Watchdog officials say ambiguity, lack of transparency plagues 340B program

Lawmakers were quick to criticize the Trump administration on Tuesday for failing to implement a new rule that would bring necessary transparency to the 340B program.

Democrats blamed President Trump for failing to hold pharmaceutical companies accountable for refusing to implement a rule that would allow regulators to crack down on manufacturers that didn’t offer discounts. Sen. Patty Murray, D-Wash., said the administration has “sabotaged” the program by repeatedly delaying an Obama-era rule that allows the Health Resources and Services Administration (HRSA) to share drug pricing data with the providers and gives the Office of Inspector General (OIG) the authority to fine manufacturers that knowingly charge a 340B entity more than the ceiling price of a drug.

The OIG hasn’t received any enforcement referrals and doesn’t expect to receive any until the rule is finalized, Ann Maxwell, assistant inspector general for evaluation and inspections at the watchdog agency, told lawmakers during Tuesday’s hearing.

“President Trump seems entirely uninterested in actual oversight or program integrity,” Murray said. The administration delayed the 340B rule for the fifth time last week.

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Slated to take effect in January 2017, the 340B regulation was caught up in Trump’s immediate regulatory freeze. After repeated delays, last week's proposal set an effective date of July 1, 2019. Maxwell said HRSA is working to complete a secure data system that would allow it to share drug prices with providers, but that isn’t likely to be finished until the rule goes into effect. Sharing pricing information with states would require congressional action.

Meanwhile, Debra Draper, Ph.D., director of the healthcare team at the Government Accountability Office (GAO), told the committee there has been long-standing confusion over the purpose of the drug program.

“I think there’s some ambiguity around what is the actual intent of the program,” Draper said during Tuesday’s hearing. “A lot of people think it’s a program for low-income people—and indirectly they may benefit—but that’s not explicitly stated in the intent,” Draper said.

That clarification will “go a long way” in creating guidance and rules for additional transparency, she added.

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Maxwell agreed, noting that her agency has identified a lack of transparency and clarity around program rules as the program’s two foremost challenges.

“[Transparency] has been a fundamental issue in the 340B program almost since its inception,” Maxwell said.

There also appears to be a distinct imbalance when it comes to oversight. While HRSA has audited 200 providers annually since 2015, the agency has audited just 11 drugmakers during the same time period.

The 340B program has seen massive growth over the last year, jumping from 7,806 participating hospitals in 2013 to more than 21,500 in 2017, according to the GAO. Draper told lawmakers the agency plans to issue two more reports this summer, including one that examines HRSA audits of covered entities, as well as what she described as a “cottage industry” of third-party administrators that oversee 340B programs for hospitals.