April 1, 2019— Today is a very good day for safety-net hospitals and the patients in need who rely on them.
After nine long years of delay and preparation, the federal government today launched a new secure website. The site will provide hospitals, clinics, and health centers participating in the 340B drug pricing program with information on the maximum amount – or ceiling price –they can be charged for any drug they buy through the program.
340B requires drug makers to discount the prices they charge to care providers that meet rigorous requirements for eligibility, including demonstrating that they serve large numbers of people living with low incomes. The savings these safety-net providers receive are then invested in serving more patients in need and expanding the type of services they deliver to all patients. 340B hospitals provide 60 percent of the uncompensated care in America even though they represent only 38 percent of acute care hospitals in the country.
For too long, 340B providers have had to operate in the dark, never knowing what the ceiling prices were for the products they were purchasing. Concerns about the potential for overcharging led the Department of Health & Human Services Office of Inspector General (OIG) to investigate. In a series of reports, OIG documented multiple cases of 340B providers who were being charged too much. The agency recommended Congress take action, and lawmakers heeded this advice in 2010 by approving a law that would take two important steps. First, it created a set of civil monetary penalties (i.e., fines) for manufacturers that “knowingly and intentionally” overcharge a 340B provider. Second, the law directed the Health Resources & Services Administration (HRSA) to make drug pricing information available to 340B providers via a secure website.
But implementation and enforcement of the 2010 law took much longer than expected. The Obama administration issued proposed rules in June 2015 but did not issue final rules until January 2017, at the end of the president’s term. When the Trump administration took office, they delayed enforcement of the rule while officials reviewed a series of regulations issued by their predecessors. The government subsequently announced four additional enforcement delays, dragging out the implementation for the better part of a decade.
The multiple delays eventually prompted 340B Health and four other national hospital groups to go to court to force action. While that case was being argued, HHS responded to the pressure by putting the rules into effect on Jan. 1, 2019. HRSA announced it would begin collecting pricing data from manufacturers in the first quarter of the year and reviewing the accuracy of those data. HRSA announced it would use the information it collected and reviewed to launch the ceiling price website on April 1.
The effective advocacy of our nation’s safety-net hospitals and the bipartisan support of members of Congress brought us today’s positive development, and continued diligence is necessary. Like any new venture, the ceiling price website is bound to experience some bumps in the road ahead. It is incumbent on safety-net providers and manufacturers to work with HRSA to make improvements to the system when they are needed. At 340B Health, our members stand ready to assist.
Today’s website launch and the implementation of overcharging penalties usher in a new era of transparency and accountability for drug companies. As an attorney by training, I like to quote the words of one of my favorite legal champions, the late Supreme Court Justice Louis Brandeis. In his landmark set of essays on good government, Judge Brandeis wrote: “Sunlight is said to be the best of disinfectants.” I think he got it just right.
Maureen Testoni is the President and Chief Executive Officer of 340B Health.