New Proposed Guidance on the 340B Drug Discount Program

The 340B drug discount program was created in 1992 with the intention of allowing healthcare organizations that served low income patients to be able to benefit from significantly reduced costs for purchasing outpatient drugs and in turn use those savings to provide for those patients. This program started out quite small but has expanded considerably in recent years based on legislative and regulatory changes. More than one third of hospitals in the United States are now eligible for 340B drug pricing. The rapid expansion of the program has led to increased efforts to review the program to ensure it is serving the intended purpose. Over the summer, the House Energy and Commerce Committee held a hearing to review the program, the Government Accountability Office issued a report on incentives to prescribe in 340B programs, and the Medicare Payment Advisory Commission reviewed the program.

On August 28, the Health Resources and Services Administration (HRSA), which is responsible for administering the program, issued draft guidance that is intended to clarify and in some cases establish rules for participating in the program. The proposed guidance demonstrate some of the administrative difficulty of the program for both participants and the government monitors.

The first proposed change intends to further clarify what constitutes a patient at a 340B eligible entity. HRSA proposes that in order to be a patient served by a 340B entity, the services rendered must not be limited to merely providing drugs. As well, the drugs provided must be a result of the medical services that are provided. In practical terms, this means that a physician employed or contracted by a hospital, for instance, must prescribe the drug in order for it to be provided under 340B prices. The 340B entity cannot merely act as a pharmacy filling orders.

The second issue details some of the accounting requirements for participating in the 340B program. Because of other competing discounts and the ineligibility of certain drugs for 340B pricing, inventory must be closely tracked to ensure that pricing access is for the appropriate drugs. While documentation was always required, these proposed regulations provide more detail.

HRSA also seeks comments on how it could change the definitions of offsite clinics for hospitals for 340B programs, but does not propose any changes. At this point, HRSA does not require that the clinic be within a certain geographic distance or have the kind of ownership and medical record integration that would be required as if the clinic were to bill as provider-based clinic of the hospital for Medicare. HRSA has struggled with defining these outpatient clinics in previous regulatory efforts.

ASH is closely monitoring the 340B program to ensure that it comes as close as possible to the original goal of improving care for disadvantaged patients and is analyzing the proposal to understand how it might affect hematologists and their patients. The Society will consider commenting on these proposed changes and will inform members when the final guidance is released.