Key House Committee Rejects HRSA Request for More Regulatory Authority

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Key House Committee Rejects HRSA Request for More Regulatory Authority

The U.S. House Appropriations Committee yesterday turned down the U.S. Health Resources and Services Administration’s (HRSA) request to give it broad regulatory authority over the 340B program. It said HRSA isn’t using its existing authority and should audit more drug manufacturers for program compliance. As 340B Report first reported last week, HRSA has indicated that, without broad regulatory power over 340B, it can’t stop drug manufacturer Eli Lilly and Co. from denying 340B discounts on its drug Cialis shipped to contract pharmacies.

The committee said no to HRSA in the report that goes with the appropriations bill it passed last evening that covers HRSA. The bill would give $10.2 million to HRSA’s Office of Pharmacy Affairs (OPA), the same level as this fiscal year. As it has in previous years, the committee turned down HRSA’s request to collect user fees from covered entities to help run the 340B program. The agency estimates that charging covered entities a fee of 0.1 percent on 340B drug purchases would generate $24 million annually in additional funding for program oversight.

340B advocacy groups have consistently opposed giving HRSA broad regulatory authority as well as HRSA’s request to impose user fees.

The committee’s Labor–HHS–Education spending bill would give community health centers $1.65 billion (up $25 million from fiscal 2020). The Ryan White HIV/AIDS Program would get $2.4 billion (also up $25 million). On top of those amounts, health centers would get $65 million and Ryan White clinics $95 million under the Trump administration’s initiative to end the domestic HIV epidemic.

The 340B drug discounts that Lilly has stopped providing on Cialis shipped to contract pharmacies are required under HRSA 340B program guidelines. Lilly says the guidelines are inconsistent with the 340B statute and not legally binding. HRSA says its 340B guidance is not legally enforceable. HRSA has said multiple times this year that it is reevaluating its 340B audit processes and other 340B program integrity efforts because it has concluded that it cannot enforce policy and require corrective action related to 340B program guidance.

Lilly began denying 340B contract pharmacy discounts on Cialis on July 1. If it goes unchecked, other drug manufacturers and health care providers could begin challenging 340B program requirements. The 340B program is administered primarily by sub-regulatory guidance.

Last February in its budget request for the fiscal year that begins Oct. 1, HRSA asked the House and Senate Appropriations committees to add language to the coming fiscal year’s health care spending bill giving it general regulatory authority over 340B. A federal court ruled several years ago that Congress gave HRSA power to issue legally binding rules for 340B in just three areas: ceiling price calculation, manufacturer civil monetary penalties, and mandatory and binding dispute resolution. HRSA told the appropriations committees that with more regulatory power it could “set clear enforceable standards” and “ensure compliance with 340B program requirements.” It has been seeking the power without success since 2017.

In the House Appropriations Committee report that accompanies the spending bill that covers HRSA, the committee acknowledged HRSA’s request for more regulatory power. But the panel noted that HRSA “already has existing oversight authority” it is not using.

“The committee is concerned that HRSA is not using their existing oversight authority to pursue balanced oversight of both providers and drug manufacturers,” it said. The committee noted that HRSA has audited 1,300 covered entities for compliance but only 20 manufacturers. “We encourage HRSA to use its existing oversight authority to pursue more balanced oversight of both providers and manufacturers to ensure compliance and integrity of the 340B program.”

Action in the Republican-led Senate Appropriations Committee on the 12 regular federal spending bills is hung up over disagreements between Republicans and Democrats over COVID-19 relief and racial equity in law enforcement. If precedent holds, the Senate will also reject the regulatory authority request as well as user fees.

Hospital group 340B Health recently told its members it plans to ask U.S. Health and Human Services (HHS) Secretary Alex Azar, possibly with other 340B Coalition members, to order Lilly to resume shipping 340B priced drugs to contract pharmacies. The group also advised its members to use a 340B Prime Vendor Program form to tell HRSA that Lilly has denied them 340B pricing on Cialis, which the organization believes violates the law that manufacturers must offer their products “at or below the 340B ceiling price.”

The 340B Coalition’s virtual summer meeting opens next week. OPA Director Adm. Krista Pedley is scheduled to speak Tuesday July 21.

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Understanding HRSA Regulation Changes, Maximizing 340B Savings and Achieving Compliance In The Era of COVID-19

The recent COVID-19 pandemic revealed to many hospitals and health systems the need to streamline their operations and improve their bottom-line performance. Across the country, many facilities that were on uncertain footing before the crisis had their futures placed in jeopardy. Pharmacies in these facilities often found themselves in trouble. The impact of operational or financial shortcomings they had put off addressing became more pronounced as these pharmacies suffered from spikes in patient volume and staffing shortages. The consequences borne from the pandemic were unheard of weeks before. Many hospitals and health systems quickly found themselves less certain of their future.

Click here for a complimentary paper from Comprehensive Pharmacy Services that explores the uncertainties—and opportunities—of these historic times for hospitals and health systems that participate in the 340B program. In the paper, we describe and explain:

  • HRSA’s immediate registration and enrollment flexibilities during the pandemic
  • HRSA permanent change permitting the use of 340B drugs at new outpatient facilities located off-site from their parent location before that facility is listed as a reimbursable, outpatient cost center on the entity’s Medicare Cost Report
  • HRSA’s permanent change regarding the use of telemedicine in 340B


As inboxes continue to grow with correspondence from many 340B resources, our clients can reach out to the 340B Solutions team to decipher what is pertinent to their program. We help confidently direct them through all pandemic related HRSA regulation changes, including those related to clinic and patient eligibility.

Our 340B Solutions team takes pride in staying current with all aspects of the 340B program. After careful consideration and thorough research of events relevant to our client facilities, we notify our clients of program updates and how changes—such as those related to HRSA—may affect their entity. During and after the COVID-19 pandemic, we are uniquely positioned to provide 340B leadership to address HRSA challenges.


Our 340B Solutions team fuels pharmacy excellence for hospitals and health systems by providing access to resources that make the waters in times of crisis, such as during the COVID-19 pandemic, easier to navigate. Our unrivaled expertise and powerful analytics capabilities yield numerous benefits for client facilities, including improved operational performance, improved patient outcomes and lowered drug costs.

With a deep bench of nationally recognized experts in pharmacy regulations compliance, we are uniquely qualified to operate “best in class” 340B programs through leaders owning 150+ years of combined pharmacist experience and 70+ years of combined 340B experience.

  • All of our pharmacists have been DOPs responsible for the administrative and oversight functions of the program.
  • All of our consultants are pharmacists with DOP experience in entities with 340B programs.
  • All of our analysts are Certified Pharmacy Technicians with experience in 340B program oversight and/or 340B purchasing.
  • All of our consultants and analysts have either completed or are in the process of completing the ACE 340B certification program.

Our team of leading pharmacy consultants provides assessments and compliance for numerous programs, including 340B, USP <797> & <800>, clinical initiative identification, operational analysis, purchasing support, staffing assessments, medication safety, interim hospital leadership, medication safety programs, antimicrobial stewardship programs and more.

No two healthcare facilities are alike. While uncertainty impacts each hospital or health system differently, crafting a sound 340B program during times of normalcy allows for facilities to reap its operational and financial rewards when times are lean. Maintaining awareness to changes in HRSA regulations allows for programs to run better, thereby creating opportunities to maximize savings, even when times are lean.

No matter what the challenge, our team of 340B experts can help your pharmacy achieve excellence – as we do for hundreds of clients across the country each day.

(800) 968-6962 | |

HRSA Declines to Answer Whether Merck’s 340B Data Collection Amounts to an Audit

The U.S. Health Resources and Services Administration’s (HRSA) declined yesterday to say whether drug manufacturer Merck’s planned collections every two weeks of 340B contract pharmacy claims data for its products represent 340B manufacturer audits of covered entities governed by HRSA guidance.

In response to questions from 340B Report, HRSA said it “is aware of Merck’s requests to covered entities and is in contact with Merck to better understand their plan.”

As we reported July 7, Merck sent 340B covered entities letters late last month asking them to provide their 340B contract pharmacy claims data for Merck products every two weeks starting Aug. 14. Merck said it would use the data to see if it is paying duplicate 340B drug discounts and Medicaid drug rebates and well as duplicate Medicare Part D and commercial rebates. Merck said it would take “less collaborative, and substantially more burdensome” action against providers that don’t go along. Merck cited no 340B statutory, regulatory, or guidance basis for its information-collection request.

Providers have to inform HRSA about their Medicaid billing practices in order to prevent duplication of 340B discounts and Medicaid fee for service rebates on the same drugs. They are expected to cooperate with state Medicaid agency efforts to prevent duplicate discounts in Medicaid managed care. They have no obligation to prevent duplicate discounts on Part D and commercial claims.

HRSA’s 1996 final 340B manufacturer audit guidelines require drug companies, among other conditions, to submit a work plan to HRSA before commencing; to audit only on the basis of reasonable cause; to coordinate with the government and other drug companies to avoid duplicating audits; to audit only for duplication of 340B discounts and Medicaid rebates and/or diversion of 340B drugs to ineligible patients; to limit audits to a one-year period; to keep providing 340B discounts to the entity during the audit; and to perform audits “in the minimum time necessary with the minimum intrusion on the covered entity’s operations.”

In addition to declining to say whether Merck’s actions constitute an audit, HRSA also declined to answer:

  • Did Merck notify HRSA before it sent the letters to covered entities about the data collection?
  • Is Merck following HRSA’s 1996 manufacturer audit guidelines? If not, will HRSA take action against the company?
  • Can Merck use the data it collects to check for potential Part D and commercial duplicate discounts?
  • Is HRSA aware of any other drug companies that are following or plan to follow Merck’s lead?
  • What is HRSA advice to covered entities about honoring Merck’s request for their 340B contract pharmacy claims data?

Stay tuned for a forthcoming article in which we interview the business consultant collecting and analyzing 340B contract pharmacy claims data on Merck’s behalf and a senior executive at another business performing similar services for drug industry clients.

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News in Brief

  • Drug industry news organization Pink Sheet (subscription required) quotes 340B Report Publisher and CEO Ted Slafsky in an article yesterday about drug manufacturer Lilly blocking 340B contract pharmacies from receiving Cialis at the 340B discounted price. “Lilly’s decision is perceived by the 340B community to be a flagrant violation,” Slafsky said. Pink Sheet notes that 340B Report broke the news about Lilly’s decision.
  • “Walgreens remains the dominant 340B contract pharmacy participant” with nearly 8,000 locations acting as 340B contract pharmacies, drug industry consultant Adam Fein says today in this year’s update to his annual report on 340B contract pharmacy. Fein says Walgreens accounts for 28 percent of all 340B contract pharmacy locations, CVS for 20 percent, Walmart for 10 percent, and Rite Aid for 5 percent. Fein said that, as of this month, there are 27,928 unique locations acting as 340B contract pharmacies, up 14 percent over July 2019. “These pharmacies have more than 112,000 contractual relationships with more than 8,000 340B covered entities,” he said. “About three-quarters of these covered entities are disproportionate share and children’s hospitals.”
  • Drug manufacturer Perrigo recently announced on the U.S. Health Resources and Services Administration (HRSA) website that 340B covered entities may be eligible for 340B refunds on its products for purchases between Aug. 1, 2015 and July 1, 2020. The company attracted national attention in 2013 when it reconstituted itself as an Irish corporation to avoid paying U.S. taxes. In another notice on the HRSA website, drug manufacturer Taiho Oncology announced it was limiting distribution of Lonsurf, a treatment for metastatic gastric or colorectal cancer.
  • White House Chief of Staff Mark Meadows said on the Fox Business Network July 9 that President Trump will issue three executive orders that will lower prescription drug prices. He said the orders “will substantially make sure that the average American gets to pay less for their prescription drugs.”
  • Presumptive Democratic presidential nominee Joe Biden recently announced his campaign’s plank on health care and prescription drug pricing. Biden promises to: (1) let Medicare negotiate drug prices with drug corporations; (2) limit launch prices for drugs that face no competition; (3) limit price increases for all brand, biotech, and “abusively priced” generic drugs to inflation; (4) let consumers buy prescription drugs from other countries; (5) end pharmaceutical corporations’ tax breaks for advertisement spending; and (6) improve the supply of quality generics.

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