Michelle Herzog, the new acting director of HRSA's 340B drug pricing program, speaks at the 2015 340B Coalition summer conference.

HRSA Veteran Herzog to Oversee 340B Program as Agency Begins Search for New OPA Director

Michelle Herzog, long-time second-in-command at the U.S Health Resources and Services Administration’s Office of Pharmacy Affairs (OPA), has taken charge as OPA director on an acting basis.

A HRSA spokesperson confirmed yesterday morning that Herzog will oversee OPA temporarily now that the U.S. Public Health Service Rear Adm. Krista Pedley, OPA’s director since July 2010, has been elevated to director of HRSA’s new Office of Special Health Initiatives (OSHI).

While Herzog has kept a low profile, she is well known among 340B covered entities, manufacturers, and other stakeholders in regular contact with OPA. Herzog has been OPA deputy director since 2011 and temporarily led the department during Pedley’s maternity leave. Herzog has given keynote addresses at industry conferences and attends important meetings about 340B that Pedley and the HRSA administrator lead. She is well-liked by stakeholders, who cite her strong knowledge of the program and responsiveness.

HRSA posted the job opening for OPA director on the federal USA Jobs website late yesterday. Applications are due Sept. 14. The job description includes “assuring compliance with the [340B] program’s guidelines by all constituent groups” near the top of the director’s major duties. The job description also includes “developing, interpreting, and applying policies and guidelines to establish HRSA’s position” on 340B, and “legislative planning.” Applicants must be licensed to practice pharmacy in a U.S. state or territory and have a doctoral degree in pharmacy.

OSHI comprises OPA plus HRSA’s global health, behavioral health, and oral health programs. It is housed within the HRSA administrator’s office. The Trump administration announced a major reorganization of HRSA during its final days in January. U.S. Health and Human Services (HHS) Secretary Xavier Becerra signed off on the plan with some changes on Aug. 6. HHS posted the revised plan for public inspection late last Friday. It was formally published in the Federal Register early this morning.

Leadership Change Occurring During Time of Peril

Changes at the top of OPA are rare. Pedley’s predecessor, Jimmy Mitchell, was OPA director for 12 years, from 1998 to 2010. Pedley held the post for 11 years.

Whoever succeeds Pedley as OPA director on a permanent basis will take over during arguably the greatest crisis in 340B’s history.

Eight drug manufacturers are defying HHS, HRSA, and OPA’s authority to enforce the government’s interpretation of 340B statute with respect to contract pharmacy. The government says the law requires manufacturers to offer to sell entities covered drugs at or below the 340B ceiling price no matter how the entity chooses to dispense the drugs. The manufacturers say they are under no such obligation with respect to contract pharmacy.

In 2010, HRSA published 340B program guidelines clarifying that entities may contract with multiple contract pharmacies to dispense 340B purchased drugs. The eight manufacturers say contract pharmacy growth has exacerbated duplication of 340B discounts and Medicaid and commercial rebates on the same products. Federal law protects manufacturers only from having to pay duplicate 340B discounts and Medicaid rebates and puts the onus on entities to prevent only duplication of 340B discounts and Medicaid fee for service rebates.

Six of the eight manufacturers are suing HHS and HRSA in federal court and the other two are likely to follow suit. Four of these manufacturers and Pharmaceutical Research and Manufacturers of America are contesting the legality and/or constitutionality of OPA’s 340B administrative dispute resolution process.

If the rebellious drug companies ultimately prevail in court on contract pharmacy, all companies that participate in 340B probably would follow their lead. 340B covered entities would aggressively lobby Congress to restore HRSA’s contract pharmacy requirements for manufacturers.

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