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340B on the Move?

Consider moving the section 340B prescription drug discount program from the Health Resources and Services Administration to the Centers for Medicare & Medicaid Services.

That was the message in a recent letter from Senate Finance Committee chairman Orrin Hatch to new Secretary of Health and Human Services Alex Azar.

In his letter, Senate Hatch observes that

HRSA lacks the necessary regulatory authority to oversee the 340B program. The agency only has the authority to regulate in three areas, which include establishing an alternative dispute resolution process, imposing civil monetary penalties against manufacturers who knowingly overcharge covered entities, and calculating the 340B ceiling price. Even so, it has not fully implemented these regulations. HRSA audits covered entities for program eligibility, duplicate discounts, and diversion. However, HRSA rarely audits manufacturers to ensure compliance with the ceiling price and conducts fewer than 200 audits of covered entities each year. The limited audits HRSA did conduct reveal high-levels of non-compliance by covered entities. This is disconcerting, given that, with relatively few dedicated staff, by 2021 HRSA will be responsible for providing oversight for over $20 billion in drug sales.

To address this challenge, Senator Hatch suggests that

With the limited statutory authority and concern that HRSA lacks adequate resources, HHS should consider whether CMS is better suited for 340B program administration, all or in part. Many determinants of 340B eligibility and other operational program details are linked to Medicare and Medicaid program components. CMS has extensive experience directly interacting with hospitals and drug manufacturers, including ensuring they meet participation requirements and conduct audits. Additionally, HHS already works with the Internal Revenue Service (IRS) to report charity care to Congress. This makes HHS more capable of tracking how covered entities use 340B savings.

In his letter, Senator Hatch also posed a number of 340B-related questions to Secretary Azar and requested a response to the Senate Finance Committee by February 26.

The 340B program has become controversial in recent years and has been the subject of considerable congressional scrutiny.  Currently, Congress is considering several bills to alter the program in different ways.

Virtually all Pennsylvania safety-net hospitals participate in the 340B program and consider it an essential tool in their efforts to serve their predominantly low-income communities.

Read Senator Hatch’s entire 340B letter to HHS Secretary Azar here.

Filed in Medicare.

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2012 Safety-Net Association of Pennsylvania