[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6071 Introduced in House (IH)]
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115th CONGRESS
2d Session
H. R. 6071
To amend the Public Health Service Act to clarify the intent of the
340B program and provide for enhanced 340B program integrity, and for
other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 12, 2018
Ms. Matsui introduced the following bill; which was referred to the
Committee on Energy and Commerce, and in addition to the Committee on
Ways and Means, for a period to be subsequently determined by the
Speaker, in each case for consideration of such provisions as fall
within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To amend the Public Health Service Act to clarify the intent of the
340B program and provide for enhanced 340B program integrity, and for
other purposes.
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 ``Stretching Entity Resources for
Vulnerable Communities Act'' or the ``SERV Communities Act''.
SEC. 2. SENSE OF CONGRESS RELATED TO PURPOSE OF THE 340B PROGRAM.
It is the sense of Congress that--
(1) the program under section 340B of the Public Health
Service Act (42 U.S.C. 256b) (in this section referred to as
the ``340B program'') enables covered entities to stretch
scarce resources as far as possible, reaching more patients and
providing more comprehensive services than without such
program;
(2) the 340B program provides health care settings that
serve a disproportionate share of underserved patient
populations (referred to as covered entities) a discount from
drug manufacturers on the covered outpatient drugs they
purchase to meet health care needs of the community;
(3) covered entities that qualify for participation under
the 340B program meet rigorous eligibility criteria, proving
they are safety net health care providers for many underserved
patients;
(4) such discounts are provided to such covered entities on
the basis of meeting eligibility criteria under the 340B
program, and not directly to individual patients;
(5) the 340B Program enables covered entities to provide
comprehensive services to the communities they serve, which may
include providing free or discounted drugs to vulnerable
populations, but providing free or discounted drugs to patients
is not the sole purpose of the program;
(6) the 340B Program is designed to help covered entities
promote health for underserved communities and patients,
regardless of a particular patient's insurance status or
inability to pay;
(7) savings from the 340B program are used by covered
entities to reach more patients and provide more comprehensive
services, and covered entities are in the best position to
assess the use of their savings for community needs; and
(8) drugs purchased under the 340B program account for a
small proportion of overall drug spending and the discounts
described in paragraph (2) provided through the 340B program
are not funded by taxpayers.
SEC. 3. CODIFYING DEFINITION OF PATIENT UNDER 340B PROGRAM.
Section 340B(b) of the Public Health Service Act (42 U.S.C. 256b)
is amended by adding at the end the following new paragraph:
``(3) Patient.--
``(A) In general.--For purposes of carrying out
this section, the term `patient' shall have the
definition given to such term on pages 55156 through
55158 of title 61 of the Federal Register published on
October 24, 1996.
``(B) Clarification.--For purposes of this section,
the Secretary shall not implement the definition under
subparagraph (A) more narrowly than the definition
specified in subparagraph (A), including by limiting
the application of the definition to particular
individuals based on their insurance status.''.
SEC. 4. NON-DISCRIMINATION WITH RESPECT TO COVERED ENTITIES.
Section 340B of the Public Health Service Act (42 U.S.C. 256b) is
amended by adding at the end the following new subsection:
``(f) Non-Discrimination With Respect to Covered Entities.--
``(1) Terms of agreement.--Subject to paragraph (3), no
entity that reimburses a covered entity or its contract
pharmacy for drugs that are subject to an agreement under this
section may discriminate against such covered entity with
respect to the terms of such reimbursement, including terms
relating to the level and amount of reimbursement, on the basis
that the covered entity participates in the program under this
section.
``(2) Patient's choice.--With respect to a patient eligible
to receive drugs that are subject to an agreement under this
section from a covered entity or its contract pharmacy, no
entity that makes payment for such drugs shall discriminate
against the covered entity or its contract pharmacy in a manner
that prevents or interferes with the patient's choice to
receive such drugs from the covered entity or contract
pharmacy.
``(3) Exception.--Paragraph (1) shall not apply to States
with respect to retail drugs that are reimbursed by the State
on a fee-for-service basis pursuant to a State plan approved
under title XIX of the Social Security Act.''.
SEC. 5. PROGRAM INTEGRITY.
(a) Findings.--Congress finds the following:
(1) In response to findings by the Office of the Inspector
General of the Department of Health and Human Services that
nearly 100 percent of covered entities were overcharged by
manufacturers for at least one of the drugs reviewed, Congress
directed the Secretary of Health and Human Services in 2010 to
publish the ceiling prices under section 340B of the Public
Health Service Act (42 U.S.C. 256b) (in this section referred
to as the ``340B ceiling price'') via Internet website so that
covered entities could verify they were being charged the
correct price, however this website has not yet been
established, leaving covered entities vulnerable to continuing
manufacturer overcharges.
(2) In response to findings by the Office of the Inspector
General of the Department of Health and Human Services of
widespread overcharges by manufacturers and a lack of oversight
and authority by the Secretary of Health and Human Services to
ensure that covered entities paid no more than the 340B ceiling
price, Congress directed the Secretary to develop standards for
calculating 340B ceiling prices and civil monetary penalties to
apply to manufacturers that violate these rules, however those
standards and penalties have not yet been developed,
significantly limiting the Secretary's ability to oversee
manufacturer compliance with such section 340B of the Public
Health Service Act (42 U.S.C. 256b).
(3) There is no public transparency on drug manufacturers'
average manufacturer price, best price in the marketplace, or
how much the average manufacturer price of a drug has increased
relative to the rate of inflation.
(4) Information on the average manufacturer price and best
price are reported to the Centers for Medicare & Medicaid
Services, but rarely does the Federal Government audit the raw
data underlying those calculations.
(5) Such data is not submitted and reviewed by the Health
Resources and Services Administration as part of a 340B program
audit.
(6) Furthermore, the Office of Pharmacy Affairs has
conducted only 11 total audits of manufacturers.
(b) Parity in Audits Between Manufacturer and Hospital Audits.--
Section 340B(d)(1)(B)(v) of the Public Health Service Act (42 U.S.C.
256b(d)(1)(B)(v)) is amended to read as follows:
``(v) Selective auditing of manufacturers
and wholesalers to ensure the integrity of the
drug discount program under this section,
consistent with the following:
``(I) Such audits shall be
conducted in a form and manner that, to
the greatest extent practicable,
results in parity between such audits
and audits under subsection (a)(5)(C)
of covered entities, as measured by
comparing the percentage of total
manufacturer audits under this clause
to the percentage of total audits
conducted under such subsection of
covered entities described in
subsection (a)(4)(L).
``(II) Such audits shall include
review of average manufacturer price,
best price, and the inflationary
penalty to ensure that manufacturers
are calculating the ceiling price
accurately.''.
(c) Deadline for Internet Website With Applicable Ceiling Prices
for Covered Outpatient Drugs.--Section 340B(d)(1)(B)(iii) of the Public
Health Service Act (42 U.S.C. 256b(d)(1)(B)(iii)) is amended by
striking ``The provision'' and inserting ``Not later than 90 days after
the date of the enactment of the Stretching Entity Resources for
Vulnerable Community Act, the provision''.
(d) Civil Monetary Penalty.--
(1) In general.--Clause (vi)(II) of section 340B(d)(1)(B)
of the Public Health Service Act (42 U.S.C. 256b(d)(1)(B)) is
amended to read as follows:
``(II) shall not exceed, for each
instance of overcharging a covered
entity that may have occurred, the
greater of--
``(aa) $5,000; or
``(bb) 200 percent of the
amount of such overcharge;
and''.
(2) Clarifications.--Section 340B(d)(1) of the Public
Health Service Act (42 U.S.C. 256b(d)(1)) is amended by adding
at the end the following new subparagraph:
``(C) Clarifications.--For purposes of subparagraph
(B)(vi)--
``(i) an instance of overcharging described
in subclause (II) of such subparagraph shall--
``(I) apply to each unit of a
national drug code within an order,
whether placed directly with a
manufacturer or through a wholesaler,
authorized distributor, or agent, and
may not be offset by other discounts
provided on any other National Drug
Code or discounts provided on the same
National Drug Code on other
transactions, orders or purchases; and
``(II) include a manufacturer's
failure, such as through a limited
distribution network, to offer a
covered outpatient drug to a covered
entity at the 340B ceiling price to the
same extent the manufacturer makes the
drug available to non-340B providers,
unless such action is taken to narrowly
address an actual or imminent shortage
and has been approved in advance by the
Secretary pursuant to standards issued
through an appropriate policy or
regulatory issuance; and
``(ii) in applying subclause (III) of such
subparagraph--
``(I) the term `knowingly' shall
have the meaning given the term `should
know' in section 1003.101 of title 42
of the Code of Federal Regulations (or
any successor regulation); and
``(II) the term `intentionally'
means, with respect to an overcharge,
that such overcharge is not due to
inadvertent error.''.
(3) Non-application of 340b ceiling price and cmp
regulation.--The Secretary of Health and Human Services shall
not take any action to implement, administer, or enforce the
provision of the final regulation titled ``340B Drug Pricing
Program Ceiling Price and Manufacturer Civil Monetary Penalties
Regulation'' published on June 5, 2018 (83 Fed. Reg. 25943 et
seq.), that changes the effective date of the 340B Drug Pricing
Program Ceiling Price and Manufacturer Civil Monetary Penalties
Regulation from July 1, 2018 to July 1, 2019. The effective
date shall be determined as if such final regulation published
on June 5, 2018, did not apply.
(4) Implementation.--The Secretary of Health and Human
Services shall implement the amendments made by paragraphs (1)
and (2) by program instruction or otherwise such that such
amendment applies to instances of overcharges occurring on or
after the date that is 60 days after the date of the enactment
of this Act.
(5) GAO report.--Not later than one year after the date of
the enactment of this Act, the Comptroller General of the
United States shall submit to Congress a report evaluating the
extent to which the Secretary of Health and Human Services is
carrying out the provisions of clause (vi) of section
340B(d)(1)(B) of the Public Health Service Act (42 U.S.C.
256b(d)(1)(B)), as amended by this subsection.
(e) Manufacturer Transparency.--Section 340B(d)(1)(B) of the Public
Health Service Act (42 U.S.C. 256b(d)(1)(B)) is amended by adding at
the end the following new clauses:
``(vii) The requirement that the applicable
ceiling price described in clause (iii) for a
covered outpatient drug, with respect to a
calendar quarter, shall be equal to the average
manufacturer price under section 1927(k)(1) of
the Social Security Act from the preceding
calendar quarter for the smallest unit of
measure minus the unit rebate amount and will
be calculated using six decimal places and will
be published by the Secretary rounded to two
decimal places, in accordance with the
following:
``(I) In the case that the ceiling
price calculation results in an amount
less than $0.01, the ceiling price will
be $0.01.
``(II) For a new covered outpatient
drug--
``(aa) manufacturers shall
estimate the ceiling price as
of the date the new drug is
first available for sale;
``(bb) the estimation shall
be calculated as wholesale
acquisition cost minus the
appropriate rebate percentage
until an average manufacturer
price is available, which shall
occur no later than the 4th
quarter that the drug is
available for sale; and
``(cc) manufacturers shall
calculate the actual ceiling
price and shall offer to refund
or credit the covered entity
the difference between the
estimated ceiling price and the
actual ceiling price within 120
days of the determination by
the manufacturer involved that
an overcharge occurred.
``(viii) The prohibition against
discriminatory distribution of drugs,
consistent with the following:
``(I) A manufacturer shall make
available each covered outpatient drug
to covered entities on the same terms
and conditions that the covered
outpatient drug is offered to
purchasers that are not covered
entities except that the manufacturer
will charge the covered entity for the
covered outpatient drug at or below the
ceiling price.
``(II) If the Secretary finds,
after audit as described in
subparagraph (B)(v) and after notice
and hearing, that a manufacturer is in
violation of the requirement described
in subclause (I), the manufacturer
shall be liable to the covered entity
that was not able to purchase the
covered outpatient drug involved at a
discounted price in an amount equal to
the reduction in the price of the drug
provided under the agreement between
the entity and the manufacturer under
this section.''.
SEC. 6. INCLUDING PROGRAMS FUNDED UNDER THE COMMUNITY MENTAL HEALTH
SERVICES BLOCK GRANT OR THE SUBSTANCE ABUSE PREVENTION
AND TREATMENT BLOCK GRANT AS COVERED ENTITIES.
(a) In General.--Section 340B(a)(4) of the Public Health Service
Act (42 U.S.C. 256b(a)(4)) is amended by adding at the end the
following new subparagraph:
``(P) A program carried out through funds received
under a grant under the Community Mental Health
Services Block Grant or the Substance Abuse Prevention
and Treatment Block Grant under part B of title XIX.''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply beginning on the date of the enactment of this Act.
SEC. 7. PREVENTING MEDICARE HOSPITAL OUTPATIENT PAYMENT CUTS FOR
HOSPITALS THAT PURCHASE DRUGS UNDER 340B PROGRAM.
(a) In General.--The Secretary of Health and Human Services shall
not take any action to implement, administer, or enforce the provision
of the final regulation titled the Medicare Program: Hospital
Outpatient Prospective Payment and Ambulatory Surgical Center Payment
Systems and Quality Reporting Programs published on November 13, 2017
(82 Fed. Reg. 52356 et seq.), that changes the payment amount under the
Prospective Payment System for Hospital Outpatient Department Services
under section 1833(t) of the Social Security Act (42 U.S.C. 1395l(t))
for separately payable, nonpass-through drugs and biologicals purchased
under the 340B drug pricing program under section 340B of the Public
Health Service Act (42 U.S.C. 256b). The payment amount under such
payment system under such section 1833(t) for such a drug or biological
provided on or after January 1, 2018, shall be determined (or in the
case of claims already processed, redetermined) through the same
methodology as if such final regulation did not apply.
(b) OPPS Budget Neutrality Adjustment.--The first sentence of
section 1833(t)(9)(B) of the Social Security Act (42 U.S.C.
1395l(t)(9)(B)) is amended by striking ``part'' each place such term
appears and inserting ``subsection'' each such place.
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