HRSA building and signage
HRSA confirmed it will end a pandemic-era waiver program that allowed 340B drug use in certain offsite hospital locations.

HRSA Wants Reporting Requirements on Use of 340B Savings and Compliance and Reporting Requirements on Use of Contract Pharmacies

The U.S. Health Resources and Services Administration has asked Congress for general rulemaking authority over the 340B program so it can establish “reporting requirements and definitions for the use of [340B] savings and contract pharmacy utilization.”

The Biden administration made the request Thursday in its fiscal year 2024 budget for the Department of Health and Human Services. Congress can and often does decline to act on such requests.

The HHS FY 2024 Budget in Brief released March 10 included just the proposal to require 340B covered entities “to annually report to HRSA how the savings achieved through the program benefits the communities they serve.” The administration’s last two budgets made similar pitches to give HRSA more power so it could track how entities use 340B savings. HRSA first began asking Congress for comprehensive regulatory power over 340B in the 2017 budget.

New Emphasis on Contract Pharmacy Compliance

HRSA released its more detailed FY 2024 budget justification to Congress yesterday. For the first time, it is believed, HRSA said it wants general regulatory authority “to strengthen compliance and transparency related to the utilization of contract pharmacies.” HRSA’s request for “explicit regulatory authority to define necessary terms” also came in this document.

Although it did not say so explicitly, HRSA possibly wants to strengthen drug manufacturer compliance and covered entity transparency regarding use of contract pharmacies. HRSA’s stance on manufacturers and contract pharmacy compliance is well known: It says drug makers may not impose conditions on shipments of 340B-purchased drugs. What HRSA would require entities to disclose about their use of contract pharmacies is not known.

The administration wants $17 million for the 340B program in FY 2024, the same as it sought for 2023, 2022, and 2020. This year’s spending level is $12 million. 2020 was the last year that HRSA sought a 0.1% user fee on 340B purchases to fund the 340B program. The user fee proposal never received traction on Capitol Hill and was opposed aggressively by 340B providers.

“The FY 2024 budget request provides resources for the 340B program to educate participating covered entities and prospective sites on compliance with statutory requirements,” HRSA’s budget justification said. “For participating covered entities, HRSA will continue to expand its oversight and compliance activities. HRSA will continue to conduct audits of manufacturers, which should not only increase compliance, but also guide future technical assistance.”

HRSA said it “will continue to implement improvements to the [340B] administrative dispute resolution process” and “increase the audit and oversight functions, including additional manufacturer and covered entities audits.”

Elsewhere in the president’s budget, the administration proposes

  • Extending the Inflation Reduction Act’s $35 cap on out-of-pocket costs per monthly insulin product in Medicare to group and individual market plans.
  • Increasing the number of drugs subject to Medicare Parts B and D price negotiation under the IRA and making drugs eligible for negotiation sooner after their launch.
  • Expanding the IRA’s Parts B and D drug price inflation rebates to drugs paid for by commercial plans.
  • Increasing mandatory funding for the Health Center Program (which will expire on Oct. 1 unless reauthorized by Congress) from $4 billion this fiscal year to $5.2 billion in FY 2024, $6.3 billion in FY 2025, and $7.5 billion in FY 2026. Discretionary spending would rise from $1.8 billion in FY 2023 to $1.9 billion in FY 2024.
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