Good morning and thank you for the opportunity to speak with you all this morning.
As you are well aware, the past year has been quite a rocky road for the 340B Program with
a lot of uncertainty � from the orphan lawsuit, to possible regulations.
We have seen the challenges of the past year as a tremendous opportunity.
We took a hard look at our performance and our priorities, and made some key decisions
about what was most important to us for the future of the 340B Program.
As you know by now, we placed program integrity as our highest priority, and followed through
with dedicated resources and staffing to support that.
HRSA has made great strides in advancing the program forward and enhancing our program
integrity efforts.
While HRSA withdrew its proposed omnibus regulation last year due to the orphan drug court ruling,
we are moving forward in our goal to provide clear policy for all stakeholders.
We are working on drafting regulations where we have explicit authority and guidelines
subject to notice and comment where we do not.
We have explicit regulatory authority for Civil Monetary Penalties (CMPs) for Manufacturers
and Administrative Dispute Resolution (ADR).
The CMPs Notice of Proposed Regulation (NPRM) is expected to publish in Spring 2015 and
will include calculation of the 340B ceiling price.
The ADR NPRM is expected to publish Fall 2015.
Additional policies will be addressed in the 340B omnibus guidelines which we expect to
publish in June 2015, including topics where we do not have rulemaking authority, such
as patient definition, hospital eligibility, contract pharmacies, recertification, covered
outpatient drug, audits, duplicate discounts including Medicaid managed care, manufacturer
limited distribution plans and more.
The guidance will be proposed and have a public comment period.
It is important that all stakeholders review the guidance and provide HRSA with comments
in order for us to assess the impacts on the community.
HRSA made significant progress with the additional $6 million in funding for the 340B Program
included in the FY 2014 Omnibus Appropriations legislation, which has enabled us to strengthen
and build the Program to ensure program integrity.
We were able to develop a broader strategy around program integrity for entities and
manufacturers and focus on improvements to our IT infrastructure and increase our staffing.
We awarded 2 new contracts for IT work and we are now fully staffed at 25.
I would like to focus my presentation today on our progress to date and our priorities
for 2015.
To begin with entity program registration, when an entity applies for participation in
the program, HRSA staff reviews and validates its eligibility based on statutory requirements.
Starting last fall for hospitals, HRSA staff use information provided through automatic
feeds of Medicare Cost Report data from CMS to ensure that the entity meets appropriate
criteria.
This automation allows staff to move away from the manual process we were using so we
can devote more resources to working on the more complex cases.
We also invested in additional staff to conduct regular quarterly eligibility reviews and
to catch any potential compliance issues as early as possible.
We continue to work on the IT infrastructure necessary to integrate other federal IT systems.
We also currently integrate with HRSA�s Electronic Handbooks (EHB) and the Drug Enforcement
Administration.
We are working with others, like CDC and Office of Population Affairs to automatically obtain
eligibility information about their grantees, as this will decrease the possibility of an
error occurring and reduce the staff time needed for manual checks.
The requirement for hospitals to submit hardcopy cost report worksheets has been dramatically
reduced (and completely eliminated in many cases), and several other entity types are
expected to benefit from the integration of additional external data sources in 2015.
In December, we launched a new version of the 340B database to help augment the various
functions of the system to improve stakeholder transparency and utilization.
The database has a completely new look and feel, featuring a simpler interface that modernizes
the user experience.
The database front page more clearly guides the user to appropriate choices, based on
the most common uses of the database itself, and HRSA continues to streamline on-screen
instructions based on feedback from the user community.
HRSA also continues to enhance the Medicaid Exclusion File, which is the primary tool
for preventing duplicate discounts.
Fixed quarterly files were reintroduced in 2014, providing stakeholders with authoritative
information on which entities were using 340B drugs for their Medicaid patients for a given
time period, and we are responding to stakeholder feedback by adding additional fields and releasing
archived files to the start of 2011.
Once a year, all participating covered entities are required to recertify.
Through the annual recertification process, covered entities verify that all eligibility
information is up to date and attest to compliance through an eight part test.
Should a compliance concern come up during this process, HRSA staff follow-up and investigate
in a manner that tracks with other compliance activities, which I will touch upon in a moment.
In addition, should an entity ever discover a compliance issue, HRSA has a standard process
for reporting, known as �self-disclosure,� which may include corrective action and repayment
to affected manufacturers.
This information can be found on our September monthly update.
For those covered entities that are eligible through a HRSA grant, including health centers
and Ryan White grantees, there are now 340B related compliance elements in the site visits
that those entities receive from their granting office.
These elements include, for example, the ability to verify a covered entity maintains auditable
records and policies and procedures to prevent diversion and duplicate discounts.
Some covered entities will be selected for random audits, or targeted audits in the case
of a particular issue.
All HRSA auditors follow a strict protocol.
An entity receives a Final Report, but is granted the opportunity for �notice and
hearing,� by which they can submit one written disagreement
If an entity submits a disagreement, HRSA considers additional points raised, which
may result in adjusted findings.
When an entity disagrees, it is critical that they include documentation supporting any
claims that are contrary to the HRSA findings.
Without appropriate documentation, HRSA is unable to fully assess the source of disagreement
and would likely not overturn adverse findings.
The entity is then issued a Final Report.
If findings were included in the Final Report, the entity is required to submit a Corrective
Action Plan as well as a Public Letter informing manufacturers of the potential need for repayment.
To ensure the transparency of the audit process, HRSA posts a summary of final audit findings,
including the name of the covered entity, on the OPA public website.
Through findings in the audits, HRSA is developing educational tools and resources in order to
inform all 340B stakeholders and improve overall program integrity.
Some examples of the resources and tools include monthly webinars, call center and regular
in person trainings.
The findings of the audits have varied.
Some were minor, requiring basic corrections in the 340B database (i.e., contact or address
information was incorrect).
Other audits found diversion and duplicate discounts of 340B drugs, and those covered
entities have repaid manufacturers.
Also, to date, we have not had to remove any covered entity or contract pharmacy from the
340B Program.
However, for the first time, we just recently child sites from one hospital for failure
to be on the entity�s Medicare cost report and because the entity no longer owned and
operated the child site.
Finally, random audits are selected using a risk stratification methodology, so that
entities with higher risk factors are more likely to be selected for audit.
In terms of audits since 2012, we have conducted 277 on site audits encompassing over 3290
outpatient facilities/sub-grantees and over 8500 contract pharmacy locations.
Many have been finalized and are posted on our website.
Covered entities should be constantly preparing for audit and ensuring their sites are in
compliance.
Some examples of best practices to prepare for audit include working with Apexus, attending
340B University, participating on peer to peer calls, researching the OPA and Apexus
websites for the latest information, and the entity itself conducting an internal audit
or having an outside party conduct an audit.
All of these practices will assist entities in preparing for the audit and would likely
have a better chance at positive outcomes.
We are also actively engaged in manufacturer oversight.
Per the statute, HRSA is required to collect information from manufacturers in order to
verify the accuracy of 340B ceiling prices, and then make ceiling prices available to
covered entities.
We expect to operationalize the system to provide prices by the end of FY 15.
This will also include spot checks of sales transactions.
We will be using analysis of these sales transactions as an early warning system to conduct proactive
analysis and trending of pricing data to assess manufacturer compliance.
HRSA is also required to establish procedures for refunds and credits to covered entities
� we plan to address this in our upcoming proposed guidance.
Finally, as mentioned earlier, we will be publishing an NPRM related to civil monetary
penalties for manufacturers who do not abide by the law.
These penalties would be levied when a manufacturer knowingly and intentionally charges covered
entities more than the statutorily mandated ceiling price.
Our expected timeline for issuing the NPRM is Spring 2015.
HRSA also has statutory authority to audit manufacturers.
We review and follow up on all allegations brought to our attention regarding manufacturer
compliance; particularly that manufacturers are not charging covered entities at or below
the 340B ceiling prices, and ensuring that manufacturers are not discriminating against
340B entities.
An audit of a manufacturer is currently in process in partnership with the OIG and we
hope to have more information on the outcome soon.
We are developing a protocol to move forward on additional manufacturer audits to be conducted
in FY 15.
As we are gaining more information about compliance, it is critical to be able to track this information
and put it to use.
Therefore, we are developing a new IT system that will track information related to each
covered entity.
This internal system will link to our current Through our contracted prime vendor program,
we have additional information on purchase and sales data that they make available to
us.
This new system will be able to access this information regularly and mine the data to
create an �early warning system� to flag covered entities that may be at risk for noncompliance
We have also ramped up our activities regarding our communication and outreach with stakeholders
to relay the latest information about the program.
For example, we publish monthly updates on our website and HRSA now conducts webinars
on hot topics to complement the work of the peer to peer program and 340B University.
I encourage you to use the vast array of resources available to you to stay on top of 340B compliance.
The 340B contracted Prime Vendor Program managed by Apexus should be the first stop when you
need answers to your questions � whether it is through their call center or by attending
340B University.
You can get accurate and trusted information as we work with them closely on FAQs and education
materials so the right information is delivered.
I started today by saying that we took the challenges of the past year to regroup, refocus
and pour our energies into improving the integrity of the 340B Program.
But while HRSA has regained some clarity on its path forward, I know that some uncertainty
remains in the stakeholder community.
I would urge you all to take this opportunity to look at your priorities for the 340B Program,
and develop innovative strategies to achieve those priorities.
As you know, there is a lot of activity and information regarding how the program should
and should not focus moving forward.
We are here to work with you to ensure that your implementation of the Program complies
with the statute and meets Congressional intent.
But you all have work to do to come together as a community around this Program and find
common ground by which the program can move forward and make improvements in the years
to come.