Press Release

GAO Sounds the Alarm on Lax Oversight of Contract Pharmacies Within 340B Program


06.28.18

Nonpartisan Watchdog Makes Several Recommendations


WASHINGTON, DC – A new report by the nonpartisan Government Accountability Office (GAO) is making seven recommendations that the Department of Health and Human Services’ (HHS) Health Resources and Services Administration (HRSA) take additional action to ensure all contract pharmacies are compliant with the 340B Drug Pricing Program (340B Program).

The report, which was requested by the committee, examined contract pharmacies, the outside pharmacies many covered entities under the 340B Program use to dispense drugs and medications to eligible patients. More than 12,000 covered entities participate in the 340B Program today, with approximately one-third of them contracting with these outside pharmacies. The report also presents new findings on the prevalence of contract pharmacies and the distance between covered entities and their contract pharmacies – including some contract pharmacies that are more than a thousand miles from the covered entity with which they contract.

GAO summarized its findings writing, “Thirty of the 55 covered entities GAO reviewed reported providing low-income, uninsured patients discounts on 340B drugs at some or all of their contract pharmacies. Of the 30 covered entities that provided discounts, 23 indicated that they pass on the full 340B discount to patients, resulting in patients paying the 340B price or less for drugs.”

Conversely, 25 of the covered entities GAO reviewed did not report that they provided low-income, uninsured patients discounts on 340B drugs at some or all of their contract pharmacies. This dynamic raises questions about whether some low-income, uninsured patients may face higher drug prices at these contract pharmacies, compared with others.

In flagging weaknesses in HRSA’s oversight of the 340B Program, GAO made seven recommendations to improve their audits. HHS agreed with the majority, but not all, of the recommendations. HRSA did not provide GAO with a timeframe for the agency’s implementation of the recommendations.

“We support the 340B Program because it is critically important in its ability to help many safety net providers stretch resources to help provide care for more patients – which was designed to help patients get outpatient drugs at reduced prices. But with this program’s rapid expansion in recent years, many questions have arisen about the role of the program today,” said Energy and Commerce Committee Chairman Greg Walden (R-OR) and Health Subcommittee Chairman Michael C. Burgess, M.D. (R-TX). “An investigation done by the committee found that HRSA’s oversight has not kept pace with program growth – lacking rigorous oversight, meaningful reporting requirements, and reliable data. Now this new report by the nonpartisan GAO shows that oversight is fundamentally lacking when it comes to important compliance issues for contract pharmacies within the program. It is clear that we must continue to examine how this program is working with the goal of ensuring the program properly enables safety net providers to truly help patients in need.”

In January 2018, the Energy and Commerce Committee released a report reviewing the 340B Program. The report made 12 recommendations for Congressional and agency action that would help improve both the administration of the program and oversight.

To learn more about the committee’s review of the 340B program, visit the following links: #SubHealth’s March 2015 hearing on the program, #SubOversight’s July 2017 hearing on oversight challenges of the program, and #SubOversight’s October 2017 hearing featuring covered entities.

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Press Release