340B Drug Pricing Program: Drug Companies Are Concerned!

The federal 340B Drug Pricing Program allows qualifying hospitals and clinics that treat low-income and uninsured patients to buy outpatient prescription drugs at a discount of 25 percent to 50 percent. The program is intended to help safety-net health care providers stretch their financial resources to reach more financially vulnerable patients and deliver comprehensive services.

The 340B Drug Pricing Program has spiked in use. It has become more and more popular over the years.

In 2020, there were 8,100 provider sites (including both hospitals and pharmacies), but that number rose to 50,000 by 2020. New data released in August 2022 by the Health Resources and Services Administration suggest discounted purchases under the 340B program reached $44 billion in 2021, about 16% more than in 2020. Drug companies are concerned.

On November 30, 2022, the 340B Drug Pricing Program; Administrative Dispute Resolution Notice of Proposed Rulemaking (NPRM) was published in the Federal Register. Section 340B(d)(3) of the Public Health Service Act requires the establishment of an Administrative Dispute Resolution (ADR) process for certain disputes under the 340B Program. Under the statute, the ADR process is designed to resolve:

  • Claims by covered entities that they have been overcharged for covered outpatient drugs by manufacturers; and
  • Claims by manufacturers, after the manufacturer has conducted an audit of a covered entity, that a covered entity has violated the prohibition on diversion or duplicate discounts.

This NPRM proposes new requirements and more efficient procedures to make the 340B Program’s ADR process more accessible and efficient, including ensuring that ADR panels hearing disputes are comprised of subject matter experts on the 340B Program, and establishing an independent HRSA reconsideration process. The NPRM will be open for public comment through January 30, 2023. Please refer to the Federal Register (PDF – 315 KB) publication for instructions about how to submit comments.

The question is how does the new proposed rule mesh with the Inflation Reduction Act of 2022? If you recall, the Inflation Reduction Act of 2022 (IRA) allows Medicare to negotiate drug rates. It has been suggested that the following 10 medications will be the first 10 negotiated:

Does the IRA and 340B conflict? How can you negotiate prices of a drug if the drug is already discounted?

About kemanuel

Medicare and Medicaid Regulatory Compliance Litigator

Posted on January 18, 2023, in 340B Drug Program, CMS, Federal Government, Federal Law, HHS, Hospitals, Knicole Emanuel, Medicaid, Medicaid Attorney, Medicaid Providers, Medicare, Medicare and Medicaid Provider Audits, Medicare Appeal Process, Medicare Attorney and tagged , , , , , , , . Bookmark the permalink. Leave a comment.

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