The Democratic-controlled Senate Appropriations Committee says it's pleased with HRSA's response to six drug manufacturers’ denials of 340B drug discounts involving contract pharmacy.

Senate Panel Backs Penalizing Drugmakers for their 340B Contract Pharmacy Actions

U.S. Senate appropriators say they’re happy with the federal government’s response to six drug manufacturers’ denials of 340B drug discounts involving contract pharmacy.

The Democratic-controlled Senate Appropriations Committee praised the U.S. Health Resources and Services Administration (HRSA) for its actions against drugmakers in a statement explaining the committee’s $48 billion fiscal 2022 spending bill for the departments of Labor, Health and Human Services, and Education. Chair Patrick Leahy (D-Vt.) released the bill on Monday.

“The committee supports HRSA’s continued use of its authorities and any available measures, including the imposition of civil penalties, where appropriate, to hold those drug manufacturers in violation of the law directly accountable,” the statement says. “The committee directs HRSA to provide a report no later than 120 days after enactment of this act on actions taken to safeguard covered entities’ lawful access to discounted drugs.”

The committee added that it “is also concerned that drug manufacturers may adopt a rebate model that could limit covered entity access to 340B pricing.” It called 340B “a critical lifeline to many of its program participants, including FQHCs, FQHC look-alikes, children’s hospitals, Ryan White HIV/AIDS clinics, and other safety-net hospitals and providers. These covered entities are model stewards of the program and reinvest 340B savings to ‘stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services,’ as Congress intended.”

The bill would provide HRSA’s Office of Pharmacy Affairs, which administers the 340B program, with $17.2 million this fiscal year. That’s $7 million more than last year’s level and the same amount that the Biden administration requested. HRSA said it would use the additional money to process 340B administrative dispute resolution (ADR) petitions, to do up to 25 more covered entity and five more manufacturer audits per year (boosting to the totals to 225 and 10, respectively), and to hire the equivalent of two more full-time staffers.

The Senate committee’s explanatory statement is silent on HRSA’s longstanding request for general rulemaking authority over the 340B program. It also is silent on the Biden administration’s request to let HRSA audit 340B covered entities “to determine how net income from purchases under [340B] are used by the covered entity.”

The Biden administration did not ask Congress for a 0.1% user fee on 340B purchases to help support OPA this fiscal year, something past administrations sought. The idea has been panned by 340B provider groups and the concept has not gained traction from either political party. 

House Committee’s Bill

The House Appropriations Committee released its Labor-HHS-Education spending bill for fiscal 2022 in July. It too would give OPA $17.2 million.

The House committee report that accompanied its bill directs the U.S. Government Accountability Office (GAO) to update its pivotal 2011 report on the 340B program’s performance. That report, required by the Affordable Care Act, concluded that HRSA’s oversight was “inadequate to provide reasonable assurance that covered entities and drug manufacturers are in compliance with program requirements—such as, entities’ transfer of drugs purchased at 340B prices only to eligible patients, and manufacturers’ sale of drugs to covered entities at or below the 340B price.”

HRSA implemented three of the 2011 GAO report’s five recommendations (regarding covered entity audits, guidance for cases in which distribution of drugs is restricted, and reviews of manufacturers’ plans to restrict distribution of drugs at 340B prices). The House committee’s report directs HRSA, within 120 days of the appropriations bill’s enactment, to report “on plans to implement the remaining two recommendations, which focus on clarifying eligibility criteria for 340B patients and providers.”

It is unclear if Congress will provide fiscal 2022 funding for HHS by passing a Labor-HHS-Education appropriations bill or by passing one or more continuing resolutions. If it’s the former, you can expect 340B covered entity groups to try remove the requirements to study the patient definition and 340B provider eligibility criteria from the report that goes along with the final appropriations bill.

HRSA, under both Republican and Democratic administrations, proposed a narrower patient definition as well as some restrictions on provider eligibility. However, these proposals were never finalized after significant pushback from 340B provider groups. 

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