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  • Washington Highlights

    Senate HELP Committee Holds Third Hearing on 340B Program

    Jason Kleinman, Senior Legislative Analyst, Govt. Relations

    The Senate Health, Education, Labor, and Pensions (HELP) Committee June 19 held the third in a series of hearings on the 340B Drug Pricing Program. The hearing featured Capt. Krista Pedley, PharmD, MS, Director, Office of Pharmacy Affairs, Health Resources and Services Administration (HRSA).

    During his opening statement, Chairman Lamar Alexander (R-Tenn.) noted that savings from the 340B program “are used in many different ways” and highlighted how the program enables Erlanger Health System to deliver prescription drugs to low-income patients at their homes at no cost.

    Sen. Alexander also raised concerns about the data that HRSA collects on the program and what is missing. Referencing previous recommendations from the Office of the Inspector General and Government Accountability Office during the committee’s May 15 hearing [see Washington Highlights, May 18], Alexander questioned whether HRSA needs additional authority to collect data and if HRSA is using its existing authority properly. Specifically, he stated, “On the other hand, HRSA may not be using its clear existing authority. For example, earlier this month HRSA delayed, for the fifth time, a rule to ensure drug companies are properly participating in the 340B Program. Why isn’t HRSA using this existing authority to ensure drug companies are participating properly in the 340B Program?”

    Ranking Member Patty Murray (D-Wash.) reiterated her support for the 340B program, citing that the program “provides critical drug savings to providers who take on the burden of serving our communities with the greatest needs and fewest resources.” She criticized the administration for its repeated attempts to “sabotage” the 340B program by delaying the implementation of the ceiling price and civil monetary penalties (CMP) final rule, cutting Medicare reimbursements to safety-net providers in the outpatient final rule, and by “suggesting 340B discounts somehow contribute to high drug prices.”

    In her testimony, Capt. Pedley highlighted the steps that HRSA has taken to strengthen its program integrity efforts, including the certification and auditing process. Her written testimony notes that HRSA has audited 981 covered entities and 12 drug manufacturers. Additionally, Pedley provided an overview of the President’s fiscal year (FY) 2019 budget proposal, which she states increases transparency and accountability by providing “explicit general regulatory authority in order for the 340B Program to set clear, enforceable standards of program participation, and to require all covered entities to report on the use of the program savings.”

    Sen. Alexander commented that it would be helpful to know how covered entities use their savings, but thought it would be unnecessary to create a narrow definition of how that savings could be used. He asked Capt. Pedley, “Why shouldn’t we require that hospitals and clinics tell us how they’re using their 340B savings so that we can know how the money is being spent?” Pedley noted that the FY 2019 budget proposal would require covered entities to report how they use their savings to HRSA and admitted that “it is a very complex issue and would be a shift in how the program is operated.”

    Several Democrats expressed concern about the lack of parity between the number of covered entity and manufacturer audits and about the recent delay of the ceiling price and CMP rule [see Washington Highlights, June 8]. In response to the delay, Pedley said, “The ceiling price and civil monetary penalties regulation that’s been delayed to July 1, 2019, is an important rule. It has been delayed in order to allow for a more deliberative process in the context of now the broader drug pricing strategy that is being discussed at the department. Therefore, it would be premature to put that rule into effect at this time as there are broader discussions — not only around the 340B program — but on drug pricing in general.”