January 19, 2011—The Office of Pharmacy Affairs’ (OPA) decision that rural hospitals cannot seek 340B drug discounts on purchases between Jan. 1, 2010 and their enrollment in the program contradicts congressional intent and the office’s own past guidance, three hospital groups maintained in a Jan. 11 letter to the Health Resources and Services Administration (HRSA).
Safety Net Hospitals for Pharmaceutical Access (SNHPA), the American Hospital Association (AHA) and the National Rural Health Association (NRHA) sent the letter in response to guidance that OPA published last September on its Web site’s “frequently asked questions” page.
Law’s Effective Date
The section of health care reform that extended 340B eligibility to rural hospitals had an effective date of Jan. 1, 2010 and stated that the program’s expansion “shall apply to drugs purchased on or after” that date. OPA’s guidance, however, stated that a provider’s eligibility begins only when it is fully enrolled, assigned a 340B identification number and listed in the 340B database.
Enrollment for the new categories of 340B entities opened on Aug. 2, seven months after their eligibility began. About 850 hospitals and affiliated sites have been added to the program under health reform, the vast majority of them rural.
Industry Anticipated Payments
The hospital groups said they object to the guidance because it directly conflicts with health reform’s plain language. The drug industry itself recognized Congress’s intent to require retroactive relief, they noted. As the Monitor has previously reported, some major drug manufacturers stated publicly this fall that they were required to provide the retroactive discounts, and at least one, Eli Lilly and Co., set aside $40 million to pay for them. Lilly added that amount back to its budget after learning of OPA’s guidance.
The hospital groups also challenged the guidance on the grounds that it contradicts past HRSA guidance. HRSA allowed new 340B covered entities to receive retroactive discounts both when the program first began in 1992 and again in 2009, when children’s hospitals became eligible for the program. The letter urged HRSA to allow newly-enrolled rural hospitals to obtain retroactive discounts under the same process it established for children’s hospitals.