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#SubOversight Examines Oversight Challenges of 340B Program



WASHINGTON, DC – The Subcommittee on Oversight and Investigations, chaired by Rep. Tim Murphy (R-PA), today held a hearing examining Health Resources and Services Administration’s (HRSA) oversight of the 340B drug pricing program.

Kicking off the hearing, #SubOversight Chairman Murphy stated, “HRSA faces several challenges in conducting oversight of the 340B program, one of which is the lack of reporting requirements in the 340B statute. Participating entities save between 25-50 percent of the average wholesale price for covered outpatient drugs, and according to the HHS Office of Inspector General’s estimates, covered entities saved $6 billion on drug expenditures in Fiscal Year 2016. However, covered entities are not required to report their annual savings through participation in the program, or how they used the money saved.”

Ms. Erin Bliss, Assistant Inspector general, Office of Evaluation and Inspections, Office of Inspector General (OIG), U.S. Department of Health and Human Services, testified that “OIG reviews have explored various aspects of the 340B program, identified potential vulnerabilities, and offered several recommendations to promote program integrity. Some of the weaknesses we have identified have been addressed through legislation or by HRSA directly. However, some long-standing, fundamental vulnerabilities persist, impeding effective program oversight and operations.” Ms. Bliss specifically flagged concerns regarding a lack of transparency in order to ensure accurate payments and uncertainty regarding program rules that has resulted in uneven implementation across the program.

Full committee Chairman Greg Walden (R-OR) questioned the witnesses, asking if HRSA knows how the savings are spent.

Captain Krista M. Pedley, Director, Office of Pharmacy Affairs, HRSA, HHS, answered, “The statute is silent as to how savings are used. Therefore, HRSA does not audit or have access to that information.”

Chairman Walden followed up on that response, asking if HRSA knew if the savings were being passed on to patients who need reduced prices for drugs, Captain Pedley responded saying once again that “the statute is silent in that area, and HRSA does not have that information.”

Ms. Debra Draper, Director, Health Care, Government Accountability Office (GAO), highlighted ongoing work at GAO examining HRSA oversight. This work will look at the extent to which covered entities are using contract pharmacies, what financial arrangements are made with the pharmacies and third-party administrators, and if covered entities and HRSA are compliant with the program’s requirements for contract pharmacies.

For more information on todays hearing, including a background memo, witness testimony, and archived webcast, click here.


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