Improving health is our policy
Creates new reporting, auditing, oversight and other compliance procedures for HHS relevant to both manufacturers and 340B covered entities, including civil monetary penalties against manufacturers as well as sanctions for covered entities. Directs HHS to implement an administrative dispute resolution process for covered entity as well as manufacturer claims.
2010
HRSA issued a September 20, 2010 Advance Notice of Proposed Rulemaking (ANPRM) and Request for Comments (RFC) on Manufacturer Civil Monetary Penalties as well as a concurrently issued ANPRM and RFC on the Administrative Dispute Resolution Process.
More information about 340B program integrity, including audits, is available on the HRSA website.
2013
On Jan. 31, six Congressional Republicans wrote a letter to HRSA to obtain more information regarding recent audits through which the agency sought to determine whether covered entities remain eligible for the 340(B) Drug Pricing Program.
On Apr. 3, Sen. Charles Grassley (R-IA) issued a press release regarding his investigation of North Carolina hospitals’ participation in the 340B Drug Discount Program, the results of which were detailed in a March 27 letter to HRSA. In the letter, Sen. Grassley also posed questions to the agency relative to 340B program integrity.
On Apr. 5, HRSA updated an FAQ extending the deadline to August 7 for covered entities’ compliance with the stipulations of February 7 guidance regarding the GPO prohibition. The agency notes that participating facilities must attest that they are in compliance with all requirements, including the GPO prohibition, at the time of annual re-certification, which it says it will conduct after the August 7 deadline.
On Apr. 18, Sen. Grassley and Rep. Bill Cassidy (R-LA) wrote a letter to a Georgia hospital regarding its participation in the 340B Program. Also see a related press release.
On May 8, Sen. Charles Grassley (R-IA) posted a letter from HRSA responding to his March 27 letter regarding 340B program integrity issues. In it, HRSA Administrator Mary Wakefield noted that the agency “does not have the authority under 340B legislation to require that covered entities either limit their charges for 340B drugs or direct 340B-derived revenues to any particular activity.” Sen. Grassley posted a statement on his website noting that “Congress needs to know the extent to which the agency believes it lacks the statutory authority to ensure that hospitals use the 340B program to help the uninsured receive affordable prescription drugs.”
On July 12, HRSA posted results for completed audits through that date.
2014
Pursuant to the explanatory statement (see page 113 of Division H here) that accompanied H.R. 3547, the FY 2014 omnibus appropriations package, which the President signed into law on January 17, 2014, the agreement provides $6 million “to implement a new program integrity effort within the 340B Drug Pricing Program.” Specifically, the agreement stipulates that the Director of the 340B Program “brief the House and Senate Appropriations Committees within 45 days of enactment regarding the plans to strengthen program oversight to ensure compliance with existing requirements. Further, the briefing should address the timetable for issuing new regulations that address compliance concerns raised by both the Office of Inspector General and the Government Accountability Office.”
On Feb. 5, the OIG issued a report regarding contract pharmacy arrangements in the 340B Drug Pricing Program. As indicated by the OIG, the report is intended to assess covered entities’ – including community health centers (CHCs) and disproportionate share hospitals (DSH) – oversight of contract pharmacy arrangements “to prevent: (1) diversion of drugs purchased through the 340B Drug Pricing Program to ineligible patients and (2) duplicate discounts through Medicaid.” On February 6, HRSA issued a letter reiterating the program integrity-related dimensions of contract pharmacy oversight and emphasizes that such arrangements are “not common,” although they “present unique compliance challenges.”
On Mar. 6, HRSA’s OPA posted an update regarding manufacturer compliance under the 340B program.
On Mar. 27, HRSA issued a revised Orphan Drug List and Explanation (available here) governing the April 1 – June 30, 2014 period.
On Mar. 31, HRSA posted the FY 2013 340B program audit results.
On Apr. 9, HRSA sent a proposed rule on 340B Drug Pricing Program regulation to the federal Office of Management and Budget (OMB) for regulatory clearance, which as per HHS’ fall 2013 regulatory agenda, is expected to be released in June 2014. It is anticipated that the rule will address key issues such as the definition of an eligible patient, compliance requirements for contract pharmacy arrangements, hospital eligibility criteria and eligibility of off-site facilities.
In a May 9 memo to 340B covered entities, HRSA discusses “several recurring critical areas of non-compliance” with 340B Drug Pricing Program requirements among hospital and non-hospital covered entities – as uncovered in FY 2012 audits – while noting a “sentinel effect” of the audits in promoting compliance. The FY 2012 audits spanned 51 covered entities, with 410 outpatient facilities and sub-grantees and more than 860 contract pharmacy locations.
On June 17, HRSA releasedupdated information pertaining to FY 2013 340B program audit results. HRSA also detailed 340B program staffing investments here during the month of June. On June 18, HRSA asserted that a recent U.S. District Court decision did not invalidate HHS’ interpretation of the ACA provision allowing certain hospitals to receive 340B discounts on orphan drugs used for non-orphan conditions. Separately, on June 23 (and later revised on June 25), HRSA released information regarding recent 340B entity terminations (copy on file with TRP).
On July 23, HRSA issued an interpretive rule in which the agency affirms its previously finalized policy (June 23, 2013) whereby orphan drugs are excluded from the 340B Drug Pricing Program only when used for the orphan-designated indication but not when used for broader uses.
On Aug. 4, HRSA highlighted some of the most frequently asked technical assistance questions and the answers for 340B Program from hospitals and clinics. Additionally HRSA reminded hospitals of requirements for recertification and issued passwords for hospitals on August 6, 2014.
On Aug. 7, HRSA updated its list of entities that agreed to the HRSA Final Report audit. The list is here and information on Corrective Action Plans and Sanctions will be updated once approved by HRSA.
On Aug. 20, Four health clinics and centers were terminated from the 340B Drug Pricing Program (340B Program) and indicated to HRSA that they made purchases when they were not eligible to do so. Entities are encouraged by HRSA to work with affected manufacturers regarding possible repayment.
On Sept. 16, HRSA published a presentation that reviews procedures for auditing 340B covered entities. The agency notes that over the past 3 fiscal years, it has audited 236 covered entities that span 2,475 outpatient facilities and subgrantees and more than 6,600 contract pharmacy sites.
On Sept. 29, HRSA released slides from a September 16 presentation on the procedures for auditing 340B covered entities. The agency notes that over the past 3 fiscal years, it has audited 236 covered entities that span 2,475 outpatient facilities and subgrantees and more than 6,600 contract pharmacy sites.
On Oct. 8, HRSA announced that registration for the 340B Drug Pricing Program was taking place for Health Center Program grantees and look-alikes. The agency noted that any sites must have an ‘active’ status in the health center’s scope of project (Form 5B: Service Sites) in order to complete the site’s registration for the 340B Program. The deadline for registration was Wednesday, October 15, 2014.
On Oct. 29, as part of an ongoing focus on program integrity and with a 340B proposed rule on still pending regulatory clearance at the federal Office of Management and Budget, the Health Resources and Services Administration convened a webinar the 340B Drug Pricing Program during which contractors and program participants discussed covered entity eligibility and provided guidance to assist facilities in being “audit ready.”
On Nov.14, HRSA officially withdrew a proposed rule on the 340B Drug Pricing Program. The rule had been pending regulatory clearance at the OMB since April 2014 and was well beyond its June/July 2014 target date for release. Coinciding with the withdrawal, HRSA’s Office of Pharmacy Affairs posted a brief statement saying that in 2015, the agency plans to issue “proposed guidance for notice and comment that will address key policy issues raised by various stakeholders committed to the integrity of the 340B program.”
On Nov. 20, HRSA’s Office of Pharmacy Affairs convened a webinar on the 340B Drug Pricing Program as part of an ongoing focus on program integrity and with a long-anticipated 340B proposed rule that was recently withdrawn. Contractors and program participants discussed patient eligibility and provided guidance by discussing strategies to achieve compliance with responsibility for care and by providing scenarios of compliance and non-compliance.
On Dec.15, HRSA posted a policy clarification on its oversight role in preventing duplicate discounts – via Medicaid rebates – on outpatient prescription drugs acquired through the 340B Drug Pricing Program. Specifically, HRSA addressed the Medicaid Exclusion File’s current use in stemming duplicate discounts in fee-for-service Medicaid. The agency also alluded to its ongoing efforts to develop future guidance specific the same scenario when 340B drugs are paid through Medicaid managed care organizations (MCOs).
On Dec. 17, HSRA’s Office of Pharmacy Affairs (OPA) 340B Peer-to-Peer Resource Network convened a webinar to continue a discussion from last month’s webinar about the definition of an eligible patient in the 340B program. The focus of the webinar centered on how a covered entity (CE) can retain responsibility of care for a patient when the patient has been referred to an outside provider, like a specialist.
On Dec. 19, HHS released its customary semi-annual regulatory agenda, an inventory of forthcoming rules that the Department plans to release in the “foreseeable future.” Among the broader updates in OMB’s online listing, HRSA lists upcoming proposed rules on: 340B Civil Monetary Penalties for Manufacturers and Ceiling Price Regulations (April 2014 target date); and 340B Administrative Dispute Resolution Process (September 2015 target date).
2015
On Jan. 14, HRSA hosted a webinar as a part of it 340B Audit Readiness Webinar Series. The presentation addressed Patient Eligibility (Clinic and Multi Grantee) audit readiness. Specifically, strategies, priorities and methodology to improve processes, controls and documentation related to a complaint 340B program were discussed.
On Mar. 11, a HRSA-sponsored webinar (archived here) addressed program integrity and compliance best practices in contract pharmacy arrangements. On Mar. 24, HRSA, HHS OIG and GAO testified at a House Energy and Commerce Subcommittee hearing on the 340B Drug Pricing Program.
On Mar. 30-31, HRSA posted updated FY 2014 and FY 2015 340B audit results. On Ap4. 21, HRSA released its March 2015 program integrity update highlighting best practices for its new hospital registration process. On April 24, HRSA released a bulletin noting that it is developing a verification system for “manufacturer-calculated 340B selling prices against HRSA’s calculated 340B ceiling prices”; the agency requests that manufacturers verify on-file database records for each labeler code by May 15 as part of this process.
On May 6, HRSA sent omnibus guidance on the 340B program to OMB for regulatory clearance; the target date for the guidance’s release was changed to September 2015 as of the HHS’ spring 2015 unified regulatory agenda, which was updated in late May.
On June 15, MedPAC issued its June Report to Congress, including some discussion of 340B (see chapter 3 on Part B drug payment issues). On June 16, HRSA released a proposed rule on the calculation of ceiling prices for outpatient drugs through the 340B Drug Pricing Program as well as the application of manufacturer civil monetary penalties in specified instances. Comments are due by Aug. 17.
On July 6, GAO released a report comparing financial characteristics of 340B hospitals and non-340B hospitals and examining Medicare Part B drug spending for all drugs and for oncology drugs compares across such facilities. The report 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.”
On July 17, Sen. Charles Grassley (R-IA) requested a Senate Finance hearing on the 340B Drug Discount Program, citing recent GAO findings.
On Dec. 18, President Obama signed the Consolidated Appropriations Act, 2016, the explanatory statement for which directs HRSA to provide a briefing to update the House and Senate Committees on Appropriations on the status of 340B guidance, the secure website, and covered entities in the 340B drug program.
2016
On Jan. 11, HRSA released a 340B update highlighting some FY 2016 changes in 340B Drug Pricing Program audit procedures, including the agency’s process for public notice of audit findings, acceptance of electronic audit submissions and pending duplicate discount cases.
On Jan. 15, MedPAC approved a 2017 payment update recommendation for hospitals that would:
On Feb. 17, HRSA posted a covered-entity notice regarding the ceiling prices for Amgen’s Epogen (epoetin alfa), Neulasta (pegfilgrastim), Neupogen (filgrastim), Vectibix (panitumumab), Nplate (romiplostim), Prolia (denosumab), and Sensipar (cinacalcet) and for Aranesp (darbepoetin alfa) and Enbrel (etanercept).
On Apr. 8, HRSA issued a revision to an existing 340B related information collection titled, “Enrollment and Re-Certification of Entities in the 340B Drug Pricing Program and Collection of Manufacturer Data to Verify 340B Drug Pricing Program Ceiling Price Calculations.” The revision included an addendum to the Pharmaceutical Pricing Agreement to incorporate the administrative requirement for manufacturer integrity provisions directly addressed in the ACA Act.
On Apr. 18, HRSA announced it would reopen the comment period on a June 2015 proposed rule, “340B Drug Pricing Program Ceiling Price and Manufacturer Civil Monetary Penalties Regulation.” The renewed 30 day comment period ends May 19, 2016.
On May 9, HRSA posted a notice indicating that for specified products, Genentech will issue refunds to 340B covered entities where data shows a difference between the original and recalculated ceiling prices.
On May 19, HRSA released a proposed revision of an information collection that includes “additional background information on the [manufacturer and covered entity] dispute resolution process and clarifies the need and proposed use of information regarding the manufacturer audit guidelines and the informal dispute resolution process.” Comments are due by June 20, 2016.
On May 23, HHS released the Spring 2016 Regulatory Agenda, which states that finalized wide-ranging 340B omnibus guidance now is due for release in December 2016, representing a delay from the previously anticipated September 2016 target date. A proposal that would outline an administrative dispute resolution process to resolve claims raised by covered entities that they have been overcharged for drugs purchased under the 340B Program is targeted for September 2016. A final rule imposing penalties on drug manufacturers who intentionally charge a covered entity a price above the 340B ceiling price is slated for November 2016.
On Aug. 11, HRSA released a proposed rule, establishing and implementing a binding administrative dispute resolution (ADR) process for resolving certain disputes under the 340B Program. The proposed rule lays out the requirements and procedures under the ADR process and will apply to all drug manufacturers and covered entities that participate in the 340B program. Comments are due by Oct. 11.
2019
On April 8, HRSA Office of Pharmacy Affairs (OPA) launched a new secure website that allows providers participating in the 340B Drug Pricing Program to view the maximum allowable price, or ceiling price, that pharmaceutical manufacturers can charge them for drugs purchased under the program.
SEC. 7102. IMPROVEMENTS TO 340B PROGRAM INTEGRITY. (a) INTEGRITY IMPROVEMENTS.
—Subsection (d) of section 340B of the Public Health Service Act (42 U.S.C. 256b) is amended to read as follows: ‘‘(d) IMPROVEMENTS IN PROGRAM INTEGRITY.— ‘‘(1) MANUFACTURER COMPLIANCE.— ‘‘(A) IN GENERAL.—From amounts appropriated under paragraph (4), the Secretary shall provide for improvements in compliance by manufacturers with the requirements of this section in order to prevent overcharges and other violations of the discounted pricing requirements specified in this section. ‘‘(B) IMPROVEMENTS.—The improvements described in subparagraph (A) shall include the following: ‘‘(i) The development of a system to enable the Secretary to verify the accuracy of ceiling prices calculated by manufacturers under subsection (a)(1) and charged to covered entities, which shall include the following: ‘‘(I) Developing and publishing through an appropriate policy or regulatory issuance, precisely defined standards and methodology for the calculation of ceiling prices under such subsection. ‘‘(II) Comparing regularly the ceiling prices calculated by the Secretary with the quarterly pricing data that is reported by manufacturers to the Secretary. ‘‘(III) Performing spot checks of sales transactions by covered entities. ‘‘(IV) Inquiring into the cause of any pricing discrepancies that may be identified and either taking, or requiring manufacturers to take, such corrective action as is appropriate in response to such price discrepancies. ‘‘(ii) The establishment of procedures for manufacturers to issue refunds to covered entities in the event that there is an overcharge by the manufacturers, including the following: ‘‘(I) Providing the Secretary with an explanation of why and how the overcharge occurred, how the refunds will be calculated, and to whom the refunds will be issued. ‘‘(II) Oversight by the Secretary to ensure that the refunds are issued accurately and within a reasonable period of time, both in routine instances of retroactive adjustment to relevant pricing data and exceptional circumstances such as erroneous or intentional overcharging for covered drugs. ‘‘(iii) The provision of access through the Internet website of the Department of Health and Human Services to the applicable ceiling prices for covered drugs as calculated and verified by the Secretary in accordance with this section, in a manner (such as through the use of password protection) that limits such access to covered entities and adequately assures security and protection of privileged pricing data from unauthorized re-disclosure. ‘‘(iv) The development of a mechanism by which— ‘‘(I) rebates and other discounts provided by manufacturers to other purchasers subsequent to the sale of covered drugs to covered entities are reported to the Secretary; and ‘‘(II) appropriate credits and refunds are issued to covered entities if such discounts or rebates have the effect of lowering the applicable ceiling price for the relevant quarter for the drugs involved. ‘‘(v) Selective auditing of manufacturers and wholesalers to ensure the integrity of the drug discount program under this section. ‘‘(vi) The imposition of sanctions in the form of civil monetary penalties, which— ‘‘(I) shall be assessed according to standards established in regulations to be promulgated by the Secretary not later than 180 days after the date of enactment of the Patient Protection and Affordable Care Act; ‘‘(II) shall not exceed $5,000 for each instance of overcharging a covered entity that may have occurred; and ‘‘(III) shall apply to any manufacturer with an agreement under this section that knowingly and intentionally charges a covered entity a price for purchase of a drug that exceeds the maximum applicable price under subsection (a)(1). ‘‘(2) COVERED ENTITY COMPLIANCE.— ‘‘(A) IN GENERAL.—From amounts appropriated under paragraph (4), the Secretary shall provide for improvements in compliance by covered entities with the requirements of this section in order to prevent diversion and violations of the duplicate discount provision and other requirements specified under subsection (a)(5). ‘‘(B) IMPROVEMENTS.—The improvements described in subparagraph (A) shall include the following: ‘‘(i) The development of procedures to enable and require covered entities to regularly update (at least annually) the information on the Internet website of the Department of Health and Human Services relating to this section. ‘‘(ii) The development of a system for the Secretary to verify the accuracy of information regarding covered entities that is listed on the website described in clause (i). ‘‘(iii) The development of more detailed guidance describing methodologies and options available to covered entities for billing covered drugs to State Medicaid agencies in a manner that avoids duplicate discounts pursuant to subsection (a)(5)(A). ‘‘(iv) The establishment of a single, universal, and standardized identification system by which each covered entity site can be identified by manufacturers, distributors, covered entities, and the Secretary for purposes of facilitating the ordering, purchasing, and delivery of covered drugs under this section, including the processing of chargebacks for such drugs. ‘‘(v) The imposition of sanctions, in appropriate cases as determined by the Secretary, additional to those to which covered entities are subject under subsection (a)(5)(E), through one or more of the following actions: ‘‘(I) Where a covered entity knowingly and intentionally violates subsection (a)(5)(B), the covered entity shall be required to pay a monetary penalty to a manufacturer or manufacturers in the form of interest on sums for which the covered entity is found liable under subsection (a)(5)(E), such interest to be compounded monthly and equal to the current short term interest rate as determined by the Federal Reserve for the time period for which the covered entity is liable. ‘‘(II) Where the Secretary determines a violation of subsection (a)(5)(B) was systematic and egregious as well as knowing and intentional, removing the covered entity from the drug discount program under this section and disqualifying the entity from re-entry into such program for a reasonable period of time to be determined by the Secretary. ‘‘(III) Referring matters to appropriate Federal authorities within the Food and Drug Administration, the Office of Inspector General of Department of Health and Human Services, or other Federal agencies for consideration of appropriate action under other Federal statutes, such as the Prescription Drug Marketing Act (21 U.S.C. 353). ‘‘(3) ADMINISTRATIVE DISPUTE RESOLUTION PROCESS.— ‘‘(A) IN GENERAL.—Not later than 180 days after the date of enactment of the Patient Protection and Affordable Care Act, the Secretary shall promulgate regulations to establish and implement an administrative process for the resolution of claims by covered entities that they have been overcharged for drugs purchased under this section, and claims by manufacturers, after the conduct of audits as authorized by subsection (a)(5)(D), of violations of subsections (a)(5)(A) or (a)(5)(B), including appropriate procedures for the provision of remedies and enforcement of determinations made pursuant to such process through mechanisms and sanctions described in paragraphs (1)(B) and (2)(B). ‘‘(B) DEADLINES AND PROCEDURES.—Regulations promulgated by the Secretary under subparagraph (A) shall— ‘‘(i) designate or establish a decision-making official or decision-making body within the Department of Health and Human Services to be responsible for reviewing and finally resolving claims by covered entities that they have been charged prices for covered drugs in excess of the ceiling price described in subsection (a)(1), and claims by manufacturers that violations of subsection (a)(5)(A) or (a)(5)(B) have occurred; ‘‘(ii) establish such deadlines and procedures as may be necessary to ensure that claims shall be resolved fairly, efficiently, and expeditiously; ‘‘(iii) establish procedures by which a covered entity may discover and obtain such information and documents from manufacturers and third parties as may be relevant to demonstrate the merits of a claim that charges for a manufacturer’s product have exceeded the applicable ceiling price under this section, and may submit such documents and information to the administrative official or body responsible for adjudicating such claim; ‘‘(iv) require that a manufacturer conduct an audit of a covered entity pursuant to subsection (a)(5)(D) as a prerequisite to initiating administrative dispute resolution proceedings against a covered entity; ‘‘(v) permit the official or body designated under clause (i), at the request of a manufacturer or manufacturers, to consolidate claims brought by more than one manufacturer against the same covered entity where, in the judgment of such official or body, consolidation is appropriate and consistent with the goals of fairness and economy of resources; and ‘‘(vi) include provisions and procedures to permit multiple covered entities to jointly assert claims of overcharges by the same manufacturer for the same drug or drugs in one administrative proceeding, and permit such claims to be asserted on behalf of covered entities by associations or organizations representing the interests of such covered entities and of which the covered entities are members. ‘‘(C) FINALITY OF ADMINISTRATIVE RESOLUTION.—The administrative resolution of a claim or claims under the regulations promulgated under subparagraph (A) shall be a final agency decision and shall be binding upon the parties involved, unless invalidated by an order of a court of competent jurisdiction. ‘‘(4) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated to carry out this subsection, such sums as may be necessary for fiscal year 2010 and each succeeding fiscal year.’’. (b) CONFORMING AMENDMENTS.—Section 340B(a) of the Public Health Service Act (42 U.S.C. 256b(a)) is amended— (1) in subsection (a)(1), by adding at the end the following: ‘‘Each such agreement shall require that the manufacturer furnish the Secretary with reports, on a quarterly basis, of the price for each covered drug subject to the agreement that, according to the manufacturer, represents the maximum price that covered entities may permissibly be required to pay for the drug (referred to in this section as the ‘ceiling price’), and shall require that the manufacturer offer each covered entity covered drugs for purchase at or below the applicable ceiling price if such drug is made available to any other purchaser at any price.’’; and (2) in the first sentence of subsection (a)(5)(E), as redesignated by section 7101(c), by inserting ‘‘after audit as described in subparagraph (D) and’’ after ‘‘finds,’’
(202) 309-0796
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