A key Senate panel is eying new reporting requirements for 340B hospitals and clinics, in line with the Trump administration's push to shake up the drug discount program that critics accuse hospitals of exploiting for the savings.
The Senate health committee held its third oversight hearing over 340B on Tuesday, where Krista Pedley, the program's top administrator from the Health Resources and Services Administration, told lawmakers they would need to alter the 340B statute in order to give the agency authority to write regulations to define how the savings can be used and how 340B providers calculate the savings they receive through the program.
Senate health committee Chairman Lamar Alexander (R-Tenn.) did not promise any major overhaul of the program, but made it clear he is interested in giving HRSA more oversight authority to decide which patients qualify for the discounts and how hospitals and clinics manage the dollars they receive.
The Senate panel is taking a more cautious tack than House GOP lawmakers, who earlier this year tried to assemble a packet of bills aimed at regulating how providers use 340B. The House effort faded as legislative focus turned to the opioid epidemic, but the proposed bills included a measure to define which patients could qualify for 340B discounts and impose mandatory user fees for hospitals that want to participate in the program.
Big Pharma and hospitals have been lobbying intensely over 340B all year as lawmakers debated freezing or halting the administration's $1.6 billion in cuts to the Medicare Part B payments for 340B providers that went into effect Jan. 1, 2018. Hospitals sued the administration over the rule that launched this new policy, and the case is awaiting a federal appellate court decision.
The administration in its 2019 budget proposal for Congress sought several legislative changes to 340B that track with the legislation the House Energy & Commerce Republicans have planned to introduce.
In the Senate hearing, Pedley repeated the legislative requests from the Trump administration's 2019 budget proposal. HRSA under current law can't write rules to specify how hospitals can spend the savings they get through 340B. The agency wants to clarify how hospitals calculate their total savings through the program, whether they consider only the discount they receive from manufacturers or also include insurer payments for the drugs. She also raised the administration's request to impose a 0.1% user fee on hospitals that acquire the discounts.
Under current law, HRSA is unable to set new standards for the program but does have audit authority. In the past five years, the agency has audited 12 of the 600 drug manufacturers who participate in 340B and 981 out of the 12,871 providers.
Pedley reported that HRSA so far hasn't uncovered non-compliance issues by drugmakers, whose only responsibility is to sell the drugs at the mandatory discount. Hospital audits revealed issues ranging from minor reporting glitches to diversion of the discount to patients who didn't qualify for 340B, Pedley said.
By law, HHS must release a rule that sets the ceiling price for the drugmaker discounts, but the administration has slow-walked the regulation. The latest delay puts the anticipated release date to July of next year. Sen. Elizabeth Warren (D-Mass.) argued that through this delay the administration is undermining transparency needed from pharmaceutical companies.
Pedley defended the delay, saying that the administration needs to consider the ceiling prices in light of the broader strategy to address escalating drug costs.