GAO Calls For More HHS Oversight of 340B Program

The Government Accountability Office determined in a recent report that the 340B Drug Discount program needs increased oversight from the HHS.

The report included seven recommendations to the HHS on how to increase compliance for hospitals within the 340B program.

“To have their drugs covered under Medicaid, the 340B program requires drug manufacturers to sell outpatient drugs to covered entities—certain hospitals and clinics—at a discount,” GAO wrote in the report. “These entities are increasingly contracting with pharmacies to dispense 340B drugs. Doing so can make it harder to ensure compliance with 340B rules.”

The report explained that about one-third of the 12,000 covered entities contract with outside pharmacies. They review 30 pharmacy contracts for the report and found that 29 of the covered entities were required to pay a flat fee—ranging from $6 to 15$—for eligible prescriptions filled at the contracted pharmacies.

Additionally, the GAO reviewed 55 340B hospitals and found that only 30 reported providing low-income, uninsured patients with discounts for 340B drugs at some or all of these pharmacies. Of these hospitals, 23 reported that they pass the full 340B discount to these patients—ensuring that they pay less than the 340B discounted price. However, these findings indicate that 25 of the 55 hospitals do not pass savings directly to low income patients.

Furthermore, the GAO said that the HHS’ Health Resources and Services Administration (HRSA) had lapses in oversight of the 340B program. These included incomplete audits of compliance to ensure that hospitals are not receiving duplicate discounts on 340B drugs.

“Manufacturers cannot be required to provide both the 340B discount and a rebate through the Medicaid Drug Rebate Program,” GAO wrote. “However, HRSA only assesses the potential for duplicate discounts in Medicaid fee-for-service and not Medicaid managed care. As a result, it cannot ensure compliance with this requirement for the majority of Medicaid prescriptions.”

Recommendations made by the GAO included requiring 340B hospitals to register their contract pharmacies for each site where a contract exists, issuing guidance to prevent duplicate discounts, and providing more specific guidance regarding oversight of contract pharmacies.

—David Costill

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