Tag Archives: 340B Drug Pricing Program

House Subcommittee Hearing Focuses on HRSA’s Oversight of 340B

by Blair Burnett, Policy Analyst, ACCC

U.S. CapitolThis week, the U.S. House of Representatives Subcommittee on Oversight and Investigations, of the Energy and Commerce Committee, chaired by Rep. Tim Murphy (R-PA), held a hearing titled, “Examining HRSA’s Oversight of the 340B Drug Pricing Program.” Health Resources and Services Administration (HRSA) is the agency within the U.S. Department of Health and Human Services that currently oversees the 340B Drug Pricing Program. The program’s inception in 1992 sought to provide discounted outpatient drugs to “covered entities” (DSH facilities, rural referral centers, freestanding cancer centers, non-profit hospitals, etc.) who provide a certain level of care to Medicaid and low-income Medicare patients, allowing covered entities to stretch scarce federal resources to provide affordable prescription drug coverage to all patients.

The hearing, convened on Tuesday, July 18, addressed how HRSA’s oversight can improve review of eligible healthcare facilities utilizing the program in the face of continued expansion of facilities that qualify. As of October 2016, there are 12,168 covered entities utilizing the 340B Drug Pricing Program, and this number has quadrupled since 2011. The hearing also sought to explore how HRSA can be more transparent with 340B Drug Pricing Program reporting, calling attention to gaps in current data collection efforts.

Witnesses who testified at the hearing included:

  • Krista M. Pedley, PharmD, MS, CDR, USPHS, Director, Office of Pharmacy Affairs, Health Resources and Services Administration, U.S. Department of Health and Human Services;
  • Debbie Draper, Director, Health Care, Government Accountability Office (GAO); and,
  • Erin Bliss, Assistant Inspector General, Office of Evaluation and Inspections, Office of Inspector General (OIG), U.S. Department of Health and Human Services.

Both the office of the GAO and HHS OIG have done significant work with the 340B Drug Pricing Program, and the witness testimony spoke to the recommendations both have made to HRSA. Both offices have also repeatedly reviewed HRSA’s regulatory capabilities with the 340B Drug Pricing Program and stated the need for more robust oversight. Based upon witness testimony and member questioning, key takeaways include:

  • Possible bipartisan legislation efforts that seek to grant HRSA more oversight of the 340B Drug Pricing Program.
  • Increased transparency from HRSA on 340B Drug Pricing Program costs and rules.
    Multiple members called for insight into how covered entities are utilizing any savings accrued from the 340B Drug Pricing Program. Within the current oversight from HRSA, there are no guidelines on how covered entities utilize or report 340B Drug Pricing Program savings.
  • Additional hearings to examine the 340B Drug Pricing Program within the subcommittee bringing in physicians and hospital executives to ask healthcare facilities how they are utilizing savings acquired from the 340B Drug Pricing Program.

Notably, this hearing convened shortly after the July 13 release of the Centers for Medicare & Medicaid Services (CMS) proposed 2018 Outpatient Prospective Payment System (OPPS) rule, which calls for a drastic reduction in Medicare Part B payments for outpatient drugs to all covered entities utilizing the 340B Drug Pricing Program from average sale price (ASP) plus 6 percent to ASP minus 22.5 percent in an effort to reign in the program. Rep. DeGette (D-CO), Rep. Schakowsky (D-IL), and Rep. Pallone (D-NJ) voiced concern over this proposal and called for bipartisan support to make meaningful reforms to the 340B Drug Pricing Program to ensure HRSA oversight is effective in aligning transparency as well as improved facility and overall data audits.

As policymakers continue to shine the light on the 340B program, over the next several weeks ACCC will continue to monitor efforts to reform the program and evaluate the impact the OPPS proposal will have on ACCC membership. Along with other stakeholders and coalition partners, we will be forcefully advocating for policies that are in the best interest of all community-based providers and their patients.


ACCC members can gain an in-depth understanding of how CMS’ proposed CY 2018 Medicare rules will impact oncology by participating in ACCC’s August 9 webinar, “CMS Proposed 2018 OPPS & PFS Rules: What You Need to Know.” Learn more [member log-in required].

Drug Pricing in the Crosshairs

by Amanda Patton, ACCC Communications

Drug pricing reform is in the news again this week as the Medicare Payment Advisory Commission (MedPAC) voted unanimously April 6 in support of the Commission’s multi-part Part B recommendations that include a Drug Value Program (DVP) with elements that align with President Trump’s interest in requiring drug companies to bid for government business.

ACCC17-Cancerscape“Despite Trump’s outreach to industry leaders and declaration of support for reducing drug prices, any attempt at price reform will be hard fought,” Jessica Turgon, MBA, ECG Management Consultants, told attendees last week at the ACCC 43rd Annual Meeting, CANCERSCAPE. The “how” of executing drug pricing reform will be “impressive,” Turgon said. She outlined five possible reform scenarios for lowering U.S. drug costs. The unknown: which reforms will the Administration stick to the most?

  1. Importing cheaper drugs from other countries in an effort to reduce average domestic drug prices. Pro: This might force drug companies to lower prices domestically. Con: It could result in higher drug prices worldwide.
  1. Increasing availability of generic drugs by requiring the FDA to speed up the approval process for generic versions of drugs. There is a similar option being put forward to hamper or make illegal the practice of “pay to delay,” which slows generic drug advancement. In fact, one study found that “pay to delay” has cost U.S. consumers $14 billion by keeping brand name drugs as the sole source product when cheaper, generic versions were available.
  1. Allowing Medicare to negotiate for drug prices using its leverage as the largest healthcare payer to achieve lower drug prices. This would require legislation or possibly execution through the regulatory process. However, the Congressional Budget Office has indicated this option would not have that great of an impact on federal spending, Turgon said.
  1. Increasing the use of value-based drug purchasing, i.e., paying for drugs based on the outcomes they achieved (i.e., treatment effectiveness) and not on a flat fee or other standard pricing approach. If this were integrated into protocols or pathways, it’s not clear how the financial results would be quantified, Turgon noted. However, as last year’s proposed Medicare Part B experiment showed, the impact would be very hard on providers.
  1. Scaling back the scope of the 340B Drug Pricing Program, for example, by revising the definition of a covered entity. The program remains in MedPAC’s crosshairs, Turgon warned. In FY 2013, covered entities saved $3.8 billion on outpatient drugs through the program; the number of 340B covered entity sites grew to 16,500 in 2013, a rise of nearly 8,000 sites from 2008. Turgon’s take-home message for cancer programs: Ask yourselves, “If I had to operate without my 340B program what would my cancer program, hospital, or health system look like?” Would it would likely have a significant impact on your health system overall? Is 340B funding “everything else” [e.g., services that are currently not-reimbursed, such as patient navigation] at your hospital right now?

Add to the mix, MedPAC’s recommendations for reducing spending in Medicare Part B. (Spending has gone up 9% every year since 2009, Turgon noted, which is not sustainable.) Briefly put, MedPAC’s recommendations fall into two track recommendations:

Track 1: Improve the average sales price (ASP) system.

  • Require drug makers to report ASP data and increase penalties for non-compliance.
  • Reduce WAC (wholesale acquisition cost), cut the add-on payment from 6 percent to 3 percent.
  • Require drug makers to give Medicare a rebate when the ASP price for a product exceeds an inflation benchmark.
  • Require the Centers for Medicare & Medicaid Services (CMS) to implement a common billing code for a reference biologic and its biosimilars.

Track 2: Establish a Drug Value Program

For this voluntary program, Medicare would contract with private vendors to negotiate prices for Part B drugs using tools like a formulary. The Drug Value Program vendor would negotiate directly with drug manufacturers. Providers would purchase all DVP products at the price negotiated by their DVP vendor. Medicare would reimburse providers for the DVP-negotiated price AND reimburse DVPs an administrative fee with a shared savings opportunity.

What Cancer Programs Can Do Now

What seems certain is President’s Trump continued interest in drug pricing reform. How (or if) reform is executed remains to be seen. MedPAC serves in an advisory role to Congress on Medicare issues—and whether Congress will consider MedPAC’s recommended changes to Part B is also uncertain. In the face of the many uncertainties surrounding drug pricing reform, cancer programs can still take proactive steps to address the rising cost of drugs, Turgon said. To do so, she suggested that cancer programs:

  • Develop and adhere to clinical pathways and protocols.
  • Determine the availability of evidence-based alternatives that are cheaper and comparable to high-priced drugs, and remove the higher-priced drugs from your formulary or tighten guidelines around use.
  • Deploy clinical pharmacists to educate prescribers about high drug prices.
  • Hold cost-of-care conversations with patients.
  • Reduce waste associated with high-cost drugs.
  • Keep negotiating with GPOs and wholesalers.
  • Identify signs of increases in drug prices as close to real-time as possible to avoid delays in taking action to minimize financial impact.
  • Keep the lowest possible inventory of high-cost drugs.
  • Keep communication lines open with senior administrators so they stay informed of the impact on the drug budget.

Final takeway: “Run your hospital-based cancer program as a private practice and know where your costs are,” Turgon advised.

HRSA Releases 340B Proposed Rule

Health Care ReformBy Maureen Leddy, JD, Policy Coordinator, ACCC

A proposed rule regarding 340B pricing enforcement was published in the Federal Register on June 17. The proposed rule responds to a mandate in the Affordable Care Act, which required the Health Resources and Services Administration (HRSA) to provide for imposition of civil monetary penalties on manufacturers that knowingly and intentionally overcharge 340B-covered entities. The rule also provides a methodology for ceiling price calculation.

While not addressing more controversial aspects of the 340B program, such as patient definition, hospital eligibility criteria, and contract pharmacy arrangements, the rule does provide some important clarifications. Codification of the ceiling price calculation would provide 340B-covered entities with needed clarity in ensuring appropriate pricing. The rule would also impose a civil monetary penalty of up to $5,000 per instance of knowing and intentional overcharge of a covered entity, regardless of whether the order is placed with a manufacturer, wholesaler, authorized distributor or agent.

ACCC continues to closely watch for developments related to 340B, including expected release this summer of HRSA’s “mega-guidance,” anticipated to clarify several issues for which the agency does not believe it has rulemaking authority. HRSA has also indicated that it intends to release another rule on the administrative dispute resolution process in the near future. Stay tuned.