HHS Secretary Alex Azar assured a provider group Monday that the agency is committed to releasing regulation involving setting drug ceiling prices for the 340B drug discount program, despite many delays to implement a rule on the issue.
In a speech to 340B Health, a hospital trade group, Azar said he was disappointed that providers viewed the five delays for implementing the program’s ceiling price rule as a favor to drug companies that opposed the rule.
“That couldn’t be further from the truth,” he said. “We will address this and propose other changes to the 340B program as part of our comprehensive approach to lowering drug prices and reducing out-of-pocket costs.”
Azar didn’t elaborate on when such a regulation may be released.
The Obama administration initially released the finalized 340B drug ceiling price rule on Jan. 5, 2017, before implementation was delayed multiple times. HHS recently said it was unclear whether the regulation would be upheld in court.
Last month, the agency delayed implementation on a current drug price ceiling rule through July 1, 2019, saying it needed more time to consider additional rulemaking to replace the proposal.
“It would be disruptive to require stakeholders to make potentially costly changes to pricing systems and business procedures to comply with a rule that is under further consideration and for which substantive questions have been raised,” HHS said in the rule.
In addition to setting new drug ceiling prices, the delayed rule would allow HHS to levy fines against drug manufacturers that intentionally charge a hospital more than the ceiling price.
Azar also called for adding more transparency to the 340B program. Specifically, he wants providers to better show how they use program savings to offer care.
“We simply do not know the scale of benefits that have been delivered,” Azar said.
Providers use savings from the 340B program to provide ongoing care management for conditions ranging from HIV to diabetes, according to 340B Health.
For instance, Monroe County Hospital in Alabama uses the $1.1 million it draws from the 340B program to fund cancer care for patients with no coverage. The University of Rochester (N.Y.) Medical Center saves more than $4 million and uses the savings to offer patients free medications.
However, Azar said he has concerns about those practices.
“The current nature of 340B is such that it is quite possible for the program’s benefits to be diverted to unintended purposes, unrelated to supporting care for low-income patients,” he said.
Funds could be used to buy outpatient clinics where Medicare patients could face higher cost-sharing, Azar said.
It’s unclear whether HHS has the authority to shed more light on the program without legislation.
Last month, Senate health committee Chairman Lamar Alexander (R-Tenn.) said he is interested in giving the Health Resources and Services Administration more oversight authority to decide which patients qualify for the discounts and how hospitals and clinics manage the dollars they receive.
He made the remarks after Krista Pedley, the program’s top administrator at HRSA, told lawmakers they would need to alter the 340B statute in order to give the agency authority to write regulations to define how the savings can be used and how 340B providers calculate the savings they receive through the program.