On Wednesday May 9th, I was floored when the Administration released the Spring 2018 Unified Agenda of Regulatory and Deregulatory Actions, which contained this nugget: by December 2018, HRSA will publish its 340B Omnibus Guidance. Readers of our blog know that, as we predicted, this so-called Mega-Guidance was withdrawn in January 2017 without ever seeing the light of day. Within a day, the Unified Agenda was reposted with references to the so-called 340B Mega-Guidance removed, and HRSA acknowledged that its inclusion in the Unified Agenda was an error. The 340B Guidance remains shelved.  Continue Reading Last Week in 340B: the Revival [not] of the 340B Mega-Guidance, Another Senate Hearing, and the Trump Blueprint to Lower Drug Prices

There are now multiple proposals in the House and Senate for substantive changes to the 340B Drug Discount Program. The odds of a legislative “fix” to 340B are increasing. But independent of congressional action, is CMS signaling that additional changes to 340B may be coming?

The most significant recent change to 340B came courtesy of CMS, not HRSA. Effective January 2018, CMS, relying on its authority over the Medicare Hospital Outpatient Prospective Payment System (OPPS), effectively cut Medicare Part B reimbursement for 340B drugs in the hospital outpatient setting by almost 30%.  Most hospital and ambulatory surgical center reimbursement for Medicare Part B 340B drugs went from the standard ASP plus 6%, down to ASP minus 22%. Accompanying the new OPPS rule, CMS issued Frequently Asked Questions (FAQs), discussing the mandatory use of modifiers when billing 340B drugs under the OPPS.  While the OPPS rule implementing the payment reduction is the subject of ongoing litigation, to date the Medicare Part B payment reduction remains in full force and effect.  Continue Reading Will CMS Drive Further Changes to 340B?

Earlier this month the House Energy and Commerce Committee’s subcommittee on Government Oversight and Investigations held its second hearing on the 340B Drug Discount Program. The hearing followed on the heels of a July 18th hearing in which officials from the Health Resources and Services Administration (HRSA), the Government Accountability Office (GAO), and the Department of Health and Human Services Office of Inspector General (HHS-OIG) testified about the challenges faced in overseeing the 340B Program.

This hearing was called Examining How Covered Entities Utilize the 340B Drug Pricing Program.  Representatives of five different covered entities were asked to address three questions in their testimony:

  • How much do 340B Covered Entities save when purchasing 340B drugs?
  • How are those savings tracked?
  • How are those savings used?

However, it was the follow-up questions from subcommittee and committee members that may indicate where Congress is headed in legislating changes to the 340B Program. Continue Reading Six Key Follow-Up Questions Asked by Congress in 340B Hearing

On July 18, 2017, just days after CMS went public with its proposal to reduce Medicare Part B reimbursement to certain 340B covered entities, Congress held its first hearing on 340B Program Oversight since March 2015.  A common thread ran through the testimony of the three testifying witnesses:  Erin Bliss, Assistant Inspector General with HHS-OIG; Dr. Debra Draper, Director of Health Care at the GAO; and, Captain Krista Pedley, Director of the Office of Pharmacy Affairs at HRSA:  Congress needs to legislatively grant HRSA more administrative authority over the 340B Drug Discount Program.  Continue Reading Witnesses at Congressional Hearing on 340B Urge Congress To Give HRSA Broader Regulatory Authority

Thus far, 2016 has been a relatively quiet year for the 340B program at the federal level.  Neither Congress nor the Health Resource and Service Administration (HRSA) has shown an appetite to take on the issues plaguing the program.  In fact, late last month, the Department of Health and Human Services indicated that the program is likely to remain in its status quo until at least the end of the year.  In its regulatory agenda released May 2015, HRSA stated it will delay the release of its final 340B Program Omnibus Guidance to the end of 2016.  HRSA also indicated it will delay its 340B manufacturer civil monetary penalty rule and proposed administrative dispute resolution rule.

Although HRSA has not provided any further information for the reason of the delay, it does not come as a surprise.  When the D.C. District Court invalidated HRSA’s orphan drug “interpretive” rule in October 2015, we hypothesized that this may call into question HRSA’s willingness to proceed on the Proposed Guidance.  The fact is, a number of the provisions in the Proposed Guidance impose duties in the name of compliance that go beyond statutory requirements, and under the Court’s decision, such provisions may be unenforceable.  This delay may be the first step in HRSA’s decision to eventually pull the Proposed Guidance and spare itself the attacks. Continue Reading Delays in 340B Mega-Guidance and a Recap of the Latest 340B Updates

Last week, under the cover of the impending Thanksgiving Holiday, OIG lobbed another grenade at the 340B Drug Discount Program.  The means of delivery was an OIG Report on Medicare Part B payments for 340B drugs which found:

  • Nearly 1/5 of Medicare Part B drug expenditures in 2013 went towards purchasing 340B drugs, much of those purchases involving cancer drugs.
  • In the aggregate Medicare Part B and its beneficiaries spent $3.5 billion for 340B drug purchases in 2013.
  • Those Medicare Part B payments exceeded 340B ceiling prices by an average of 58% — meaning that in the absence of subceiling agreements, covered entities potentially reaped approximately $1.3 billion in profits on the purchase of those drugs.

OIG went on to propose three different Medicare Part B payment scenarios for 340B drugs.

Continue Reading OIG Proposes Alternative Part B Payment Methodologies for 340B Drugs: Is This the End of 340B As We Know It?

Our recent post on HRSA’s Omnibus Proposed Guidance for the 340B Drug Discount Program (Proposed Guidance) noted that since the DC District Court had yet to rule on the validity of HRSA’s “interpretive” 340B orphan drug rule, it was an open question as to whether certain provisions in the Proposed Guidance would even be enforceable.

One week later, the Court in fact invalidated the orphan drug “interpretive” rule.  The Court’s reasoning may well provide fodder for challenges to the Proposed Guidance if and when it is finalized.  We have to wonder whether, like HRSA’s predecessor Omnibus 340B rule of June 2014, the final 340B Guidance never sees the light of day.  Continue Reading Does Invalidation of 340B Orphan Drug Rule Doom HRSA’s Guidance?

We have now had more than 30 days to digest HRSA’s proposed 340B Drug Pricing Program Omnibus Guidance (“Proposed Guidance”), intended to clarify expectations and provide guidance on key issues in the 340B Program.  There are several weeks remaining in the comment period on the Proposed Guidance, and there has already been much handwringing over some of the specific provisions.  Does HRSA really intend to prohibit the use of 340B drugs to fill discharge prescriptions?   Will HRSA really stand by its position that employees of covered entities do not become eligible to receive 340B drugs solely by being employees? Will HRSA actually limit access to 340B drugs to individuals who meet all of the components of the definition of “patient?”

Given that the D.C. District Court has yet to rule on HRSA’s authority to issue interpretive rules in the pending 340B orphan drug litigation, whether certain provisions in the Proposed Guidance will even be enforceable is an open question.  But before the comment period closes, stakeholders may want to consider some of the clear winners, and just who is the biggest loser, under the Proposed Guidance. Continue Reading The Proposed 340B Guidance:  Who is the Biggest Loser?

The 340B Drug Discount Program has operated for more than 20 years with just a few governing regulations codified in 42 CFR Part 10.  Through the Affordable Care Act (“ACA”), Congress adopted several amendments to the 340B Program.  One of those amendments required the Department of Health and Human Services (“HHS”) to impose a maximum $5000 civil monetary penalty on participating manufacturers for each instance in which the manufacturer knowingly and intentionally charged a participating 340B entity a purchase price for a 340B drug that exceeds the statutory ceiling price.  Congress specifically authorized the Health Resources and Services Administration (“HRSA”) to promulgate regulations implementing this requirement within 180 days of the ACA enactment, i.e. by September 2010.

And in fact, in September 2010 HRSA published an Advance Notice of Rulemaking on this requirement, seeking stakeholder input on the requirement.

Finally, on June 17, 2015, HRSA issued proposed rules to implement that requirement.  What took so long?  HRSA’s commentary to the proposed rules, combined with the recent history of the 340B Program, provide the answers.  These proposed rules may be the first steps, but not the last, in what may be major changes to the 340B Program. Continue Reading HRSA Takes its First Steps on 340B Rules

Last week, new bi-partisan legislation was introduced to increase the number of graduate medical education (GME) slots over the next five years at teaching hospitals and academic medical centers.  If passed, the Resident Physician Shortage Reduction Act of 2015 (S. 1148/H.R. 2124) will create 3,000 additional full time equivalent (FTE) residency slots each year from 2017 through 2021, for a total of 15,000 new residency slots.  Half of the 3,000 slots must be used for a “shortage specialty residency program,” as defined by the Health Resources and Services Administration (HRSA), until the National Health Care Workforce issues a new report on specialty shortages in 2018.

The purpose of the legislation is to guard against the precipitous shortfall of primary care physicians that at least one study is predicting will occur by 2025 – another says 2035 – if there is no increase in residency training slots.  The shortfall is said to be due primarily to changing demographics and the expansion of health care insurance as a result of federal health care reform. Continue Reading Proposed GME Legislation Looks to Increase Residency Slots