340B Roundup: The Senate and White House Focus on the 340B Program; Manufacturer Oversight and Overcharge Penalties Delayed (Yet Again)

By , Published On: May 23, 2018

The 340B program continues to garner the attention of Congress and the Trump Administration.  In a recent flurry of activity, the Senate Health, Education, Labor and Pensions (HELP) Committee held its second hearing on the 340B program on May 15.  Unlike the first HELP hearing in early April, which focused on stakeholder perspectives on the 340B program, this event brought officials from the Government Accountability Office (GAO) and Health and Human Services (HHS) Office of the Inspector General (OIG) before the committee to discuss their prior and current oversight of the drug discount program.  The Senators in attendance focused their questions on transparency in the program – both in how covered entities use their 340B savings and in whether manufacturers accurate calculate and offer 340B pricing – in addition to program integrity.

The members in attendance also repeatedly asked why the Trump Administration continues to delay implementation of a rule finalized by the Health Resources and Services Administration (HRSA) in early 2017.  On May 7, 2018, HRSA published a notice that the rule, which would give OIG the authority to impose civil monetary penalties (CMPs) on drug manufacturers that fail to offer accurate 340B pricing to covered entities participating in the program, would be further delayed (for the fifth time) to July 1, 2019.  The rule would also formalize the “penny pricing” policy that applies whenever a drug manufacturer is penalized for increasing the price of a drug faster than the rate of inflation.  The OIG representative at the Senate hearing explained that OIG has not investigated any instances of manufacturer overcharging and likely will not until the rule is finalized.

The HELP Committee also asked how the repeated delays in implementation of the CMP rule comported with the Trump Administration’s “Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs.”  The Blueprint, which was released on May 11, describes recent changes to the 340B program, including the reduction in Medicare Part B reimbursement for hospital outpatient facilities.  The Administration also requests public feedback on 340B program topics.  HHS seeks feedback on program growth, program eligibility, and Medicaid rebates.

If you are interested in submitting a comment on the Trump Administration’s blueprint for lowering drug costs, or have any questions regarding recent 340B program activity, please contact Jason Reddish, Michael Glomb, or the Feldesman Tucker attorney with whom you typically work.  The FTLF 340B/Pharmacy Team also conducts intensive two-day trainings on 340B program compliance and operations.  Additional details and information regarding registration for the next session, being held on June 25 and 26 in Washington, D.C., and focusing on 340B contract pharmacy and third-party administrator arrangements can be found here.