U.S. Sen. Tammy Baldwin
Press Release

U.S. Senator Tammy Baldwin Urges Trump Administration to Hold Drug Companies Accountable for Overpricing

Despite Pledges to Lower Drug Prices, Trump Administration Has Four Times Delayed Implementation of Rule Punishing Drug Companies for Overpricing Prescription Drugs

By - Oct 27th, 2017 01:56 pm

WASHINGTON, DC – U.S. Senator Tammy Baldwin today joined a group of colleagues in a letter led by Senator Gary Peters (D-MI) to the Department of Health and Human Services (HHS) expressing alarm over the department’s decision to further delay implementation of a rule holding drug companies accountable for overcharging for prescription drugs. The final rule, which was announced in January by the Obama Administration, would give HHS greater authority to penalize pharmaceutical companies that knowingly and intentionally overcharge 340B health care providers. The 340B program requires drug companies to sell discounted prescription drugs to safety net hospitals, rural health facilities, and other entities that provide care in underserved communities. Despite President Trump’s pledge to take action to control drug prices, his administration has delayed the rule four times.

“Currently, HHS has limited authority to penalize pharmaceutical companies that overcharge 340B health care providers despite significant evidence that these companies frequently and impermissibly overprice their products,” wrote the Senators. “Further delays or changes the implementation of this rule contradict President Trump’s repeated promises to crack down on unfair drug pricing and allows bad actors to continue enriching themselves at the expense of the American public.”

The 340B program was established in 1992 to help lower drug prices for hospitals and health clinics serving vulnerable communities that would otherwise not be able to afford prescription drugs. In 2015, the 340B program helped health care providers save over $6 billion in prescription drug costs. However, the practice of pharmaceutical companies overcharging 340B health care providers is a long-standing problem. A 2006 audit from the HHS Inspector General found 340B health care providers were overcharged in 14% of total prescription purchases in a 30-day period, and that 68 of 70 340B health care providers have been overcharged at least once in the past.

Under the Affordable Care Act, HHS is required to implement rules to better enforce penalties on drug companies that wrongfully charge higher prices for prescription drugs to 340B health care providers. Following a series of public comments, HHS announced in January a proposed rule that would enhance oversight of the 340B program and establish a $5,000 penalty for each case where a drug company knowingly and intentionally overcharged a 340B customer. Since then, the Trump Administration has delayed implementation of the rule four times and has suggested possible changes – delaying the ability to hold drug companies accountable.

Baldwin and Peters were joined on the letter by Senators Debbie Stabenow (D-MI), Amy Klobuchar (D-MN), Mazie Hirono (D-HI), Kamala Harris (D-CA), Chris Murphy (D-CT), Patty Murray (D-WA), Brian Schatz (D-HI), Richard Blumenthal (D-CT), Al Franken (D-MN), Sherrod Brown (D-OH) and Jack Reed (D-RI).

The text of the letter is below and available here:

Eric D. Hargan
Acting Secretary
The Department of Health and Human Services (HHS)
200 Independence Ave, S.W.
Washington, D.C. 20201

George Sigounas
Administrator
Health Resources and Services Administration (HRSA), HHS
5600 Fishers Ln
Rockville, MD 20852

Dear Acting Secretary Hargan and Administrator Sigounas:

We write to express our concerns with the Administration’s multiple decisions to delay the effective date of the HRSA 340B Drug Pricing Program Ceiling Price and Manufacturer Civil Monetary Penalties Regulation rule. We believe this delay contradicts the President’s numerous statements that he would work to bring down the skyrocketing costs of prescription drugs.

On January 5, 2017, the Department of Health and Human Services (HHS) published this common-sense rule establishing a $5,000 penalty for each case where a drug company knowingly and intentionally overcharges children’s hospitals, safety net hospitals, federally qualified health centers, rural facilities, and other covered entities under the 340B program. Unfortunately, since that time the rule has been delayed four times, including the most recent delay to July 1, 2018. In addition, Administration officials have publically indicated there may be additional changes to the rule in its current form.

Currently, HHS has limited authority to penalize pharmaceutical companies that overcharge 340B health care providers despite significant evidence that these companies frequently and impermissibly overprice their products. Further delays or changes in the implementation of this rule contradict President Trump’s repeated promises to crack down on unfair drug pricing and allows bad actors to continue enriching themselves at the expense of the American public.

Since 2003, the Department of Justice has recovered more than $97 million from drug manufacturers and returned those funds to 340B entities. In fact, the HHS Office of Inspector General found that 68 of the 70 340B entities examined in a one-month audit had been overcharged at least one time in the past, with the monthly overpayment amount reaching as high as $36,730. Stronger oversight of drug companies that are routinely and deliberately inflating already high drug costs is needed.

Since the Affordable Care Act passed in 2010, HHS has conducted several rounds of public comment and had more than seven years to consider this rules impact on stakeholders. We strongly urge you to avoid implementing any changes that will weaken this important rule and ask that the Administration move forward with implementation of this rule as soon as possible.

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