GAO: 340B hospitals, contract pharmacies need more oversight

David Lim@LimOpinion

June 29, 2018

Dive Brief:

• The Government Accountability Office said Wednesday that HHS’ Health Resources and Services Administration (HRSA) should take new steps to ensure outside pharmacies that 340B participants use to dispense medicines are compliant with the 340B Drug Pricing Program.
• The report, requested by the House Energy & Commerce Committee, found that one-third of covered 340B participants contract with outside pharmacies. GAO found that HRSA’s audits do not properly examine compliance with a program requirement that there cannot be duplicate discounts for drugs prescribed to Medicaid recipients.
• The GAO report is the latest in a slate of scrutiny for the 340B program, which critics say has outgrown its initial purpose. On June 19, the Senate HELP Committee questioned HRSA Director Krista Pedley, who said legislation is needed to grant authority to HRSA to increase oversight of the program.

Dive Insight:

GAO noted that manufacturers cannot be required to give both a 340B discount and an additional rebate through the Medicaid Drug Rebate Program.

“HRSA only assesses the potential for duplicate discounts in Medicaid fee-for-service and not Medicaid managed care. As a result, it cannot ensure compliance with this requirement for the majority of Medicaid prescriptions, which occur under managed care,” GAO wrote.

The watchdog recommended that HRSA examine for duplicative discounts in Medicaid managed care, require more information on how 340B covered entities determine noncompliance issues and require evidence of corrective actions before closing audits.

HHS responded to GAO that while it agrees with some of the recommendations, more resources and regulatory authority are needed to implement others. The additional audit requirements would also impose “significant burden — on covered entities, especially smaller entities who are often resource constrained.”

“Successful implementation would require significant expansion of the Program’s current information technology systems to account for new audit functions as well as strengthened enforcement authority and additional staff to oversee these efforts,” HHS wrote. In addition, disclosing information about fees contract pharmacies collect from covered entities could result in “disruptions in the drug pricing market,” the department said.

340B Health, which represents several hospitals and health systems participating in the 340B program, agreed with HHS that some of the GAO recommendations would be burdensome.

“We are concerned that some of these recommendations could make program participation significantly more cumbersome for hospitals without improving transparency or compliance,” 340B Health said in a statement.

But E&C GOP leaders say the GAO report is the latest example that changes are needed to ensure oversight of the program.

“It is clear that we must continue to examine how this program is working with the goal of ensuring the program properly enables safety net providers to truly help patients in need,” E&C Chairman Greg Walden, R-Ore., and E&C Health Subcommittee Chairman Michael Burgess, R-Texas, said in a statement.

https://www.healthcaredive.com/news/gao-340b-hospitals-contract-pharmacies-need-more-oversight/526867/