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GAO Makes Recommendations for Increased Oversight of 340B Contract Pharmacies

June 29, 2018—The U.S. Government Accountability Office (GAO) June 28 released a report that examines how covered entities that participate in the 340B Drug Pricing Program use contract pharmacies to distribute 340B drugs and how the Health Resources and Services Administration (HRSA) within the Department of Health and Human Services (HHS) oversees these arrangements. The report includes seven recommendations to increase oversight.

The report, which was requested by Energy and Commerce Committee Chair Greg Walden (R-Ore.) and Health Subcommittee Chair Michael Burgess (R-Texas), describes the extent to which covered entities contract with pharmacies to distribute 340B drugs, reviews how selected covered entities provide discounts on 340B drugs dispensed by contract pharmacies to low-income patients, and examines HRSA’s efforts to ensure program compliance at contract pharmacies.

The GAO found that as of July 1, 2017, about one-third of all total covered entities had at least one contract pharmacy arrangement, including about 70% of hospitals that participate in the program. Of the 55 covered entities that GAO surveyed, over half reported that they provide low-income, uninsured patients with discounts on 340B drugs dispensed at contract pharmacies. Many of the remaining covered entities noted that they provide charity care to low-income patients, including free or discounted prescriptions, while others added that they provide patients with discounts on 340B drugs at their in-house pharmacies.

The report notes that HRSA relies on audits to ensure compliance at contract pharmacies and identifies weaknesses in the audit process that impede HRSA’s ability to ensure that contract pharmacies are complying with program requirements. GAO makes several recommendations to address these issues, including that HRSA should issue guidance to covered entities to prevent duplicate discounts under Medicaid managed care and that HRSA should provide more specific guidance on contract pharmacy oversight. The report also recommends that HRSA issue guidance on the length of time that covered entities must look back following an audit to identify the full scope of noncompliance identified during the audit.

HHS noted some concerns with the findings in the report and disagreed with three of the recommendations. Specifically, HHS commented that requiring covered entities to register contract pharmacies for each site of the entity for which a contract exists would be burdensome. Additionally, HHS disagreed with recommendations to require covered entities to specify their methodologies for identifying the full scope of noncompliance identified during their audits as part of their corrective action plans, and to provide evidence that these plans have been successfully implemented prior to HRSA closing audits.

Contact:

Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806
Email: jkleinman@aamc.org

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Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806
Email: jkleinman@aamc.org