In a strongly worded letter to the Health Resources and Services Administration (“HRSA”), the American Hospital Association has asked HRSA to abandon the proposed 340B Rebate Model Pilot Program (“the Pilot Program”), or to delay its implementation until issues with the costs of compliance with it could be fixed.
The 340B Drug Pricing Program allows 340B hospitals, which serve a significant share of the nation’s underserved populations, to purchase certain drugs from pharmaceutical manufacturers at discounted prices, allowing them to use the savings to fund patient care. Under the Pilot Program, instead of purchasing the drugs at a discount, hospitals would need to request rebates from the drugmakers using reporting platforms maintained by the drugmakers.
The crux of the AHA’s opposition is that HRSA had vastly underestimated the costs of complying with the Pilot Program. HRSA had estimated that each hospital would need to submit 52 reporting claims during the year and that each reporting claim would take two hours to prepare, for a collective total of more than 1.5 million hours. In contrast, HRSA had estimated that the pharmaceutical manufacturers would need to submit monthly purchase reports requiring an average of two hours each to complete, for a collective total of 216 hours.
The AHA letter stated in bold type:
The anticipated burdens on hospitals far exceed the agency’s estimates, and the more than 1,000 comments that the agency recently received make clear that the pilot program will not be ready for implementation by the end of the year. At the very least, the agency should delay implementation until it can accurately account for these costs and solve the pilot’s many operational challenges.
Based on the responses of its 340B member hospitals, the AHA estimated that each hospital would need to devote, on average, up to two full-time equivalents to manage the Pilot Program, amounting to nearly 11.2 million burden hours. Again in bold type, and quoting from the statute that created the 340B Drug Pricing Program, the AHA letter stated:
Spending these 340B dollars on administrative compliance with a pilot program, rather than using those funds to ‘stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services,’ is manifestly counter to the program’s purpose.
As a result, the AHA asked HRSA to abandon the Pilot Program altogether, or at a minimum delay to by a year or more to “get it right.”
The attorneys at Whatley Kallas represent many 340B hospitals and will continue to monitor developments with the Pilot Program.
The AHA’s letter is linked here.