WASHINGTON -- Health and Human Services Secretary Alex Azar continued his campaign against high drug prices on Monday, calling for more oversight of hospitals that get drug discounts under the federal 340B program because they serve many uninsured and low-income patients.
"By one estimate, discounted purchases under 340B totaled $16 billion in 2016 -- a fourfold increase just since 2009," Azar said at the annual meeting of 340B Health, a trade group for 340B hospitals. "Government programs can grow pretty fast, but they usually don't grow that fast."
"This growth has occurred without any increase in statutory oversight," he continued. "HHS works hard within the powers we have to oversee the program. But a comprehensive system for reporting on the distribution and use of the program's benefits does not exist ... The current nature of 340B is such that it is quite possible for the program's benefits to be diverted to unintended purposes, unrelated to supporting care for low-income patients."
For example, Azar said, "the acquisition of outpatient clinics by 340B entities has meant that a Medicare patient could pay cost-sharing on the full price of a Part B drug administered in their doctor's office, while the doctor's office gets the drug at a large discount that will never be known to the patient, was never intended to support care for that kind of patient, and may not be used to support care for low-income patients at all. Indeed, the discount may be so steep that the patient's cost-sharing is greater than the price their doctor paid for the drug."
He called for two kinds of reforms for the 340B pricing program: "greater transparency surrounding how these discounts are being used, and reforms to reduce the gap between discounted prices and the reimbursement provided, particularly by government programs."
"We believe changes along these lines are essential to the future of the 340B program," Azar added. "Leaving a program as it is, within the rapidly changing context of healthcare, quickly renders it outdated."
Maureen Testoni, 340B Health's interim president and CEO, seemed taken aback by Azar's remarks when she spoke after Azar left the lectern. "I credit the secretary with coming here," she said. "It certainly gives me my marching orders going forward; we have a lot of work to do."
"They came out with their blueprint and they are obviously concerned about an impact the 340B program may be having on the market and how the 340B dollars are being used," Testoni told ľֱ in a meeting with reporters afterward, with a media relations representative present. "Incumbent on us from the provider community to make that clear and educate the administration and members of Congress on how valuable the program is -- the fact that they do so much more uncompensated care than other types of hospitals and see so many more Medicaid patients. We're worried that is getting lost and we really need to make sure we get that out."
"What's not getting as much attention is all this publicly available data on how much uncompensated care 340 B hospitals provide," said Testoni. "[If you compare] how much is being spent on [the 340B] discount compared to how much uncompensated care 340B hospitals provide, it's just a fraction."
Azar's remarks came only a few days after a report from the Government Accountability Office (GAO) faulted the Health Resources and Services Administration (HRSA) for lax oversight of 340B contract pharmacies -- mainly retail and independent pharmacies that 340B hospitals contract with to provide drugs to patients.
The GAO listed three main problems with HRSA's work: lack of data on how many contract pharmacies are participating in the program; weaknesses in the audit process; and lack of specific guidance for the providers involved.
"As currently structured, weaknesses in HRSA's oversight impede its ability to ensure compliance with 340B program requirements at contract pharmacies," the report's authors concluded. "As the 340B program continues to grow, it is essential that HRSA address these shortcomings."
Azar didn't just aim his remarks at 340B hospitals; he also repeated his criticism that pharmaceutical manufacturers weren't taking seriously the administration's call to lower their prices. "The drug companies that recently increased prices will be remembered for creating a tipping point in U.S. drug pricing policy. As you may have recently seen on Twitter, the President's noticed, I've noticed, and, more importantly, the American people have noticed. Change is coming to prescription drug pricing, whether it's painful or not for pharmaceutical companies."
Azar was referring to a tweet from President Trump, which called out Pfizer and other companies for raising their prices. "Pfizer & others should be ashamed that they have raised drug prices for no reason," early Monday afternoon. "They are merely taking advantage of the poor & others unable to defend themselves, while at the same time giving bargain basement prices to other countries in Europe & elsewhere. We will respond!"
At the end of May, Trump predicted that "people will see for the first time ever in this country a major drop in the cost of prescription drugs ... I think we're going to have some big news ... Some of the big drug companies are going to announce voluntary massive drops in prices." No such decreases have yet occurred.