinized in Senate, targeted by Trump
- The Senate HELP Committee again turned its attention toward the 340B Drug Pricing Program on Tuesday, calling into question the program’s vague intent, lack of transparency surrounding its rules and “inadequate” level of oversight by the Health Resources and Services Administration.
- The hearing coincided with the release of a Government Accountability Office report that found HRSA has not clarified guidance on the definition of eligible patients or specificity on hospital eligibility criteria, two of four recommendations GAO made in 2012.
- President Donald Trump’s administration has also put the 340B program in its sights, with substantial changes called for in its "American Patients First" blueprint, FY 2019 proposed budget and a White House Council of Economic Advisers (CEA) drug pricing report.
The 340B program has come under a microscope since the Trump administration took office, and is now the subject of a lawsuit between HHS and the hospital industry.
Committee Chairman Lamar Alexander, R-Tenn., turned to nonpartisan federal watchdogs to ask what changes in authority would be needed to provide more effective oversight of the 340B program. Specifically, he called attention to the lack of consensus over the savings providers garner from the program and what percentage of that money is spent on charity care.
“I would like to hear more about if HRSA’s lack of oversight authority has made it difficult for us have agreement on a common set of data about the 340B program of which to make such determinations,” Alexander said.
The original intent of 340B was to lower the price of drugs for hospitals, enabling providers to offer better care for low-income patients, according to Debra Draper, director of the GAO's healthcare team. Growth of the program since its implementation in 1992 has made the intent vague, and that confusion has been compounded by a lack of transparency for all entities involved.
“People have a lot of interpretations of what the intent of the program is, but that's not consistent with what the stated intent is,” Draper said.
While HRSA has taken some steps recently to improve the integrity of its oversight over 340B, Draper said fundamental problems have yet to be addressed, including whether the language of the program is still relevant and a lack of specificity in guidance around hospital eligibility criteria.
Ann Maxwell, assistant inspector general for evaluation and inspections at the HHS Office of Inspector General, said OIG has worked to make sure 340B is best serving low-income patients. “What remains to be done is to build on that progress and resolve long-standing issues,” including a lack of transparency in prices and clarity in program rules, she said.
Maxwell said transparency surrounding 340B “has been a fundamental problem” since the program’s inception. Visibility into prices, she said, is one gap that remains unresolved. “At this point, providers just pay what they are charged,” she said, adding that hospitals have to trust pharmaceutical companies are providing the discount mandated by 340B.
“We think the best way to provide better transparency is for HRSA to share the 340B ceiling prices with providers and states,” Maxwell said.
When questioned by Senator Susan Collins, R-Maine, about why HRSA isn’t already sharing ceiling prices, Maxwell said that while the agency has the authority to share that information with providers, it would require additional authorization from Congress before sharing with states.
Trump’s drug pricing blueprint, released Friday, also called into question whether the growth of the 340B program has led to perverse incentives around drugmaker list prices. It also touched on whether redefining “patient” would “help refocus the program towards its intended purpose.”
The president's proposed budget called for hospitals to be required to publish how they use savings from 340B, and threatened to pull back payments if they do not provide enough charity care. A separate Council of Economic Advisers report, which also called for more oversight of the program, suggested the creation of a new agency that would set prices for eligible providers could reduce “profiteering.”
But the American Hospital Association suggested oversight should extend to drugmakers as well, saying that “any effort to add transparency to the 340B program should include more robust transparency requirements of manufacturers.”
“We believe 340B-participating hospitals provide information to support their use of the 340B program through the yearly recertification process and the randomized audits required of them. While more can and should be done to improve the overall transparency of the program, we urge caution,” AHA wrote in a statement for the record.
AHA and other hospital groups are currently suing HHS over a final rule that reduced drug payments to 340B hospitals by nearly 30%. The rule took effect in January, and in early May the U.S. Court of Appeals for the District of Columbia Circuit heard oral arguments for the case.
Last year, HRSA 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. Senator Elizabeth Warren, D-Mass., criticized the Trump administration for delaying the implementation of those penalties “not once, not twice, not three times but four separate times” since the rule was published. Last week, the administration proposed a fifth delay.
Maxwell testified that, while OIG has evidence that drug manufacturers have overcharged entities covered by 340B, no manufacturers have been penalized for overcharging hospitals or clinics to date. According to Draper, HRSA audited one manufacturer in 2015 and five in 2016 and 2017. Those audits yielded “no findings.” Draper argued that the audit process is “not as systematic” for manufacturers as it is for providers.
- U.S. Government Accountability Office Status of Agency Efforts to Improve 340B Program Oversight
- Senate HELP Committee Examining Oversight Reports on the 340B Drug Pricing Program