GAO Reports on 340B Program

The U.S. Government Accountability Office (GAO) recently completed a review of the federal 340B Drug Pricing Program.

gaoThe program, which requires pharmaceutical companies to provide drug discounts to qualified hospitals that serve especially large proportions of low-income patients, has come under fire recently because approximately 40 percent of U.S. hospitals now participate in the program and there have been questions about how hospitals use the program and its drug discounts.

The GAO found that Medicare Part B spending on drugs was much higher at participating 340B hospitals than it was at non-participating hospitals, suggesting that participating hospitals prescribe more drugs and more expensive drugs. It found that

The Centers for Medicare & Medicaid Services (CMS), which administers the Medicare program, uses a statutorily defined formula to pay hospitals for drugs at set rates regardless of hospitals’ costs for acquiring the drugs. Therefore, there is a financial incentive at hospitals participating in the 340B program to prescribe more drugs or more expensive drugs to Medicare beneficiaries.

In the review, GAO recommended that

Congress should consider eliminating the incentive to prescribe more drugs or more expensive drugs than necessary to treat Medicare Part B beneficiaries at 340B hospitals.

Go here to find the GAO report Action Needed to Reduce Financial Incentives to Prescribe 340B Drugs at Participating Hospitals.

A number of groups have criticized GAO’s findings. Learn about their perspective in articles in Healthcare Finance News and Becker’s Hospital Review.

New 340B Rules Expected Soon

The federal Health Resources and Services Administration (HRSA) is expected to release new rules governing its section 340B prescription drug discount pricing program in the near future.

The new rules have long been in development and were in the verge of being published late last year when the agency decided to try another approach to addressing some of the program’s problems, but now, new draft guidelines are being reviewed by the White House Office of Management and Budget (OMB) in anticipation of being published soon in the Federal Register.

law booksThe 340B program, which provides discounts on prescription drugs to hospitals and others that serve large numbers of low-income patients, has encountered controversy in recent years with providers complaining about the lack of transparency in drug manufacturers’ prices and the manufacturers claiming that the program’s benefits are being extended to some patients who do not qualify for the assistance.

The 340B program is a vital resource for most private safety-net hospitals.

To learn more about the program and what might be expected when the new rules are proposed, see this CQ HealthBeat article presented by the Commonwealth Fund.

340B Program Faces Challenges, Change

A federal program that helps selected health care providers obtain discounted drugs for low-income patients they are serving on an outpatient basis may soon face major changes.

The 340B prescription drug pricing program, created more than 20 years ago to help serve low-income individuals, has come under fire in recent years in both the House and the Senate over how qualified, participating providers – disproportionate share hospitals, Federally Qualified Health Centers and their look-alikes, children’s hospitals, critical access hospitals, rural referral centers, and others – use the savings they derive from the program. While there is a general expectation that providers will use those savings to provide additional services to low-income patients, they are required neither to do that nor to discloses how they do use their savings.

Prescription Medication Spilling From an Open Medicine BottleThe House Energy and Commerce Committee held a hearing about the program this week and Congress has asked the Medicare Payment Advisory Commission (MedPAC) to look into the program as well.

In addition, the U.S. Government Accountability Office (GAO) recently published an update on the status of its 2011 recommendations for improving the program, which it found suffered from inadequate oversight by Health Resources and Services Administration (HRSA), lacked adequate criteria for determining patient and provider eligibility, and lacked controls for preventing drugs acquired through the program from being diverted to ineligible patients.

The administration has long been thought to be preparing new guidelines for the 340B program.

Most private safety-net hospitals qualify for the 340B program because of the many low-income patients they serve, so any changes in the program will be of special interest to them.

For a closer look at the issues surrounding the 340B program, see this Roll Call blog report. Find a summary of the GAO report Drug Discount Program: Status of GAO Recommendations to Improve 340B Drug Pricing Program Oversight and a link to the study itself here and a report on some of the testimony provided at the congressional hearing here.

Administration Delays Major 340B Program Regulation

The U.S. Department of Health and Human Services has decided against releasing a long-awaited regulation that was expected to bring sweeping changes to the federal government’s 340B Drug Pricing Program.

The 340B program requires drug manufacturers to sell drugs at a discount to hospitals and other providers that serve especially large proportions of low-income patients.  While providers believe the program enables them to serve more vulnerable patients at a reasonable cost, drug companies have argued that the federal government has expanded the program to include more providers and more drugs than the program originally envisioned.

Prescription Medication Spilling From an Open Medicine BottleA spokesman for the federal Health Resources and Services administration told Bloomberg BNA that the release has been delayed until next year and that the agency

…plans to issue a proposed guidance for notice and comment that will address key policy issues raised by various stakeholders committed to the integrity of the 340B program. HRSA is also planning to issue proposed regulations where the statute provides explicit rulemaking authority, pertaining to civil monetary penalties for manufacturers, calculation of the 340B ceiling price, and administrative dispute resolution.

Because they serve so many low-income patients and typically participate in the 340B program, private safety-net hospitals have a great deal of interest in any attempt by the federal government to alter the scope or regulation of the program.

To learn more about the delay in the anticipated 340B regulation, see this Bloomberg BNA article.

 

340B Program Under the Microscope

Federal officials continue to cast a wary eye on a program that gives discounts on prescription drugs to hospitals that care for large numbers of low-income patients.

The federal 340B Prescription Drug Program requires drug manufacturers to give discounts to eligible providers for the prescriptions they provide patients on an outpatient basis; the hospitals then provide their low-income patients with their prescriptions at a discount or free of charge.  The program has grown a great deal in recent years and now, critics argue that some hospitals that currently receive the discounts should not qualify for them and others are not reinvesting the savings the program generates in care for low-income patients.

Hospitals, meanwhile, note that program savings enable them to fund clinics and otherwise unaffordable programs and services and help them absorb the cost of uncompensated care.

Prescription Medication Spilling From an Open Medicine BottleThe controversy has drawn congressional interest, and the federal agency that administers the program, the Health Resources and Services Administration, was expected to produce new guidelines governing eligibility and the use of prescription drug discounts.  Those guidelines have been delayed in the wake of a federal court ruling involving orphan drug sales that has called into question the agency’s regulation-issuing authority.

Most private safety-net hospitals participate in the program.

Learn more about the 340B Prescription Drug Program, its growth in recent years, the concerns raised about it amid that growth, and what to expect next in this Kaiser Health News article.