By Karin Rives
Office of Pharmacy Affairs
May 26, 2009 - Jimmy Mitchell and his staff at Office of Pharmacy Affairs (OPA) have reason to celebrate this year.
A few months ago, they received $1.47 million to begin tackling system shortcomings that, most everyone agrees, compromise the integrity of the federal 340B drug discount program, a market estimated at $5 billion annually. It was the first pot of money specifically dedicated to OPA since Congress enacted Section 340B of the Public Health Service Act 17 years ago. The money was included in the fiscal 2009 appropriations bill signed by President Obama and allocated in March to cover the second half of the year.
That initial funding would double to $3 million under the budget the Obama administration has proposed for fiscal 2010, which begins Oct. 1. While miniscule in comparison with the line items awarded larger federal agencies, OPA’s new-found budget will allow the agency to continue to implement database changes that will make it easier to keep information on 340B-covered providers on the OPA Web site accurate and up to date, said Mitchell, OPA’s director.
Some of that information has never been verified, which means manufacturers and other stakeholders who depend on the list run into problems when trying to contact or verify 340B participants. “It needs to be done systematically and at least annually,” Mitchell said. “So we’re developing systems that will enable us to improve the data we collect on covered entities, and to purge the database of inappropriate information.”
Whether any of the funding will be used to update the database of pharmaceutical industry contacts – which also has been criticized for being inaccurate – is unclear.
The agency is also taking steps to conduct price comparisons that may alleviate long-standing concerns within the 340B community that healthcare providers are overcharged for drugs. The OPA’s parent agency, the Health Resources and Services Administration (HRSA), has an intra-agency agreement with the Centers for Medicare and Medicaid Services (CMS), the agency overseeing Medicaid. Under that agreement, HRSA can access pricing data that manufacturers provide CMS.
If the fiscal 2010 funding request is appropriated by Congress, OPA plans to use such pricing data to begin to calculate 340B drug ceiling prices and to compare those each quarter with the selling prices manufacturers and drug wholesalers offer.
The 340B law requires drug companies to give the 14,400-plus hospitals, health clinics, and other covered entities participating in the program discounts of at least 15.1 percent below the manufacturer’s Average Manufacturer Price (AMP) for brand-name drugs, and 11 percent below AMP for generic and prescribed over-the-counter drugs.
OPA also plans to use its proposed 2010 funds to publish guidelines on 340B price calculations, and to evaluate the need for authority to perform audits and to impose civil penalties against program participants that violate the 340B law. The funds may also support audits conducted by public accounting firms.“Going from nothing to something is a huge leap,” Mitchell said. “We plan to be good stewards of this money.”