An absence of accountability is hindering oversight of the 340B Drug Pricing Program. On that, U.S. lawmakers are pretty much agreed.

But sides are being drawn as to who should be at the focus of that oversight – eligible providers that benefit from the steep discounts drug companies must provide or the drug companies themselves.

That divide was at the fore Tuesday as the Senate Health, Education, Labor and Pensions (HELP) Committee held its third hearing on the subject. The purpose of the hearing was to delve into what new authorities the Health Resources and Services Administration (HRSA) needs to properly oversee the program that's intended to help eligible hospitals and community clinics stretch "scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services."

In his opening remarks, HELP Chairman Lamar Alexander (R-Tenn.) noted the lack of consistent data to show how hospitals and clinics spend the money they save through the drug discount program. "Data is necessary to demonstrate the value of the 340B program," he said, "and Congress cannot evaluate the program, conduct oversight or consider changes to improve the program without more information."

Under the program, which was created in 1992 and then expanded in 2010 as part of the Affordable Care Act, qualifying hospitals and clinics purchase outpatient drugs at an average 50 percent discount and then can charge full price for the drugs. While community clinics are required to reinvest their 340B revenue into care for uninsured or vulnerable patients, hospitals have no restrictions on how they use the money or whether they must pass any of the savings on to patients. And they are not required to report how they use the funds, which last year totaled about $8 billion nationwide. (See BioWorld, March 16, 2018.)

"HRSA has clear authority to determine if hospitals, clinics and drug companies are eligible to participate in the program," Alexander said, but it's unclear if it has the statutory authority to oversee other aspects of the 340B program, such as defining which patients may benefit from it.

Alexander also questioned whether HRSA is correctly using the authorities it does have. He cited a hospital audit in which HRSA unexpectedly required data in line with a draft guidance and the agency's fifth delay of a rule that would provide clarity and transparency on the required discounts and set civil monetary penalties for drug companies that try to game the system.

When it was her turn, Ranking Member Patty Murray (D-Wash.) homed in on what she saw as a lack of oversight of drug companies. "Integrity, transparency, accountability are critical to any program," she said. "I believe we can strengthen the 340B program by increasing accountability for drug companies that currently have very little. And we should focus on them and not on efforts to roll back the 340B program that provides help for patients and families across the country."

She pointed to HRSA's audit history, which focuses more on providers, as an example of the lack of accountability for drug companies. As of April, the agency had audited 981, or about 7.5 percent, of the more than 12,850 covered entities that benefit from the discounts. During the same time, it had audited 12, about 2 percent, of the more than 600 participating drug companies.

Krista Pedley, director of HRSA's Office of Pharmacy Affairs, defended that record, saying the agency takes a risk-based approach to the audits. Drug companies have only one core obligation under 340B and that's to provide the discount, she testified, but the qualifying providers have several requirements.

So far, HRSA has found no compliance problems in any of the drug company audits, but 70 percent of the audits of hospitals and clinics had findings, and 60 percent required the provider to repay the drug company for at least one drug, Pedley said.

Legislative efforts

The HELP hearings are intended to inform the committee as it considers what Congress can do to evaluate the 340B program, measure its performance and ensure that HRSA is conducting proper oversight, Alexander said.

Getting a jump on the Senate efforts, Rep. Doris Matsui (D-CA) introduced a bill in the House last week that she said clarifies the intent of the program, enhances its integrity, and protects and expands 340B to address the opioid crisis. While increasing oversight for drug companies, the bill basically would continue the status quo for participating hospitals.

Supported by the hospital industry, Matsui's bill would require parity between provider and drug manufacturer audits. It also would require HRSA to implement the monetary penalties for noncompliant drug companies and to create a website listing ceiling drug prices for covered outpatient drugs.

The Trump administration has proposed a more ambitious tack to increasing 340B transparency and accountability, with the goal of ensuring the program benefits low-income and uninsured patients. The president's fiscal 2019 budget proposed amending the statute to provide HRSA with explicit general regulatory authority to set clear, enforceable standards of program participation, Pedley told the HELP Committee.

The proposal also would require all covered entities to report on the use of 340B savings, and it would create a 0.1 percent user fee, to be paid by covered entities, that would fund the administration of the program, improve information technology capabilities and enhance oversight activities such as more audits of both providers and drug manufacturers.

None of those fixes take aim at a problem Sen Bill Cassidy (R-La.) raised at Tuesday's hearing. Citing academic studies and quoting from a study by the U.S. Government Accountability Office (GAO), Cassidy said, "There is a financial incentive for hospitals participating in the 340B program to prescribe more drugs or more expensive drugs to Medicare beneficiaries. Unnecessary spending has negative implications, not just for the Medicare program but for the beneficiary who would be financially liable for larger co-payments."

In 2012, the GAO found that the average per beneficiary drug spend at 340B hospitals was $144, compared with $60 at non-340B hospitals, Cassidy said. As a doctor, Cassidy's concern went beyond costs. The more drugs patients take the more likely they are to have complications, he noted.

Medicare partially negated those incentives this year when it adopted a new reimbursement policy for Part B drugs provided by some 340B entities. Instead of reimbursing the drugs at the average sales price (ASP) plus 6 percent as it does for Part B drugs administered by other providers, Medicare is now paying certain 340B entities ASP minus 22.5 percent for the drugs. (See BioWorld, Nov. 3, 2017.)

As she has in the past, Murray used the hearing to blast the administration for the new Medicare policy change, as well as for its delay of the civil monetary penalty rule. "Unfortunately, instead of working in good faith to make this system stronger, President Trump has worked to sabotage it by repeatedly stalling measures to provide accountability and clarity, severely cutting funds to 340B recipients and even suggesting 340B discounts somehow contribute to high drug prices," she said.