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U.S. lawmakers seek HELP for nebulous 340B Drug Discount program

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By Mari Serebrov
Regulatory Editor

The finger pointing over U.S. drug prices continued Tuesday as members of the Senate Health, Education, Labor and Pensions (HELP) Committee once again tried to grope their way through the nebulous fog of the 340B Discount Drug program.

Amid calls for implementation of a long-delayed rule and for more oversight of drug companies and participating hospitals, HELP Chairman Lamar Alexander (R-Tenn.) cautioned, "It would be hard for us to do anything else until we clarify the intent of the program."

Debra Draper, director of the Government Accountability Office's health care team, agreed, saying there's a lot of ambiguity about what 340B is supposed to do.

Congress created the program in 1992, requiring drug companies to provide qualifying hospitals and clinics steep discounts on outpatient drugs and then allowing the providers to use the "savings" they make on the drugs to "stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services." That definition leaves a lot of room for interpretation, Draper said.

While the program is directed at hospitals and clinics that provide services to large numbers of low-income and uninsured patients, there's nothing in the law that requires the providers to pass the drug savings on to low-income patients. There's also little oversight or transparency – on the prices drug companies charge or providers' use of the savings. The oversight issues intensified when the program was expanded under the Affordable Care Act (ACA).

In opening the committee's second hearing on the 340B program, Alexander acknowledged the unveiling last week of President Donald Trump's blueprint to lower prescription drug prices, describing it as "sweeping, comprehensive and sophisticated." It's a plan that appears to put patients and taxpayers first, he said.

Alexander committed to holding a hearing on the president's proposals and said the committee would work with the administration on areas within its jurisdiction to lower drug prices. Noting that HELP already has held three hearings on the high cost of drugs, Alexander asked committee members to focus Tuesday's discussion on 340B oversight.

They did, but drug prices and Democratic jabs at the president's plan still clouded the conversation. In her opening remarks, Ranking Member Patty Murray (D-Wash.) said there have been opportunities to provide more accountability in 340B for both drug companies and providers, but Trump seems uninterested in actual oversight and program integrity.

"He has continued to sabotage efforts to make sure drug companies play by these rules," Murray said. She noted that a few days before Trump vowed to get tough on drug prices, his administration again delayed implementing a rule that calculates ceiling prices for 340B drugs and sets civil penalties for drug companies that overcharge safety-net providers. (See BioWorld Today, Jan. 5, 2017.)

Stemming from new 340B oversight authorities Congress granted the Health Resources and Services Administration (HRSA) in 2010 as part of the ACA, the final rule wasn't rolled out until the final days of the Obama administration in January 2017. Since its original implementation date was March 6, 2017 – after the new administration came in – the rule was held up by the review that's customary for all 11th-hour rules in an administration change.

When the Department of Health and Human Services (HHS) announced last week that it wanted to delay implementing the rule until July 1, 2019, it said it was working on additional or alternative rules that could make the Obama-era rule counterproductive.

"HHS is in the process of developing new comprehensive policies to address the rising costs of prescription drugs," the department said in a Federal Register notice that was a bit of a preview of the president's pricing blueprint. "Those policies will address drug pricing in government programs, such as Medicare Parts B & D, Medicaid and the 340B discount drug program."

Testifying before the HELP Committee Tuesday, Ann Maxwell, HHS acting inspector general for evaluation and inspections, stressed the necessity of a rule to implement the civil penalties on drug companies that overcharge on 340B drugs, as well as the need for transparency on the ceiling prices for those drugs. Currently, hospitals pay what they're charged, she said.

In the absence of regulations, the 340B program has been self-policing. In each of the past two years, HRSA has audited 200 340B providers but only five drug manufacturers.

However, Maxwell acknowledged the importance of clarifying the purpose of the 340B program before going on to rule-making. "Deciding the intent of the program would go a long way to really helping with creating the necessary guidance and regulations that are needed in the program," she said.