AHA Calls for Hospital Access to Prescription Drug Rate Info

October 13, 2016 - The American Hospital Association (AHA) recently urged the Health Resources and Services Administration (HRSA) to grant hospitals in the 340B Drug Pricing Program more access to prescription drug rate information.

In a comment letter on a proposed rule to formally establish an administrative dispute resolution process in the 340B Drug Pricing Program, the AHA commended HRSA for developing a process to dispute prescription drug overcharges, but the industry group recommended several changes, including more access to drug spending data and fair decision-making procedures.

In August, HRSA released a proposed rule that outlined an appeals process for the 340B Drug Pricing Program, which helps eligible hospitals by reducing prescription drug rates for outpatient pharmaceuticals. The proposed rule would allow hospitals to dispute potential prescription drug rate overcharges by manufacturers and, in turn, manufacturers could use the process to resolve ineligible patient participation or duplicate discount allegations with hospitals.

While the AHA expressed support for the administrative dispute resolution process, the group called for more access to 340B drug ceiling price information. Under the proposed rule, hospitals would need to submit drug ceiling price data when starting a dispute, but hospitals currently do not have access to this information.

HRSA acknowledged the inaccessibility of prescription drug rate information in the proposed rule and committed to developing a system to allow hospitals to obtain drug price ceiling data. In the meantime, the agency plans to give the information directly to the administrative dispute resolution panel.

But hospitals need prescription drug rate ceiling data for assessing supply chain costs. Therefore, the AHA advised HRSA to establish a “fast-track process” to allow 340B hospitals and other covered entities to acquire the data, which would ensure that all parties would be on a level playing field during the dispute process.

“Not having access to the ceiling price puts 340B hospitals at a significant disadvantage because the ceiling price is central to proving that the drug manufacturer overcharged for the drug,” the letter stated. “If HRSA is able to give the ADR [administrative dispute resolution] panel the ceiling price information, we do not understand why it would not be able to give 340B hospitals the information.”

The AHA also urged HRSA to hold all stakeholders in the dispute process accountable for fulfilling information requests. The proposed rule stated that hospitals and other covered entities may ask drug manufacturers and other third parties for prescription drug rate information related to their claim. However, manufacturers would not be required to comply with the request. If a manufacturer fails to produce the information, the proposed rule would allow the administrative dispute resolution panel to use data contained in the original submitted claim to make a decision.

The industry group argued that manufacturers oftentimes have unique access to key information, such as historical pricing and purchasing data. However, the proposed rule does not provide enough incentive for manufactures to ever provide prescription drug rate data to hospitals.

The AHA advised HRSA to allow the administrative dispute resolution panel “to issue a finding in favor of the covered entity claim if the manufacturer fails to fulfill such information requests.”

Additionally, the AHA recommended that HRSA exclude some duplicate discount cases from being considered a hospital violation under the dispute process. Manufacturers would be able to initiate a dispute if 340B hospitals or other covered entities allow eligible patients to also use a Medicaid duplicate discount.

However, the organization noted that manufacturers, not hospitals, give Medicaid patients discounts on 340B-covered drugs for which the state Medicaid program applies for a rebate on that same drug.

“There are situations that arise where the hospital or other covered entity is in compliance with all requirements to prevent the duplicate discount and, yet, the state Medicaid agency does not have the systems in place to verify claims level data to prevent triggering a rebate on a 340B claim,” the letter stated.

The AHA also provided panel composition recommendations to ensure timely decisions and fair judgements. The organization advised HRSA to include more than three panel members and require members to be screened for conflicts of interest. The panel should also include a non-voting person from outside of the HRSA who has professional mediation training.

Panel decisions should also be issued no more than 30 days from receiving comments from interested parties on the draft decision, the organization added.

The AHA intends for its suggestions to help boost healthcare transparency within the 340B Drug Pricing Program and assist hospitals with managing supply chain budgets.

“We share the common goal of ensuring that the 340B program can continue to help fulfill its original intent of helping hospitals stretch limited resources to expand and improve access to comprehensive healthcare services to low-income patients,” the letter concluded. “To that end, we believe a well-designed dispute resolution process will help create greater transparency and go a long way to ensure a more balanced marketplace for hospitals and pharmaceutical manufacturers.”

The dispute process echoes the spending challenges that hospitals have recently faced with healthcare supply chain management. Earlier this week, the AHA in collaboration with the Federation of American Hospitals and NORC released a report that showed inpatient hospital prescription drug spending grew by 38 percent per admission from 2013 to 2015.

Rising prescription drug rates have put more pressure on hospital revenue cycles, the report added. More than 90 percent of surveyed hospitals said that changes in drug prices had a moderate to severe impact on their organization’s ability to manage healthcare costs.

“Managing these skyrocketing cost increases forces difficult choices between providing adequate compensation to employees, many of whom are highly skilled in professions facing shortages; upgrading and modernizing facilities; purchasing new technologies to improve care; or paying for drugs, especially when these price increases are not linked to new therapies or improved outcomes for patients,” the report stated.

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