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Highlights

The Health Resources and Services Administration (HRSA), within in the Department of Health and Human Services (HHS), oversees the 340B Drug Pricing Program, through which participating drug manufacturers give certain entities within the health care safety net--known as covered entities--access to discounted prices on outpatient drugs. Covered entities include specified federal grantees and hospitals. The number of covered entity sites has nearly doubled in the past 10 years to over 16,500. The Patient Protection and Affordable Care Act (PPACA) mandated that GAO address questions related to the 340B program. GAO examined: (1) the extent to which covered entities generate 340B revenue, factors that affect revenue generation, and how they use the program; (2) how manufacturers' distribution of drugs at 340B prices affects covered entities' or non-340B providers' access to drugs; and (3) HRSA's oversight of the 340B program. GAO reviewed key laws and guidance, analyzed relevant data, and conducted interviews with 61 340B program stakeholders selected to represent a range of perspectives, including HRSA, 29 covered entities, 10 manufacturers and representatives, and 21 others. Selection of stakeholders was judgmental and thus, responses are not generalizable.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Health and Human Services PPACA contained several important program integrity provisions for the 340B program, and additional steps can also ensure appropriate use of the program. Therefore, the Secretary of HHS should instruct the administrator of HRSA to conduct selective audits of 340B covered entities to deter potential diversion.
Closed - Implemented

Recommendation status is Closed - Implemented.

HRSA began conducting audits of covered entities in fiscal year 2012. The 2012 audits included 45 covered entities that were selected randomly and 6 that were targeted selections--for a total of 51. As of August 31, 2012, HRSA had completed data collection related to all 51 audits and agency officials told us that they were in the process of reviewing these data to identify results.
Department of Health and Human Services PPACA contained several important program integrity provisions for the 340B program, and additional steps can also ensure appropriate use of the program. Therefore, the Secretary of HHS should instruct the administrator of HRSA to finalize new, more specific guidance on the definition of a 340B patient.
Open

Recommendation status is Open.

In January 2017, HRSA withdrew proposed guidance that included further specificity on the definition of 340B patient in response to the new administration's January 20 memorandum directing agencies to withdraw regulations that were pending before the Office of Management and Budget but had not yet been published in the Federal Register. In March 2018, HRSA told GAO that it continues to assess next steps with the Administration on the proposed omnibus guidance, which included the patient definition. In June 2019, HRSA reported that it is still working with the Department to determine next steps for this recommendation.
Department of Health and Human Services PPACA contained several important program integrity provisions for the 340B program, and additional steps can also ensure appropriate use of the program. Therefore, the Secretary of HHS should instruct the administrator of HRSA to further specify its 340B nondiscrimination guidance for cases in which distribution of drugs is restricted.
Closed - Implemented

Recommendation status is Closed - Implemented.

On May 24, 2012, HRSA issued more specific nondiscrimination guidance for cases in which distribution of drugs is restricted.
Department of Health and Human Services PPACA contained several important program integrity provisions for the 340B program, and additional steps can also ensure appropriate use of the program. Therefore, the Secretary of HHS should instruct the administrator of HRSA to issue guidance to further specify the criteria that hospitals that are not publicly owned or operated must meet to be eligible for the 340B program.
Open

Recommendation status is Open.

In January 2017, HRSA withdrew proposed guidance that included additional specificity regarding hospital eligibility in response to the new administration's January 20 memorandum directing agencies to withdraw regulations that were pending before the Office of Management and Budget but had not yet been published in the Federal Register. In March 2018, HRSA reported that it believes it is unable to implement this recommendation without additional legislative authority because the statute does not speak to the issue raised in the recommendation. HRSA also noted that the FY19 President's Budget includes a proposal to provide HRSA comprehensive regulatory authority, and that if this proposal is enacted, it could regulate on hospital eligibility. In June 2019, HRSA reported that it is still unable to implement this recommendation without additional legislative authority, though the President's FY 2020 Budget includes a proposal to provide HRSA with such authority.
Department of Health and Human Services PPACA contained several important program integrity provisions for the 340B program, and additional steps can also ensure appropriate use of the program. Therefore, the Secretary of HHS should instruct the administrator of HRSA to require reviews of manufacturers' plans to restrict distribution of drugs at 340B prices.
Closed - Implemented

Recommendation status is Closed - Implemented.

On November 16, 2012 we had a phone call with HRSA officials in which they told us that while the agency's current practice is to request that manufacturers submit restricted distribution plans for review in advance of implementing them, HRSA may require manufacturers to submit these plans if, after implementation, they receive complaints from covered entities that they are not able to access the drug at the 340B price. HRSA also provided updated guidance on this issue.

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