Health Reform WK-EDGE Senate bill would increase transparency, accountability related to 340B program discounts
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Monday, February 19, 2018

Senate bill would increase transparency, accountability related to 340B program discounts

By Susan Smith, J.D., M.A.

In an effort to close loopholes in 340B Drug Pricing Program (340B program) and help hold participating hospitals accountable for passing on discounts on prescription drugs to patients, Senator Bill Cassidy, M.D. (R-La), a member of the Senate Finance Committee and the Senate Health, Education, Labor and Pensions Committee, introduced a bill titled the Helping Ensure Low-income Patients have Access to Care and Treatment (HELP ACT). The 340B program requires drug manufacturers to provide discounted drugs to participating hospitals and other providers that serve large numbers of low-income Americans.

The 340B program. The 340B program (see 42 U.S.C. §256b) is based upon pharmaceutical pricing agreements (PPAs) entered into between HHS and certain drug manufacturers. When a drug manufacturer enters into a PPA, the manufacturer agrees to charge 340B covered entities for covered outpatient drugs at prices that do not exceed ceiling prices. The 340B program regulations require manufacturers to calculate the 340B ceiling price quarterly for each covered outpatient drug (including a newly covered outpatient drug on the date it is available for sale) based on quarterly pricing data from CMS. The ceiling price is equal to the average manufacturer price (AMP) from the preceding calendar quarter for the smallest unit of measure, using the Unit Rebate Amount (URA). Section 7102 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) provided for the imposition of civil money penalties (CMPs) on manufacturers that overcharge covered entities. CMPs may not exceed $5,000 for each instance of overcharging (see 340B gets teeth with CMPs, January 5, 2017).

Provisions of the bill. Enrollment in the 340B program has roughly tripled over the past decade, increasing costs in the drug supply chain, Cassidy reported. He noted that in recent years, HHS, the Government Accountability Office, Office of Inspector General, and the Medicare Payment Advisory Commission (MedPAC) "have identified transparency concerns and loopholes in the 340B program that enable hospitals to take advantage of Medicare and Medicaid reimbursement rates and divert resources away from the patients the program is intended to help."

According to Cassidy, the HELP Act would increase transparency and accountability and help ensure these discounts reach patients. Under the provisions of the bill:

  • reporting requirements would be strengthened to prevent abuse and ensure discounts are used efficiently to lower drug costs;
  • a moratorium would be created prohibiting certain hospitals and associated sites of such hospitals from newly enrolling in the 340B program for at least two years; and
  • the HHS Secretary would be required to issue new reporting requirements for current program participants, including establishing 340B claims modifiers and utilization reports.

The moratorium on new enrollments in the 340B program would not apply to critical access hospitals, rural referral centers, sole community hospitals, grantees and PPS-exempt children’s or cancer hospitals. In addition, grantees, rural and critical access hospitals would be exempt from most of the bill’s new reporting requirements.

Legislation: FederalLegislation 340BNews MedicaidNews MedicarePartBNews MedicarePartCNews MedicarePartDNews PharmaServicesNews

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