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

This week, two of Mintz Levin’s health law attorneys will speak at the American Health Lawyers Association Institute on Medicare and Medicaid Payment Issues in Baltimore, Maryland.

Ellyn Sternfield from our DC office will be speaking about the 340B Drug Pricing Program, a topic she covers often on this blog. Ellyn will be joined by Barbara S. Williams to discuss the 340B Program, and their presentation promises to be informative. They will give an overview of 340B Program requirements, 340B compliance and audit issues (including lessons learned), the aftermath of PhRMA and HHS litigation, expectations from HRSA, and a look at advocacy efforts.

Thomas S. Crane from our Boston and DC offices will discuss overpayments and Stark self-disclosures – topics he writes and speaks on frequently – on a panel with Lisa Ohrin Wilson from CMS and Robert L. Roth. Their session will cover requirements and logistics to disclose and repay overpayments, along with updates on final and proposed regulations, distinctions between OIG and self-referral disclosures, and self-referral disclosure protocol hot topics.

Ellyn and Tom will each bring decades of experience and insight to these discussions. If you are in Baltimore for the AHLA Institute this week, take the opportunity to see them both.

  • The 340B Program: Overview, Compliance, and What to Expect in the Year Ahead
    • Speakers: Ellyn Sternfield & Barbara S. Williams
    • Wednesday, March 25 at 3:30pm & Thursday, March 26 at 11:15am
  • Hot Topics in Overpayments and Stark Self-Disclosures
    • Speakers: Thomas S. Crane, Lisa Ohrin Wilson & Robert L. Roth
    • Thursday, March 26 at 10:00am and 1:45pm

Mother Nature claimed another victim this week.  The U.S. House of Representatives Energy and Commerce Subcommittee on Health was scheduled to hold a hearing on March 5, 2015 – Examining the 340B Drug Pricing Program But with another winter storm aimed at Washington, the hearing was cancelled.  The cancellation came after witnesses had submitted their written testimony to subcommittee staff.

The submissions came from Diana Espinosa, Deputy Administer of HRSA; Debbie Draper, Director of Health Care at the GAO; and Anne Maxwell, Assistant Inspector General for Evaluations and Inspections, HHS-OIG. Several common themes appeared in the HRSA and GAO testimony:

  1. The explosive growth in the 340B program continues. In July 2011 there were 7,000 340B contract pharmacies; as of January 2015 there were 36,000.  In 2005 there were 591 hospitals enrolled as participating covered entities; in 2011 there were 1,673, and as of January 2015 there were 2,170.  HRSA estimates that as of FY 2013, $7.5 billion was spent by covered entities to purchase 340B drugs, representing a savings of $3.8 billion.
  2. In response to the GAO’s 2011 report critical of HRSA’s 340B oversight, HRSA implemented two of GAO’s recommendations: (i) instituting audits of covered entities, and (ii) clarifying non-discrimination policies. But two other GAO recommendations: (i) clarifying hospital eligibility requirements, and (ii) clarifying the definition of a 340B “patient” have yet to be acted on by HRSA.
  3. HRSA planned to address the two unimplemented recommendations in an omnibus regulation that it had intended to issue in June 2014. But confirming prior speculation, the HRSA testimony admits that last summer’s federal court ruling striking HRSA’s orphan drug rule is what caused HRSA to pull back the omnibus regulation and reexamine its regulatory authority.

Continue Reading Mother Nature Axes 340B Hearing, But Written Testimony Survives