GAO Takes a Closer Look at 340B Contract Pharmacies in New Report

by Admin | June 29, 2018 3:57 pm


June 29, 2018—Healthcare providers in the 340B drug pricing program pass their savings along to low-income, underinsured patients through drug discounts at their in-house pharmacies or those they contract with, reduced fees at contract pharmacies, or in the form of charity care including free or discounted prescriptions, a new federal report has found.

The June 28 Government Accountability Office (GAO) report[2] focuses mainly on federal oversight of compliance at 340B contract pharmacies and makes recommendations for improvement. It also examines how 340B providers use contract pharmacies to help dispense 340B drugs. The report found that 30 of 55 providers that completed a questionnaire for the report gave discounts to low-income, underinsured patients at some or all of their contract pharmacies. In addition, 13 of the 30 did not charge low-income, underinsured patients administrative fees for 340B drugs dispensed at contract pharmacies and six did not charge dispensing fees.

Some providers that did not provide discounts on 340B drugs at their contract pharmacies “assisted patients with drug costs through other mechanisms,” the GAO said. For example, six of 10 providers that told the GAO in interviews that they did not provide such discounts said “they provide charity care to low-income patients, including free or discounted prescriptions,” the study said. In addition, four providers that reported on the GAO’s questionnaire that they did not offer discounts at contract pharmacies “said they provided patients with discounts on 340B drugs at their in-house pharmacies.”

340B Health, which represents more than 1,300 hospitals and health systems in the 340B program, said in a statement[3] that the new report confirms that “contract pharmacies play an essential role in helping uninsured and low-income patients get needed care, including, but not limited to, prescription drugs.”

The group pointed to findings from its 2017 survey[4] of 340B hospitals that found 87 percent of rural hospitals use their contract pharmacy benefit to maintain operations while large majorities of disproportionate share hospitals use their benefit to support uncompensated care (89 percent) and provide free or discounted drugs to patients (71 percent).

Seven Recommendations to Improve Oversight

Also in the report, the GAO cited areas in the Health Resources and Services Administration’s (HRSA) oversight that “impede its ability to ensure compliance” with contract pharmacy requirements, including ensuring manufacturers are not subject to paying duplicate 340B discounts/Medicaid rebates when patients are enrolled in Medicaid managed care plans. It recommended that HRSA:

In comments attached to the report, HRSA disagreed about the need to require covered entities to register contract pharmacies for each site for which a contract exists. It also rejected GAO’s recommendation that covered entities be required in audit corrective action plans to detail how they identified the full scope of their noncompliance and provide evidence to HRSA that all corrective action has been taken before their audit can be closed.

340B Health expressed concern that some of the GAO’s recommendations “could make [340B] program participation significantly more cumbersome for hospitals without improving transparency or compliance.”

Questionnaire Responses

The GAO sent questionnaires to 55 340B providers – 28 hospitals and 27 federal grantees – to get a picture of the extent to which 340B providers use outside pharmacies to dispense drugs and the nature of those contract pharmacy arrangements. It also examined 30 contracts between 340B providers and pharmacies and 20 HRSA audit files. GAO also interviewed HRSA officials, 10 covered entities, and two third-party administrators. Among GAO’s findings:

According to the report, the actual number of 340B contract pharmacy arrangements—the number of contractual arrangements between contract pharmacies and the sites of a covered entity—is unknown because HRSA does not require a covered entity to register pharmacies with each of its child sites.

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