The U.S. Government Accountability Office (GAO) released a report that describes (1) the audit findings that Department of Health and Human Services' (HHS) Health Resources and Services Administration (HRSA) issued to address covered entity noncompliance with 340B Drug Pricing Program (340B Program) requirements; and (2) other efforts HRSA uses to help ensure that covered entities comply with 340B Program requirements.
GAO was asked to provide information on HRSA's efforts to oversee covered entities' compliance with 340B Program requirements. Covered entities can realize substantial savings through 340B Program price discounts, enabling them to stretch federal resources to reach more eligible patients and provide more comprehensive services.
GAO reviewed documentation, including relevant federal laws and regulations and HRSA's policies, procedures, and guidance, related to 340B Program oversight. GAO also reviewed HRSA data on the number and type of audit findings made from audits finalized during fiscal years 2012 through 2019 as of September 2020—the latest data available at the time of the audit. GAO also interviewed officials from HRSA, agency contractors, and 340B Program stakeholders.
The 340B Program requires drug manufacturers to sell outpatient drugs at a discount to covered entities—eligible hospitals and other entities participating in the program—in order for their drugs to be covered by Medicaid. Participation in the 340B Program has grown from nearly 9,700 covered entities in 2010 to 12,700 in 2020.
HRSA administers the program and oversees covered entities' compliance with 340B Program requirements through annual audits, among other efforts. If audits identify noncompliance with program requirements, HRSA issues findings to covered entities and requires them to take corrective action to continue participating in the 340B Program.
HRSA officials told GAO that, beginning in fall 2019, the agency started issuing findings only when audit information presents a clear and direct violation of the requirements outlined in the 340B Program statute. HRSA officials explained that guidance, which is used to interpret provisions of the 340B statute for the purposes of promoting program compliance among covered entities, does not provide the agency with appropriate enforcement capability.
For example, HRSA officials reported that there were instances among fiscal year 2019 audits in which the agency did not issue findings for a failure to comply with guidance related to contract pharmacies in part because the 340B statute does not address contract pharmacy use and, therefore, there may not have been a clear statutory violation.
In addition to audits, HRSA provides education to covered entities about 340B Program requirements and has implemented other efforts to identify noncompliance. For example, HRSA requires all covered entities to recertify their eligibility to participate in the 340B Program annually (e.g., self-attesting to compliance); and a self-disclosure process through which covered entities can disclose and correct self-identified instances of noncompliance.
GAO provided a draft of this report to HHS for review. The agency provided written and technical comments on the draft, both of which were incorporated as appropriate.
