Pedley: HRSA’s Power to Enforce 340B Guidance is Limited.Testoni: Some in Pharma Want to Make 340B a Rebate Program.

Pedley: HRSA’s Power to Enforce 340B Guidance is Limited

Testoni: Some in Pharma Want to Make 340B a Rebate Program

The federal official in charge of the 340B program today said again that although the U.S. Health Resources and Services Administration (HRSA) believes its 340B policies “are sound, HRSA is unable to enforce guidance unless there is a clear violation of the 340B statute.”

“HRSA places the highest priority on the integrity of the 340B program and continues to enforce the statute to the greatest extent possible,” HRSA Office of Pharmacy Affairs (OPA) Director Adm. Krista Pedley told those attending the 340B Coalition summer conference, which is being held online due to the COVID-19 pandemic. She said HRSA has “completed an evaluation of its audit process and other program integrity efforts as they relate to HRSA’s ability to enforce and require corrective action in a program that is primarily administered by guidance. HRSA’s enforcement ability is limited, as guidance does not provide HRSA appropriate enforcement capability.”

Giving HRSA power to issue “binding and enforceable regulations for all aspects of the 340B program” would enable it “to more clearly define and enforce policy” and strengthen its oversight of 340B, Pedley said.

Pedley’s latest acknowledgement of HRSA’s incapacity to enforce its 340B guidance comes as drug manufacturers Eli Lilly and Merck are testing the limits of HRSA’s 340B contract pharmacy guidelines. Lilly has stopped providing 340B discounts on three formulations of its drug Cialis when the drug is shipped to contract pharmacies and has left open the possibility of extending the ban to other drugs. Merck, meanwhile, is asking covered entities for their 340B contract pharmacy claims data and says uncooperative entities could face less collaborative and more burdensome action. The 340B Coalition asked U.S. Health and Human Services (HHS) Secretary Alex Azar on July 16 to “act swiftly and firmly to stop these actions.”

Speaking immediately before Pedley during the conference, Maureen Testoni, President and CEO of hospital group 340B Health, indicated that 340B covered entities might face even bigger challenges soon.

Testoni said her group understands that some drug manufacturers are developing a proposal to change 340B from a discount to a rebate program. Providers would buy covered outpatient drugs at wholesale acquisition cost and submit invoices to manufacturers for rebates later.

If this were to occur, it would represent a fundamental reconfiguration of 340B.

Testoni said that while the drug manufacturers’ 340B rebate proposal has not been formally announced, 340B Health understand that it is being worked on.

Testoni said some news organizations have reported that forthcoming Trump administration executive orders on drug pricing might address the 340B program. Politico reported last night that orders under discussion include one “aimed at hospitals that receive steep drug discounts under the government’s 340B program because they serve a large number of low-income patients.” The Administration has discussed a number of ways to rein in the 340B program. So far, the only major change has been to cut Medicare Part B reimbursement to hospitals by close to 30 percent. The reimbursement cut is currently being challenged in federal court.

Testoni also said drug pricing bills in Congress include language that could reduce Medicaid payments to covered entities. H.R. 3 and S. 4199 both would require Medicaid managed care organizations and/or their pharmacy benefit managers to reimburse covered outpatient drugs at ingredient cost plus a dispensing fee. That essentially would end providers’ revenues on 340B-purchased drugs billed to Medicaid (most states already require acquisition cost billing for 340B drugs in Medicaid fee for service).

HRSA Administrator Thomas Engels will be the keynote speaker tomorrow and 340B Report will cover his address to attendees.

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