US House Committee Provides Measures to Improve Drug-Pricing Program

The US House of Representatives’ House Energy & Commerce (E&C) Committee has released a report to offer recommendations to improve the 340B Drug Discount Program, a US federal government program created in 1992 that requires drug manufacturers to provide outpatient drugs to eligible healthcare organizations and covered entities at reduced prices.

340B refers to a section of the Public Health Service Act, which specifies which covered entities are eligible to participate in the 340B Drug Program. These include qualifying hospitals, federal grantees from the Health Resources and Services Administration (HRSA), the US Centers for Disease Control and Prevention, the US Department of Health and Human Services’ Office of Population Affairs, and the Indian Health Service.

The report follows an October 2017 E&C Committee hearing in which five covered entities rejected an earlier proposal that the 340B program should be narrowed or eliminated. The proposal was a result of a subcommittee hearing held in July 2017 in which government witnesses were unable to answer many questions about how covered entities use the 340B program due to the lack of reporting requirements in the statute.

The report says the committee has been examining the operation and oversight of the 340B program over the past two years. Through stakeholder meetings, hearings, and document requests, the committee has identified several weaknesses in program administration and oversight.

The report highlights 12 recommendations, including two for the HRSA in the US Department of Health and Human Services, one for covered entities, and others for Congress.

In terms of HRSA, the report suggests that: (1) HRSA should soon finalize and begin enforcing regulations in each of the three areas in which it currently has regulatory authority, including the 340B Alternative Dispute Resolution process, the imposition of civil monetary penalties against manufacturers that knowingly and intentionally overcharge a covered entity for a 340B drug, and the calculation of ceiling prices; and (2) HRSA should work toward ensuring that it audits covered entities and manufacturers at the same rate.

Regarding covered entities, the report recommends that all covered entities should perform independent audits of their contract pharmacies at regular intervals to ensure 340B program compliance.

As for Congress, the report suggests that Congress: consider whether the scope of HRSA’s audits should be expanded; promote transparency; require certain covered entities to conduct independent audits of program compliance; give HRSA sufficient regulatory authority to administer and oversee the program; clarify the intent of the program; conduct more rigorous oversight and effective management; identify and reduce duplicate discounts for drugs paid for under Medicaid managed care; and establish a mechanism to monitor the level of charity care.

In December 2017, the Pharmaceutical Research and Manufacturers of America (PhRMA) issued a statement to support proposed legislation designed to improve oversight of the 340B program. The proposed legislation, Protecting Access for the Underserved and Safety-Net Entities Act (340B PAUSE Act) (H.R. 4710) was introduced in the House by Congressmen Larry Bucshon (R-Indiana) and Scott Peters (D-California) in December 2017. The 340B PAUSE Act temporarily pauses new enrollment of Disproportionate Share Hospitals into the 340B discount drug program and requires basic data reporting, similar to the data reporting required of other 340B participants. Disproportionate Share Hospitals serve a significantly disproportionate number of low-income patients and receive payments from the US Centers for Medicaid and Medicare Services to cover the costs of providing care to uninsured patients, according to information from HSRA. </p>

 “The legislation introduced today [December 21, 2017] by Representatives Larry Bucshon and Scott Peters is yet another important action taken this year to begin to address the problems in the 340B program,” said PhRMA President and CEO Stephen J. Ubl in a Decembe 21, 2017 statement. “Starting with hearings held this summer and fall on the lack of oversight of the program, followed by the Administration’s changes in the OPPS [Outpatient Prospective Payment System] rule and this new piece of legislation, policymakers are sounding the alarm on the 340B program. Voice after voice has stressed how the program has strayed from its original intent of ensuring needy patients have access to affordable medicines, instead driving distortions in the healthcare marketplace that are increasing patient costs,” he said.

“We encourage Congress and the Administration to continue to build on the momentum and support passage and eventual implementation of this legislation. By imposing a temporary moratorium on the enrollment of new DSH [Disproportionate Share Hospitals] hospitals participating in the program, the bill helps to stem the long-time abuse of the 340B program by some of the nation’s wealthiest hospitals while ensuring that rural hospitals and grantees can continue to use the program to help patients. At the same time, the bill puts reporting requirements in place to prevent future abuses and increase HRSA’s oversight of the program.”

Source: House Energy & Commerce Committee, PhRMA, and Press Statement Congressman Larry Bucshon

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