340B Protection and Accountability Act of 2019
This bill makes various changes to the 340B prescription drug pricing program, including requiring certain participants to pay annual user fees and requiring certain participants to establish sliding scales for the amounts they charge low-income individuals for outpatient drugs.
[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1559 Introduced in House (IH)]
<DOC>
116th CONGRESS
1st Session
H. R. 1559
To amend the Public Health Service Act to strengthen program integrity
and enhance low-income patient benefits for safety net providers.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 6, 2019
Mr. Collins of New York introduced the following bill; which was
referred to the Committee on Energy and Commerce
_______________________________________________________________________
A BILL
To amend the Public Health Service Act to strengthen program integrity
and enhance low-income patient benefits for safety net providers.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``340B Protection and Accountability
Act of 2019''.
SEC. 2. STRENGTHENING 340B PROGRAM INTEGRITY AND ENHANCING LOW-INCOME
PATIENT BENEFITS FOR SAFETY NET PROVIDERS.
(a) Definition of Patient.--Section 340B(b) of the Public Health
Service Act (42 U.S.C. 256b(b)) is amended by adding at the end the
following new paragraph:
``(3) Patient.--
``(A) In general.--In this section, the term
`patient' means, with respect to a covered entity
described in subparagraph (L) or (M) of subsection
(a)(4), an individual who, on a prescription-by-
prescription or order-by-order basis--
``(i) receives a health care service at a
covered entity or an outpatient hospital
facility described in subsection (c)(3) which
is registered for the drug discount program
under this section and listed on the public
internet website of the Department of Health
and Human Services relating to this section;
``(ii) receives an outpatient in-person
health care service from a health care provider
employed by the covered entity or who is an
independent contractor of the covered entity,
such that the covered entity bills for services
on behalf of the provider;
``(iii) receives a drug that is ordered or
prescribed by the covered entity provider,
including any renewals of existing
prescriptions, as a result of the service
described in clause (ii);
``(iv) in the case of a covered entity that
has a contract with a State or local government
described in subclause (III) of subsection
(a)(4)(L)(i), receives a health care service or
range of such services, to include the ordering
or prescribing of a covered outpatient drug,
from the covered entity pursuant to such
contract;
``(v) is classified as an outpatient when
the drug is ordered or prescribed, as
demonstrated by how the service was reimbursed
by the applicable payer, or, where the covered
entity does not seek such reimbursement, how
the service would have been reimbursed under
title XVIII of the Social Security Act; and
``(vi) has a relationship with the covered
entity such that the covered entity creates and
maintains auditable health care records which
demonstrate that--
``(I) the covered entity has a
provider-to-patient relationship with
the individual; and
``(II) responsibility for the
individual's health care service that
resulted in the prescription or order
for the drug described in clause (iii)
is with the covered entity.
``(B) Exclusions.--For purposes of this section, an
individual shall not be considered a patient of a
covered entity described in subparagraph (L) or (M) of
subsection (a)(4) if--
``(i) the individual is an inmate of a
correctional facility;
``(ii) the health care service described in
clause (ii) of subparagraph (A) received by the
individual from the covered entity consists
only of the administration or infusion of a
drug or drugs, or the dispensing of a drug or
drugs for subsequent self-administration or
administration in the home setting, without a
covered entity provider-to-patient encounter;
``(iii) the health care service described
in clause (ii) of subparagraph (A) received by
the individual from the covered entity is
provided by a health care organization that has
only an affiliation arrangement with the
covered entity, even if the covered entity has
access to the affiliated organization's
records; or
``(iv) the primary relationship between the
individual and the covered entity is one of
employment.
``(C) Regulations.--Not later than 180 days after
the date of enactment of the 340B Protection and
Accountability Act of 2019, the Secretary shall
promulgate final regulations through notice-and-comment
rulemaking to define the term `patient' with respect to
covered entities described in subparagraph (L) or (M)
of subsection (a)(4) to reflect the requirements
described in subparagraphs (A) and (B) of this
paragraph.
``(D) Definition relating to other covered
entities.--In this section, the term `patient', with
respect to a covered entity described in subparagraphs
(A) through (K) of subsection (a)(4), has the meaning
given such term in the October 24, 1996, HRSA Final
Notice Regarding Section 602 of the Veterans Health
Care Act of 1992 Patient and Entity Eligibility (61 Fed
Reg. 55156).
``(E) Record retention.--A covered entity described
in subparagraph (L) or (M) of subsection (a)(4) shall
retain auditable health care records which demonstrate
the existence of a patient relationship in accordance
with this paragraph for each prescription or order for
a rolling period of not less than five years, or longer
to the extent required by State or Federal law.''.
(b) Treatment of Contracted Services.--Subsection (a) of section
340B of the Public Health Service Act (42 U.S.C. 256b) is amended by
adding at the end the following new paragraphs:
``(11) Contracted services.--In the case of a covered
entity described in subparagraph (L) or (M) of subsection
(a)(4) that elects to enter into a contractual arrangement with
a third party for services related to the drug discount program
under this section, such as to dispense covered outpatient
drugs subject to an agreement under this section to patients of
the covered entity, to administer contracted pharmacy services,
or to provide any other service related to the drug discount
program under this section, the remuneration for which is based
in whole or in part on the volume of dispensed covered
outpatient drugs subject to an agreement under this section,
such covered entity shall--
``(A) have a contractual agreement in place between
the covered entity and each contracted entity,
including with each location of a pharmacy contracted
to dispense covered outpatient drugs subject to an
agreement under this section to patients (as so
defined) of the covered entity, which shall specify
that the contracted entity shall adhere to all
requirements of the drug discount program under this
section, but that ultimate responsibility for program
compliance and oversight of compliance by each
contracted entity shall remain with the covered entity
and that all covered outpatient drugs subject to an
agreement under this section shall be purchased by the
covered entity;
``(B) register each such agreement with the
Secretary, include in such registration such
information as shall be specified by the Secretary, and
make available such agreement upon request by the
Secretary;
``(C) ensure the compliance of each such agreement
with the requirements of this section to prevent drug
diversion in violation of subparagraph (B) of paragraph
(5) and to prevent duplicate discounts in violation of
subparagraph (A) of such paragraph before utilizing the
services of the contracted entity, including by--
``(i) developing and implementing, with
each contracted entity subject to such an
agreement, a system to verify eligibility of
patients (as so defined) of the entity;
``(ii) developing and implementing, with
each such contracted entity, a mechanism for
tracking the inventory of covered outpatient
drugs that are subject to an agreement under
this section that is suitable to prevent
diversion in violation of subparagraph (B) of
paragraph (5) and to prevent duplicate
discounts in violation of subparagraph (A) of
such paragraph, such as a separate inventory
for such drugs; and
``(iii) establishing a mechanism with each
such contracted entity and each applicable
State Medicaid agency that is suitable to
prevent duplicate discounts for covered
outpatient drugs that are subject to an
agreement under this section, including such
drugs dispensed to enrollees of Medicaid
managed care organizations, and complies with
regulations on methodologies to prevent
duplicate discounts issued by the Secretary;
``(D) make available, to the extent the covered
entity offers a charity care policy or has an
obligation under subsection (a)(5)(E) to have a sliding
fee scale, patient access to a covered entity's
prescription drug charity care benefit and its sliding
fee scale, and developing and implementing, with each
such contracted entity, a mechanism for documenting the
income and insurance status of each patient (as so
defined) of the covered entity and the amount each such
patient pays to receive covered outpatient drugs that
are subject to an agreement under this section;
``(E) maintain, and ensure that each such
contracted entity maintains, auditable records that
pertain to the compliance of the covered entity and the
contracted entity with the requirements described in
this paragraph, for a rolling period of not less than 5
years;
``(F) establish a process for, and conduct,
periodic comparisons of the covered entity's
prescribing records with the dispensing records of each
such contracted entity, as applicable, to detect
potential irregularities and to ensure that all drugs
dispensed by the contracted entity are for patients (as
so defined) of the covered entity;
``(G) provide for annual on-site audits of each
such contracted entity to be conducted by an
independent outside auditor;
``(H) maintain arrangements to dispense covered
outpatient drugs that are subject to an agreement under
this section to patients (as so defined) of the covered
entity with no more than 5 contract pharmacy locations
at any given time, all of which must be located within
(or, for mail-order pharmacies, serve patients residing
in) lower-income (using American Community Survey data
as determined by the Secretary) census tracts served by
the covered entity, except in the case that the covered
entity files a publicly available exception request
with the Secretary that seeks authorization to
establish a particular contract pharmacy arrangement in
a higher-income census tract and explains the reason in
that particular case such a contract pharmacy would
best meet the needs of low-income patients of the
covered entity, and the Secretary decides to grant the
request to establish one of the 5 contract pharmacies
in the census tract requested;
``(I) ensure, as applicable, that patients (as so
defined) of the covered entity have access to the
covered entity's prescription drug charity care benefit
through each contract pharmacy location at the time of
purchase of each covered outpatient drug subject to an
agreement under this section to the same extent such
patients have access to the benefit with respect to
such drugs purchased directly through the covered
entity; and
``(J) limit any amount paid by the covered entity,
or any agent of the covered entity, to the contracted
entity for dispensing covered outpatient drugs subject
to an agreement under this section or for any other
service related to the drug discount program under this
section to a reasonable amount, which shall not exceed
the fair market value of such drug dispensing or other
service.
In the case the Secretary grants a request under subparagraph
(H) to establish a particular contract pharmacy arrangement in
a higher-income census tract, the Secretary shall make such
decision available on a public website.
``(12) Auditing.--A covered entity described in
subparagraph (L) or (M) of subsection (a)(4) and a contracted
entity that enter into a contractual arrangement described in
paragraph (11) shall permit--
``(A) the Secretary to audit the records of the
covered entity and of the contracted entity that
pertain to the covered entity's and the contracted
entity's compliance with the requirements described in
such paragraph; and
``(B) the manufacturer of a covered outpatient drug
that is subject to an agreement under this section (or
its designee) to audit such records of the covered
entity and of the contracted entity solely with respect
to such drugs of the manufacturer.
``(13) Regulations.--
``(A) Not later than 180 days after the date of
enactment of this paragraph, the Secretary shall
promulgate final regulations through notice-and-comment
rulemaking to implement the requirements of paragraph
(11) and paragraph (12). Such regulations shall include
model terms for the contractual agreement described in
subparagraph (A) of paragraph (11).
``(B) Not later than 180 days after the date of
enactment of this paragraph, the Secretary shall
promulgate final regulations through notice-and-comment
rulemaking to establish procedures, in the case in
which the Secretary determines that a violation of the
annual contract pharmacy independent on-site audit
requirement in subparagraph (F) of paragraph (11), with
respect to a contract pharmacy arrangement, was knowing
and intentional--
``(i) for removing the contract pharmacy
arrangement from a covered entity's contract
pharmacy network and disqualifying the entity
from adding any additional contract pharmacies
for a reasonable period, to be determined by
the Secretary, of not less than two years; and
``(ii) for requiring that the entity pay a
monetary penalty to a manufacturer or
manufacturers in the form of interest on sums
that are owed to the manufacturer due to
violations of subparagraph (A) or (B) of
subsection (a)(5) that occurred at one or more
contract pharmacies and that were discovered
later than such violations would have been if
the entity had complied with its obligation to
have annual independent audits of contract
pharmacies conducted.
``(14) Mail order study and regulations.--
``(A) Report.--Not later than 180 days after the
date of the enactment of this paragraph, the Secretary
shall conduct a study (and submit to Congress a report
containing the results of such study) regarding
compliance concerns associated with covered entities
described in subparagraph (L) or (M) of subsection
(a)(4) contracting with mail order pharmacies to
dispense covered outpatient drugs subject to an
agreement under this section, and any additional
safeguards or limitations necessary and appropriate to
reduce those compliance concerns.
``(B) Regulations.--Not later than 180 days after
the submission of the report under subparagraph (A),
the Secretary shall promulgate final regulations
applicable to covered entities described in such
subparagraph, through notice-and-comment rulemaking, to
implement any additional safeguards or limitations
recommended by the study.
``(15) Contract pharmacy moratorium.--No covered entity
described in subparagraphs (L) or (M) of subsection (a)(4)
shall enter into a new or expanded contractual arrangement
pursuant to which a third party dispenses covered outpatient
drugs subject to an agreement under this section to patients
(as so defined) of the covered entity during the period
beginning on the date of the enactment of this paragraph and
ending on the latter of--
``(A) the effective date of final regulations
described in paragraph (13);
``(B) the effective date of final regulations
described in paragraph (14);
``(C) the effective date of final regulations
issued through Secretarial notice-and-comment
rulemaking that take into consideration the findings
and recommendations in the report from the Inspector
General of the Department of Health and Human Services
required under subsection (g)(3).''.
(c) Regulations To Reduce Duplicate Discount Risks.--Subsection
(a)(5)(A) of section 340B of the Public Health Service Act (42 U.S.C.
256b) is amended by adding at the end the following new clause:
``(iii) Not later than one year after the
date of the enactment of this clause, the
Secretary shall promulgate final regulations
through notice-and-comment rulemaking,
describing methodologies for State Medicaid
programs and all covered entities under
subsection (a)(4) to identify and bill drugs
subject to an agreement under this section in a
manner that ensures compliance with 340B
Program prohibitions regarding duplicate
discounts, including the duplicate discount
prohibition under section 1927(j)(1) of the
Social Security Act, to include the application
of such prohibitions to Medicaid managed care
enrollees. Such methodologies shall include the
use of 340B-specific claims identifiers, and
the provision of claims-level data by covered
entities to States as well as manufacturers of
covered outpatient drugs sufficient to identify
claims that include drugs subject to an
agreement under this section and to prevent
duplicate discounts.''.
(d) Amount Charged to Low-Income Patients.--
(1) In general.--Subsection (a)(5) of section 340B of the
Public Health Service Act (42 U.S.C. 256b) is amended by adding
at the end the following new subparagraphs:
``(E) Amount charged to low-income patients.--As a
condition of certification or recertification under
subparagraph (E) of paragraph (7), each covered entity
described in subparagraph (L) or (M) of subsection
(a)(4) must establish a sliding scale fee schedule for
providing covered outpatient drugs that are subject to
an agreement under this section, directly or under a
contractual arrangement pursuant to which a third party
dispenses such drugs, to patients of the covered entity
who are--
``(i) low-income individuals; and
``(ii) not covered under minimum essential
coverage, as defined in section 5000A(f) of the
Internal Revenue Code.
``(F) Regulations.--Not later than 180 days after
the date of enactment of this subparagraph, the
Secretary shall promulgate final regulations through
notice-and-comment rulemaking, to implement the
requirements under subparagraph (E). Such regulations
shall--
``(i) define the term `low-income
individual';
``(ii) provide a methodology for
establishing the sliding scale fee schedule,
which shall apply, where otherwise applicable
to a covered entity, regardless of whether the
covered outpatient drug is dispensed by the
covered entity directly or a child site of the
covered entity or by a contracted entity
described in paragraph (11); and
``(iii) ensure the security and protection
of privileged or otherwise confidential data
from unauthorized disclosure or re-
disclosure.''.
(e) Private Non-Profit DSH Hospitals and Outpatient Hospital
Facilities.--
(1) Definition.--Subparagraph (L) of section 340B(a)(4) of
the Public Health Service Act (42 U.S.C. 256b(a)(4)) is amended
to read as follows:
``(L) A subsection (d) hospital (as defined in
section 1886(d)(1)(B) of the Social Security Act)
that--
``(i) is--
``(I) owned or operated by a unit
of State or local government;
``(II) a public or private non-
profit corporation which is formally
granted governmental powers by a unit
of State or local government; or
``(III) a private non-profit
hospital which has a contract with a
State or local government to provide
health care services, which include the
ordering or prescribing of covered
outpatient drugs that are subject to an
agreement under this section, to low-
income individuals who are not entitled
to benefits under title XVIII of the
Social Security Act or eligible for
assistance under the State plan for
medical assistance under title XIX of
such Act;
``(ii) for the most recent cost reporting
period that ended before the calendar quarter
involved, had a disproportionate share
adjustment percentage (as determined under
section 1886(d)(5)(F) of the Social Security
Act) greater than 11.75 percent or was
described in section 1886(d)(5)(F)(i)(II) of
such Act; and
``(iii) does not obtain covered outpatient
drugs through a group purchasing organization
or other group purchasing arrangement.
If the Secretary determines that a hospital that is
eligible for participation in the 340B program under
this subparagraph obtained covered outpatient drugs
through a group purchasing organization or another
group purchasing arrangement while that hospital was
participating in the drug discount program under this
section, then the Secretary shall remove such hospital
from such program and the hospital shall not be
permitted to seek re-enrollment for a period of at
least 12 months after its removal from the program.''.
(2) Study and report; moratorium; outpatient hospital
facilities; audits.--Subsection (c) of section 340B of the
Public Health Service Act (42 U.S.C. 256b) is amended to read
as follows:
``(c) Covered Entities That Are Private, Non-Profit DSH
Hospitals.--
``(1) Study and report.--
``(A) Study.--The Comptroller General of the United
States shall conduct a study on the relationship
between the disproportionate share adjustment
percentages of private covered entities described in
subclauses (II) and (III) of subsection (a)(4)(L)(i)
and the levels of charity care provided by such
entities to outpatients.
``(B) Report.--Not later than 180 days after the
date of enactment of the 340B Protection and
Accountability Act of 2019, the Comptroller General
shall submit to the appropriate committees of Congress
a report on the results of the study conducted under
subparagraph (A), including recommendations on a metric
that, as applied to a private covered entity described
in such subparagraph, reflects a high level of charity
care provided to outpatients as a percentage of the
covered entity's overall expenses for outpatient care,
and could replace the metric described in subclause
(ii) of subsection (a)(4)(L). The Comptroller General
shall recommend the metric that best aligns with the
level of charity care provided to outpatients as a
percentage of overall hospital operating expenses on
outpatient care if no metric is identified that
provides a precise measure of such percentage.
``(2) Moratorium.--
``(A) In general.--For the period described in
subparagraph (B)--
``(i) a private covered entity described in
subclauses (II) or (III) of subsection
(a)(4)(L)(i) may participate in the drug
discount program under this section as a
covered entity only if it was properly enrolled
as a covered entity in the drug discount
program under this section as of the date of
the enactment of the 340B Protection and
Accountability Act of 2019 and continuously
enrolled thereafter; and
``(ii) with respect to a facility or
organization described in paragraph (3) of this
subsection that is wholly owned by a private
covered entity described in subclause (II) or
(III) of subsection (a)(4)(L)(i), only a
facility or organization that was properly
enrolled as a child site in the drug discount
program under this section as of the date of
the enactment of the 340B Protection and
Accountability Act of 2019 and continuously
enrolled thereafter may participate in the drug
discount program under this section.
``(B) Period described.--For purposes of
subparagraph (A), the period described in this
subparagraph is the period beginning on the date of
enactment of the 340B Protection and Accountability Act
of 2019 and ending on the effective date described in
subparagraph (C).
``(C) Effective date of replacement metric.--
``(i) In general.--For purposes of
subparagraph (B), subject to clause (ii), the
effective date described in this subparagraph
is the effective date specified in legislation
that, with respect to private covered entities
described in subclauses (II) and (III) of
subsection (a)(4)(L)(i)--
``(I) replaces the metric described
in clause (ii) of subsection (a)(4)(L)
with a metric that more accurately
reflects the levels of outpatient
charity care as a percentage of overall
expenses for outpatient care provided
by such entities; and
``(II) takes into account the
report submitted under paragraph (1),
including by addressing the Comptroller
General's recommendations included in
such report.
``(ii) Exception.--If legislation described
in clause (i) is not enacted by the date that
is one year after the date of submission of the
report under paragraph (1)--
``(I) the Secretary shall
promulgate final regulations that
implement, to the extent practicable,
the Comptroller General's
recommendations included within such
report not later than the date that is
180 days after such one-year date; and
``(II) for purposes of subparagraph
(B), the effective date described in
this subparagraph is the effective date
of such final regulations.
``(3) Outpatient hospital facilities.--A facility or
organization may participate in the drug discount program under
this section as a child site of a covered entity described in
subparagraph (L) or (M) of subsection (a)(4) only if such
facility or organization--
``(A) is wholly owned by a covered entity described
in subparagraph (L) or (M) of subsection (a)(4);
``(B) except in the case in which the parent
covered entity is a children's hospital described in
subparagraph (M) of subsection (a)(4) which does not
file a Medicare cost report, is listed on the Medicare
cost report most recently filed by the parent covered
entity on a line that is reimbursable under this title,
if such cost report demonstrates that the services
provided at the facility or organization have
associated outpatient costs and charges under this
title, and if the parent covered entity has provided a
copy of such cost report to the Office of Pharmacy
Affairs of the Health Resources and Services
Administration;
``(C) in the case that the parent covered entity is
a children's hospital described in subparagraph (M) of
subsection (a)(4) which does not file a Medicare cost
report, would be correctly included on a reimbursable
line with associated outpatient costs and charges under
title XVIII on a Medicare cost report of the parent
covered entity, if filed, and the parent covered entity
authorizing official has submitted a signed statement
to the Secretary which certifies the foregoing and that
the requested outpatient facility is an integral part
of the children's hospital and is providing health care
services to patients of such hospital;
``(D) meets the provider-based status requirements
under section 413.65 of title 42, Code of Federal
Regulations or under any successor to such section;
``(E) provides outpatient health care services and
is not limited to providing only drugs or drug
administration;
``(F) provides a level of free or discounted health
care services to individuals who meet the parent
covered entity's criteria for financial assistance and
are unable to pay for all or a portion of the services,
as reported at cost to the Internal Revenue Service
under section 501(r)(4) of the Internal Revenue Code
for the calendar year, that is similar to that of the
parent covered entity; and
``(G) adheres to the parent covered entity's
sliding scale fee schedule for providing covered
outpatient drugs that are subject to an agreement under
this section to patients who are (i) low-income
individuals; and (ii) not covered under minimum
essential coverage, as defined in section 5000A(f) of
the Internal Revenue Code. Such sliding fee schedules
must be made publicly available in a similar manner to
a 501(c)(3) hospital's financial assistance policy as
required under section 501(r) of the Internal Revenue
Code of 1986.
``(4) Certification and auditing.--
``(A) A covered entity described in subclause (III)
of subsection (a)(4)(L)(i) shall--
``(i) not less than annually, provide to
the Secretary a certification executed by the
hospital's 340B Program authorizing official
and an appropriate government official (such as
the governor, county executive, mayor, or an
individual authorized to represent and bind the
governmental entity), certifying that--
``(I) a contract is currently in
force between such covered entity and
the State or local government to
provide health care services, to
include direct medical care and the
ordering or prescribing of covered
outpatient drugs that are subject to an
agreement under this section, to low-
income individuals who are not entitled
to benefits under title XVIII of the
Social Security Act or eligible for
assistance under the State plan under
title XIX of such Act;
``(II) such contract creates
enforceable expectations for such
covered entity for the provision of the
health care services described in
subclause (I) to the individuals
described in such subclause; and
``(III) the health care services
described in subclause (I) represent a
significant portion of the hospital's
operating revenues, and are not for
services the covered entity is
otherwise obligated to provide under
State or Federal law;
``(ii) make available the contract
described in subclause (III) of subsection
(a)(4)(L)(i) to the Secretary for publication
on the public internet website of the
Department of Health and Human Services
relating to this section; and
``(iii) permit the Secretary to audit the
records of the covered entity that pertain to
its compliance with the requirements described
in subclause (III) of subsection (a)(4)(L)(i)
and this subparagraph.
``(B) A facility or organization that participates
in the drug discount program under this section
pursuant to paragraph (3) shall permit the Secretary to
audit the records of such facility or organization that
pertain to its compliance with the requirements
described in such paragraph.
``(C) The Secretary shall issue guidelines to
implement the requirements described in this paragraph,
which shall, at a minimum, define the term `low-income
individuals' for purposes of subclause (I) of
subparagraph (A)(i), and identify the applicable
methodology and threshold for determining that the
health care services described in such subclause
represent a significant portion of the hospital's
operating revenues.''.
(f) Reporting Requirements.--Section 340B of the Public Health
Service Act (42 U.S.C. 256b) is amended by adding at the end the
following new subsections:
``(f) Reporting Requirements for Covered Entities.--
``(1) In general.--A covered entity described in
subparagraph (L) or (M) of subsection (a)(4) shall annually
submit to the Secretary an electronic and searchable data
report in a machine-readable format. Such report shall contain,
with respect to the year covered by the report, information
on--
``(A) the number and percentage of patients of the
covered entity, disaggregated by insurance status
(including at least the Medicare program under title
XVIII of the Social Security Act, the Medicaid program
under title XIX of such Act, the Children's Health
Insurance Program under title XXI of such Act, the
TRICARE program under chapter 55 of title 10, United
States Code, health insurance coverage or a group
health plan, and uninsured), and by the type of site of
the dispensing of the covered outpatient drug subject
to an agreement under this section (parent covered
entity, facility or organization described in
subsection (c)(3), contracted entity described in
subsection (a)(11));
``(B) the aggregate amount of gross reimbursement
received by the covered entity (calculated before
subtracting any administrative or other fees using a
methodology provided by the Secretary) for covered
outpatient drugs subject to an agreement under this
section, including reimbursement received through
facilities or organizations described in subsection
(c)(3) or pursuant to contractual arrangements
described in subsection (a)(11);
``(C) the aggregate acquisition cost for covered
outpatient drugs subject to an agreement under this
section dispensed during the year;
``(D) the aggregate amount paid by the covered
entity, or any agent of the covered entity, to
contracted entities described in subsection (a)(11) for
dispensing covered outpatient drugs subject to an
agreement under this section or for any other service
related to the drug discount program under this
section;
``(E) how the entity prevents duplicate discounts
under subparagraph (A) of subsection (a)(5) and drug
diversion under subparagraph (B) of such subsection;
``(F) the volume of covered outpatient drugs
subject to an agreement under this section dispensed by
the covered entity and, in the case of a covered entity
that has entered into a contractual arrangement
pursuant to which a third party dispenses covered
outpatient drugs subject to an agreement under this
section to patients of the covered entity, by each such
contracted entity;
``(G) quantitative data in terms of the amount and
percentage of charitable care, as such term is defined
for purposes of Medicare cost reporting or other
reporting requirements identified by the Secretary,
provided to patients of the covered entity by the
covered entity in the form of covered outpatient drugs
subject to an agreement under this section;
``(H) the name of any third-party vendor or other
similar entity (if any) that the covered entity retains
to administer the covered entity's inventory management
system or contract pharmacy arrangement; and
``(I) other reporting requirements as the Secretary
determines is necessary or appropriate for effective
management and oversight of the drug discount program
under this section.
``(2) Timing of first report.--The first report submitted
under paragraph (1) shall be submitted not later than 18 months
after the date of enactment of this subsection.
``(3) Attestation.--Each report submitted under paragraph
(1) shall be accompanied by an attestation, in a form and
manner specified by the Secretary, that the information
submitted in such report is complete and accurate. Such
attestation shall be subject to section 1001 of title 18,
United States Code.
``(4) Sanctions.--If the Secretary finds that a covered
entity is in violation of the requirement under paragraph (1)
and the Secretary determines that such violation was knowing
and intentional, the Secretary shall remove the entity from the
drug discount program under this section and disqualify the
entity from re-entry into such program for a reasonable period
of time to be determined by the Secretary.
``(5) Regulations.--Not later than 180 days after the date
of enactment of this subsection, the Secretary shall promulgate
final regulations through notice-and-comment rulemaking to
implement the requirements under paragraphs (1) through (4).
``(6) Public database.--The Secretary shall make the data
reported by covered entities under this subsection available to
the public on the website of the Department of Health and Human
Services in an electronic and searchable format, which shall
make each category of data reported available both in the
aggregate and broken down by parent covered entities, child
sites, and contract pharmacies, but shall not identify specific
parent covered entities, child sites, or contract pharmacies.
``(g) Reports to Congress.--
``(1) Report by the secretary.--Not later than two years
after the date of the enactment of this subsection, the
Secretary shall submit to the Committee on Energy and Commerce
of the House of Representatives and the Committee on Health,
Education, Labor, and Pensions of the Senate a report, which
shall contain--
``(A) with respect to covered entities described in
subparagraph (L) or (M) of subsection (a)(4), the
information contained in the first report submitted by
such entities to the Secretary under subsection (f);
and
``(B) a description of the audits conducted by the
Secretary pursuant to subparagraph (C) of subsection
(a)(5), including the methodology used for conducting
such audits, the results of such audits, and actions
taken by the Secretary in response to such audits, as
well as actions taken by the Secretary in response to
audits conducted by manufacturers pursuant to such
subparagraph.
``(2) Report by the comptroller general.--Not later than
one year after the date of the enactment of this subsection,
the Comptroller General of the United States shall submit to
the Committee on Energy and Commerce of the House of
Representatives and the Committee on Health, Education, Labor,
and Pensions of the Senate a report on the use by covered
entities of contractual arrangements pursuant to which a third
party dispenses covered outpatient drugs subject to an
agreement under this section to patients of the covered entity,
disaggregated by covered entity types and the physical distance
of the contracted entity's location from the respective parent
covered entity location.
``(3) Annual reports by the inspector general.--Not later
than July 1 of each year (beginning with 2018), the Inspector
General of the Department of Health and Human Services shall
submit to appropriate committees of Congress a report on the
contractual arrangements between covered entities and third
parties described in paragraph (11) of subsection (a),
including the methods and amounts of remuneration exchanged
between such covered entities and such contracted entities, and
the extent to which contract pharmacies are improving access to
medicines by patients of such covered entities. The first such
annual report shall include recommendations, as the Inspector
General determines appropriate, that address safeguards to
reduce duplicate discounting and diversion within contract
pharmacy arrangements and reforms to ensure these arrangements
are targeted exclusively at improving access to medicines for
low-income or vulnerable patients of covered entities.
Subsequent reports under this paragraph should continue to
monitor such issues and be updated as changes are made to the
drug discount program under this section.''.
(g) User Fees Under the 340B Drug Discount Program.--Section 340B
of the Public Health Service Act (42 U.S.C. 256b), as previously
amended, is further amended by adding at the end the following new
subsection:
``(h) User Fees.--
``(1) In general.--Subject to paragraph (6), the Secretary
shall assess and collect a user fee from covered entities
described in subparagraph (L), (M), (N), or (O) of subsection
(a)(4). In carrying out this subsection, the Secretary shall
not require manufacturers to collect any user fee or to
administer the user fee program established under this
subsection.
``(2) Payment.--A covered entity described in subparagraph
(L), (M), (N), or (O) of subsection (a)(4) shall pay to the
Secretary a fee assessed under paragraph (1) by such date that
is the later of--
``(A) the date of the certification or
recertification of the covered entity, as applicable;
or
``(B) the date that is 30 days after the date of
the enactment of an appropriations Act providing for
the collection and obligation of fees under this
subsection for a fiscal year.
``(3) Amount of fee.--The amount of a fee under paragraph
(1) shall be equal to the amount determined by the Secretary
under paragraph (4).
``(4) Determination of amount of fee.--
``(A) In general.--The Secretary shall, not later
than 180 days before the start of each fiscal year that
begins after September 30, 2019, establish, for the
next fiscal year, the amount of the fee payable under
this subsection by a covered entity using purchase data
submitted by covered entities described in paragraph
(1), and using data submitted by manufacturers on sales
to covered entities of covered outpatient drugs subject
to an agreement under this section, pursuant to
regulations to be issued by the Secretary. Such amount,
with respect to a covered entity and year, shall not
exceed 0.1 percent of the total paid during the
previous year by such covered entity to manufacturers
for purchases of covered outpatient drugs subject to an
agreement under this section.
``(5) Use of fees.--
``(A) In general.--Any fee collected under
paragraph (1) shall be used for purposes of
administering this section, enhancing program integrity
and oversight activities under this section (including
through audits under this section of covered entities
and manufacturers), and promoting access to clinical
and cost-effective pharmacy services among safety net
clinics and hospitals that participate under this
section, such as through--
``(i) the development of a multi-functional
web-based system to collect fees under
paragraph (1);
``(ii) the improvement of the integrity,
transparency, security, and reliability of the
Office of Pharmacy Affairs Information System,
including to ensure that the database continues
to meet the needs of external stakeholders; and
``(iii) improvements to the compliance tool
of the Office of Pharmacy Affairs, used to
integrate all information related to covered
entities and manufacturers with agreements
under this section.
``(B) Supplement not supplant.--Any fee collected
under paragraph (1) shall be used to supplement and not
supplant the amount otherwise provided in
appropriations Acts to carry out this section.
``(6) Availability of fees.--Fees authorized under
paragraph (1) shall be collected and available for obligation
only to the extent and in the amount provided in advance in
appropriations Acts. Such fees are authorized to remain
available until expended.
``(7) Regulations.--Not later than 180 days after the date
of enactment of this subsection, the Secretary shall promulgate
final regulations through notice-and-comment rulemaking to
implement the user fee collection pursuant to this subsection.
``(8) Oversight of user fee program.--
``(A) Study.--The Inspector General of the
Department of Health and Human Services shall conduct
an annual review of the user fee program established by
this subsection.
``(B) Report.--Not later than July 1 of each year
(beginning with 2019), the Inspector General of the
Department of Health and Human Services shall submit to
the appropriate committees of Congress a report on the
study conducted under subparagraph (A), together with
such recommendations as the Inspector General
determines appropriate.''.
(h) Direct-Hire Authority.--Section 340B(d) of the Public Health
Service Act (42 U.S.C. 256b(d)) is amended by adding at the end the
following new paragraph:
``(5) Direct-hire authority.--Notwithstanding section
3304(a)(3) of title 5, United States Code, and sections 3309
through 3318 of such title, and section 337 of title 5 of the
Code of Federal Regulations (or any successor regulations), the
Secretary may, beginning on the date of the enactment of this
paragraph, exercise direct-hire authority to appoint a minimum
of ten qualified candidates to permanent positions within the
competitive service in order to carry out management and
oversight activities under this section.''.
(i) Applicability.--Except as otherwise indicated, the provisions
of, including amendments made by, this Act shall not apply to covered
entities defined under subparagraphs (A) through (K), (N), or (O) of
subsection (a)(4).
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Energy and Commerce.
Referred to the Subcommittee on Health.
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