Health Reform WK-EDGE GOP leaders believe 340B program growth requires additional oversight
Thursday, June 8, 2017

GOP leaders believe 340B program growth requires additional oversight

By Harold Bishop, J.D.

House Republican leaders have sent a letter to the HHS’ Health Resources and Services Administration (HRSA) regarding the 340B program, which provides outpatient drugs to safety-net hospitals and other providers at a significant discount. The leaders are concerned with the program’s rapid growth without additional and proportional oversight. According to the letter, 340B drug sales more than doubled between 2010 and 2015 and expanded by 66 percent between 2013 and 2015 alone. As of 2011, nearly a third of all U.S. hospitals participate in the program. The letter requested audit documents from the last two fiscal years (FY) to assist with the committee oversight of the program.

340B program and ACA expansion. Under the 340B program, manufacturers participating in Medicaid, agree to provide outpatient drugs to covered entities at significantly reduced prices. Eligible health care organizations/covered entities include HRSA-supported health centers and look-alikes, Ryan White clinics and state AIDS Drug Assistance programs, Medicare/Medicaid Disproportionate Share Hospitals, children’s hospitals, and other safety net providers. Section 7101 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) expanded the 340B program to include new types of providers, including free-standing cancer, community, and critical access hospitals.

In their letter, Energy and Commerce Committee Chairman Greg Walden (R-Ore.), Oversight and Investigations Subcommittee Chairman Tim Murphy (R-Pa.), and Health Subcommittee Chairman Michael C. Burgess, M.D. (R-Tex.) cited multiple concerns with the program, including:

  • HRSA does not track how much covered entities make through the 340B program, nor how they use program savings;
  • uninsured and underinsured patients at 340B hospitals often pay full price for a drug while hospital receives the same drug at a severely discounted price;
  • HRSA audits commonly find that covered entities bill for duplicate discounts on the same drug, and divert 340B drugs to ineligible patients;
  • HRSA audits have revealed that covered entities have violated program requirements by reselling or transferring 340B drugs to ineligible patients; and
  • none of the audited entities that received duplicate discounts in FY 2015 were audited in FY 2016.

The leaders conclude that "HRSA’s lack of follow-up audits when it finds violations is troubling, and combined with the high rate of noncompliance, indicates a need for additional oversight of this program."

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