As I talk with different parts of the 340B community about our new efforts around program integrity, I’m often asked about our oversight of manufacturers. While the work has not received as much attention, manufacturer compliance is a critical component of our program integrity strategy. Manufacturers only have one statutory obligation: to provide covered outpatient drugs to participating covered entities at no greater than the 340B ceiling price. Due to the various federal pricing programs that interact with 340B, we have found a relatively low level of risk for systematic non-compliance. Nonetheless, we operate a multi-faceted oversight effort to prevent and correct any pricing discrepancies.
In order to calculate the ceiling price, HRSA receives pricing information from the Centers for Medicare and Medicaid Services (CMS), including the quarterly Average Manufacturer’s Price (AMP) and the Unit Rebate Amount (URA). It is in the manufacturer’s best interest to ensure that they are appropriately reporting AMP and URA to CMS, as well as providing the 340B ceiling price to 340B covered entities. Inaccuracies in any of this pricing information will negatively impact other drug pricing programs, such as Medicaid or Veterans Affairs programs. Further, misreporting pricing data to CMS could lead to state and federal False Claims Act liability, which has the potential to carry triple damages and other significant monetary penalties.
With the complexity of pricing calculations, discrepancies can and do occur. HRSA carefully reviews all discrepancies brought to our attention. In cases in which the 340B ceiling price appears to have been violated, covered entities are provided details necessary to settle any discrepancy with the manufacturer directly. Fortunately, covered entities and manufacturers are often able to work together in good faith to correct any pricing miscalculations. If a covered entity has been overcharged, HRSA requires information pertaining to refunds and credits to be publically posted on the HRSA Office of Pharmacy Affairs website. In some cases, discrepancies raise compliance questions, and HRSA pursues the issue accordingly. One such situation led to HRSA’s first audit of a manufacturer, currently ongoing.
To ensure that the oversight process runs as smoothly as possible, HRSA has participated in several initiatives with the goal of improving the accuracy of pricing data. For example, in 2007, HRSA conducted a one-year voluntary pricing pilot project with a group of manufacturers to improve the integrity and transparency of 340B drug prices paid by participating safety-net entities. Today, 100 manufacturers continue to voluntarily report their data to HRSA for this important project.
HRSA’s Prime Vendor Program (PVP) also has a number of programs in place to improve pricing accuracy and transparency, such as providing entities access to 340B ceiling price information for participating manufacturers through a secure website. Technical assistance and education is provided to both entities and manufacturers through the PVP and 340B University. Finally, HRSA ensures manufacturer compliance through development of guidance and policy releases. Guidance provided includes a November 2011 release regarding penny pricing and a May 2012 release, which clarified rules regarding manufacturer non-discrimination in drug shortage situations.
Moving forward, we are continuing to look at ways to enhance compliance oversight of manufacturers. We are in the process of considering new elements to add to those already existing to strengthen our efforts. HRSA appreciates your continued commitment to upholding integrity and compliance with 340B Program requirements. For your reference, the below chart contains links and resources available regarding manufacturer compliance.
Resources for Manufacturers
CDR Krista Pedley, Director, Office of Pharmacy Affairs