Halt 340B Fraud or Allow Private Sector Leadership

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The U.S. Department of Health and Human Services is focusing on eliminating fraud and waste, specifically in the 340B drug discount program. Several pharmaceutical companies have asked hospitals to prove the legitimacy of their claims, but the latter has asked the federal government to deny the companies’ request for data, arguing that it could expose them to fraud. The 340B Drug Pricing Integrity and Affordability for Patients Act, recently released as a draft, allows manufacturers to offer either an upfront discount or pay a rebate back to the entity within ten days after receiving claims data, helping to establish greater transparency.

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Tackling Fraud and Waste: US Health Department’s New Priority

The United States Department of Health and Human Services is placing a high priority on rooting out waste and fraudulent activities, especially those related to overpayments and price transparency in hospital and physician services. Among the areas of focus is the fast-growing 340B drug discount program, which has been identified by Senator Cassidy’s report as susceptible to duplicate discounts. Pharmaceutical manufacturers have requested data from qualifying hospitals to verify the legitimacy of their claims, but the association representing these hospitals has petitioned the federal government to prohibit this data collection.

Aim to Reduce 340B Illegal Claims

Biopharmaceutical companies are taking steps to decrease payments for illegal 340B claims by asking 340B facilities to submit de-identified data of their claims. The goal is to prevent these facilities from receiving double discounts from other programs like Medicaid and the Inflation Reduction Act’s Maximum Fair Price. If the government fails to address this issue, it is expected that companies and covered entities will resort to self-regulation by sharing and cross-verifying data to weed out duplicate claims.

The 340B Drug Pricing Integrity and Affordability for Patients Act

A recently released draft of the 340B Drug Pricing Integrity and Affordability for Patients Act would allow manufacturers to either offer an upfront discount or pay a rebate to the entity within ten days of receiving claims data. This act is intended to increase transparency and ensure patients also benefit from the program.

Understanding the 340B Program

The 340B program plays a crucial role in supporting facilities that care for patients who cannot afford treatment. However, the program does not specify who can receive discounted drugs, creating opportunities for misuse. Facilities that qualify for the program are also eligible to receive discounted drugs for Medicaid patients, which could lead to duplicate discounts.

Curbing Duplicate Discounts

Duplicate discounts are not only illegal but also constitute fraud and result in wastage. They also increase costs without necessarily improving patient health. The Government Accountability Office has highlighted recurrent failures to detect these duplicate discounts, pointing to the need for better control mechanisms.

Data Sharing: A Possible Solution

Pharmaceutical companies and health providers already share prescription data, without compromising patient privacy, as part of a standard practice. The CMS could leverage this practice to eliminate fraud and waste in the 340B program. As the program continues to grow by over 20% per year, efforts to enforce transparency and validation, such as those prescribed in the 340B Drug Pricing Integrity and Affordability for Patients Act are necessary to reduce illegal activities and ensure patients receive the help they need.

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