The year 2014 looks to be a year of major developments for the 340B Drug Discount Program. We have seen (1) a first in terms of the Health Resources and Services Administration (HRSA) imposing sanctions on audited entities, (2) written arguments in a lawsuit over the rules governing 340B access to orphan drugs, and (3) increased funding for HRSA oversight through the recently-passed Omnibus Budget Act. But it is HRSA\u2019s planned publication of regulations in June that may have the greatest impact on 340B Program operations.<\/p>\n\n\n\n
Recent Audit Report<\/strong><\/p>\n\n\n\n In January 2014, HRSA issued its most recent\u00a0report<\/a>\u00a0on its auditing activity.\u00a0 And for the first time, something substantive appears in the column labeled \u201cSanction.\u201d<\/p>\n\n\n\n As with prior reports, this report indicates that HRSA audited approximately 50 covered entities during the unspecified audit period and identified adverse findings in close to two-thirds of those audits. The most common adverse findings involved either (i) drug diversion, defined as dispensing a 340B drug to a non-patient or in-patient; (ii) duplicate discounts, defined as billing the drug to Medicaid so that the drug was likely invoiced for Medicaid drug rebates; or (iii) database errors in listing of related entities or contract pharmacies.<\/p>\n\n\n\n In the past, the column in the report labeled \u201csanctions\u201d reflected that for adverse audit findings, sanctions were either pending or to be determined. Now, in about half of the instances with adverse findings involving drug diversion, a sanction of \u201crepayment to manufacturer\u201d is listed on the report. There are no penalty assessments, because HRSA has never issued regulations implementing any authority to impose penalties. For the other adverse findings, including findings regarding duplicate discounts, CMS lists the sanctions as \u201cto be determined.\u201d <\/p>\n\n\n\n Orphan Drug Rule Lawsuit<\/strong><\/p>\n\n\n\n Last summer, HRSA issued final rules governing 340B access to orphan drugs.\u00a0 As noted in an earlier\u00a0post<\/a>, the rules that went into effect in October 2013 were meant to implement provisions of the Affordable Care Act that\u00a0excluded orphan drugs from 340B pricing.\u00a0 Under the new rules, the orphan drug exception only applies to limited types of 340B covered entities, and only applies if the drug at issue is being used for its orphan-approved purpose \u2014 meaning that 340B pricing would be available if the drug at issue was being prescribed for another purpose.<\/p>\n\n\n\n The Pharmaceutical Research and Manufacturers of America (PhRMA) filed a lawsuit to enjoin enforcement of the new rule, arguing in part that HRSA was not authorized to issue rules interpreting the legislatively adopted orphan drug exception. Briefing on that case closed January 17th<\/sup>, with the government, PhRMA, and many interested parties on both sides filing written argument. A ruling is expected in the coming months.<\/p>\n\n\n\n Increased Funding for HRSA<\/strong><\/p>\n\n\n\n The\u00a0Omnibus Budget Act<\/a>, signed by President Obama and funding government activities through September 2014, more than doubled the budget for HRSA\u2019s Office of Pharmacy Affairs from $4.4 million to $10.2 million. \u00a0This increase is designated for program integrity efforts.\u00a0 Whether those efforts will focus on increased auditing, establishing the long-delayed dispute resolution process, and\/or other regulatory efforts, remains to be seen.\u00a0 However, even before finalization of the budget, HRSA appears to have been moving towards issuing long-promised regulations.\u00a0<\/p>\n\n\n\n HRSA Regulations<\/strong><\/p>\n\n\n\n <\/strong>In recent years, there has been a constant flow of criticism of 340B Program operations. Drug manufacturers have criticized HRSA for allowing 340B drugs to be used by individuals who have government or private insurance, therefore increasing profits for hospitals and pharmacies. On the other hand, 340B entities have argued that they rely on the promise of proceeds through the 340B Program to expand services to needy populations and argue that manufacturers are needlessly limiting access to 340B drugs and pricing. Congress and the GAO have questioned the dramatic growth in the number 340B covered entities and the use of 340B drugs. A number of critics have focused on HRSA\u2019s lack of regulatory guidance as a contributing factor to the perceived problems.<\/p>\n\n\n\n Covered entities and manufacturers should therefore take note of HRSA\u2019s January 9, 2014\u00a0posting<\/a>\u00a0on its website:\u00a0<\/p>\n\n\n\n HRSA is currently working to formalize existing program guidance through regulation, designed to cover a number of aspects of the 340B Program. The regulation under development will address the definition of an eligible patient, compliance requirements for contract pharmacy arrangements, hospital eligibility criteria, and eligibility of off-site facilities. We expect to publish this proposed regulation, which will be open for public comment, by June 2014<\/strong>. <\/em><\/p><\/blockquote>\n\n\n\n <\/em>The HRSA notice does not address whether HRSA also intends to give itself authority to impose civil monetary penalties for established violations of its regulations. <\/p>\n\n\n\n Clearly 2014 will be a busy one for companies and entities that do business in the 340B arena. We will continue to monitor and post on developments in the 340B Program.<\/p>\n","protected":false},"excerpt":{"rendered":" The year 2014 looks to be a year of major developments for the 340B Drug Discount Program. We have seen (1) a first in terms of the Health Resources and Services Administration (HRSA) imposing sanctions on audited entities, (2) written arguments in a lawsuit over the rules governing 340B access to orphan drugs, and (3) … Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_generate-full-width-content":"","footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/www.healthlawpolicymatters.com\/wp-json\/wp\/v2\/posts\/4448"}],"collection":[{"href":"https:\/\/www.healthlawpolicymatters.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.healthlawpolicymatters.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.healthlawpolicymatters.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.healthlawpolicymatters.com\/wp-json\/wp\/v2\/comments?post=4448"}],"version-history":[{"count":3,"href":"https:\/\/www.healthlawpolicymatters.com\/wp-json\/wp\/v2\/posts\/4448\/revisions"}],"predecessor-version":[{"id":4451,"href":"https:\/\/www.healthlawpolicymatters.com\/wp-json\/wp\/v2\/posts\/4448\/revisions\/4451"}],"wp:attachment":[{"href":"https:\/\/www.healthlawpolicymatters.com\/wp-json\/wp\/v2\/media?parent=4448"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.healthlawpolicymatters.com\/wp-json\/wp\/v2\/categories?post=4448"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.healthlawpolicymatters.com\/wp-json\/wp\/v2\/tags?post=4448"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}