In Budget, Trump Seeks 340B Changes Congress Has Taken a Pass on Before

The Trump administration today asked Congress again to require 340B covered entities to report their 340B program savings and uses to the Health Resources and Services Administration (HRSA).

The administration made the request in its proposed federal budget for fiscal year 2021. The budget also again asks Congress to give HRSA general regulatory over the 340B program and to approve a 0.1 percent user fee on 340B program drug sales paid by participating covered entities.

This is the third year that the Trump administration has sought the 340B covered entity reporting requirement. This marks the fifth year that a president has asked for granting of broad regulatory power over 340B for HRSA and the ninth year that a president has asked for the 340B user fee.

Presidential administrations submit budget requests to Congress every year and most of the proposals in them never become law. (Congressional Democrats have declared this budget dead on arrival.) Budgets do, however, offer valuable insight about an administration’s thinking.

The budget seeks $10.2 million in appropriated funds for HRSA’s Office of Pharmacy Affairs (OPA), the same as this fiscal year. It says the user fee would raise an extra $24 million for OPA, based on HRSA’s estimate that total sales in the 340B program were approximately $24 billion in 2018. HRSA says those 340B sales represent about 5 percent of the total U.S. drug market.

In a budget justification document, HRSA said it is “evaluating its audit process and other program integrity efforts as they relate to HRSA’s ability to enforce and require corrective action in a program that is primarily administered by guidance.”

“Guidance documents do not provide HRSA appropriate enforcement capability, which is why HRSA has requested regulatory authority in the President’s Budget each year since FY 2017. General regulatory authority over the 340B Program would allow HHS to set clear enforceable standards of participation on all aspects of 340B program and will help ensure compliance with 340B Program requirements.”

Regarding the request for covered entity reporting requirements, HRSA said, “Currently, hospitals participating in 340B are not required to report on 340B savings or how these savings are used to benefit patient populations. These reforms would help ensure low income and uninsured patients benefit from the Program, as intended, and strengthen program integrity and oversight activities.”

OPA Director Adm. Krista Pedley is expected to elaborate on the 340B program budget request tomorrow in her remarks to 340B Coalition winter conference attendees.

Other highlights from the administration’s budget request:

  • HRSA would get $11.2 billion in fiscal 2021 under the president’s budget, $705 million less than it got this fiscal year. The Department of Health and Human Services would get $96.4 billion, down from $105.8 billion this fiscal year. The administration says its Medicaid reforms would yield net savings of $1.4 trillion over 10 years.

  • The budget assumes that bipartisan legislation to reduce drug prices will yield $135 billion in savings for the federal government over 10 years. The administration, however, offers no plan of its own in the budget nor throws its weight behind any of the bills now before Congress.

  • In response to rural hospital closures, the budget proposes “to allow critical access hospitals to voluntarily convert to rural standalone emergency hospitals and remove the requirement to maintain inpatient beds.” It is not clear how such conversions would affect those hospitals’ eligibility for the 340B program.

  • The budget includes several Medicare payment proposals likely to generate intense opposition from 340B-enrolled and other hospitals. They include reductions in payments to hospitals for uncompensated care; reductions in coverage of hospital bad debts; paying hospital-owned physician offices located off-campus at the same rate as physician offices; and paying hospital outpatient departments located on-campus at the physician office rate for unspecified services.

  • The administration proposes to continue Medicaid disproportionate share hospital allotment reductions.