- Poor oversight of the 340B Drug Discount Pricing Program and the Medicaid Drug Rebate Program may allow the discounts to be received twice for the same drug, according to a new report from the U.S. Government Accountability Office.
- CMS does not track or review states' procedures for preventing duplicate discounts, according to the report. Additionally, procedures that states use to exclude 340B drugs from Medicaid discounts are not always documented or effective at identifying these drugs.
- The report released Monday also found that states might be forgoing discounts and rebates for all eligible drugs, resulting in increased costs to state and federal governments.
The report is likely to add more fuel to the fire of debates surrounding the 340B program. Hospitals say the discounts are essential to helping them treat their neediest patient populations, but pharmaceutical companies and lawmakers have pushed for more oversight into how the savings are spent.
For drugmakers to have certain drugs covered by Medicaid, they must opt into that discount program and 340B, which provides hospitals with low income and uninsured patients discounts on outpatient drugs and can reduce drug prices by an estimated 25% to 50%, according to HHS.
The program that allows state Medicaid programs to request manufacturer rebates on certain drugs dispensed to beneficiaries saved states and the federal government more than $36 billion in fiscal year 2018, GAO said.
Pharma companies have drawn attention to the program lately. A recent Milliman report, funded by powerful drug lobby PhRMA, found that 340B eligible hospitals are reimbursed on average three times what they pay for Medicine. An earlier study from the same group found the program costs patients more in the long run by moving care to hospital outpatient settings rather than physicians' offices.
A more recent Medicare Payment Advisory Commission study, however, went against that critique, calling the effect of 340B on pricing "modest."
While the GAO report found a lack of oversight that may subject drug makers to duplicate discounts, it also found potential costs for state and local governments that could be avoided with an improved system.
The current system, in which CMS does not assess whether states have 340B policies and procedures and, if so, whether they are documented, effective and accessible to stakeholders, may lead to forgone rebates on drugs not purchased at the 340B price, according to the report.
The GAO gave recommendations such as requiring written policies and procedures from Medicaid programs designed to prevent duplicate discounts and forgone rebates. It also stressed increasing coordination between state Medicaid programs and covered entities and among HHS agencies.
Correction: A previous version of this story incorrectly described how the drug discount rebates are received. Drugs that hospitals and clinics buy through the 340B program can't also qualify for Medicaid rebates, and GAO is suggesting better oversight to prevent duplicate discounts. The post has been updated.