- HHS' Health and Resources Administration has finalized a rule aimed at providing additional stability to the 340B drug program, allowing for a dispute resolution mechanism for hospitals that contend that drug companies overcharged them for medications.
- Any claim involving an overcharge of $25,000 or more may be submitted for dispute resolution. Drug companies also have the ability to file an appeal if they believed participating hospitals, clinics and other providers received duplicative discounts.
- The installation of the dispute resolution mechanism has been a decadelong journey. The Affordable Care Act contained language calling on HHS to handle disputes in 2010. Although a rule is now in place, it was not received warmly by hospital groups.
Since the 340B program was initiated in the early 1990s to help safety net hospitals get a price break on drugs for Medicaid enrollees and other low-income patients, it has gone through some significant controversies. One of the biggest was hospitals reselling their steeply discounted drugs to patients with private insurance coverage.
Another longstanding complaint has been that hospitals are overcharged by drug manufacturers for their discounted wares. The issue goes back more than two decades: The Office of the Inspector General of HHS issued a report in in 2003 on the subject, saying that providers were overcharged $6.1 million in fiscal year 1999.
Any disputes above the $25,000 threshold will be decided by at least a six-member panel appointed by the HHS Secretary. The members will be picked in equal numbers from HRSA, the HHS’ Office of General Counsel and CMS. All must have legal and drug pricing expertise.
Despite finally getting a mechanism to address their grievances, neither hospitals nor its allies were particularly satisfied.
American Hospital Association President Tom Nickels said the dispute resolution process "is not sufficient to address drug companies' repeated illegal attempts to attack 340B hospitals, and the patients and communities they serve."
Nickels then cited a recent controversy over drugmakers limiting distribution of drugs the program covers and asking for detailed information about distribution through a hospital's contract pharmacy arrangements."These illegal acts require immediate relief rather than an administrative dispute resolution process," Nickels wrote.
Hospital group 340B Health was also far from pleased. Although the organization noted that the process holds "some promise for giving 340B hospitals a pathway to object to certain manufacturer overcharges," it insisted in a statement it "is not an appropriate or timely solution for refusals by Eli Lilly, AstraZeneca, Sanofi, Novartis, United Therapeutics, and Novo Nordisk to offer the 340B pricing that federal law requires. These manufacturer actions are a clear violation of the 340B statute, and the Department of Health and Human Services (HHS) has the authority — and the responsibility — to block them immediately and order recourse for affected hospitals."
This is on top of another fight hospitals are having with HHS over 340B — this one on pricing. CMS has persisted with plans to cut the drug payments by 28.5%, which hospitals have greatly protested. A district court, however, ruled in favor of the reductions earlier this year.