On February 10, 2020, the White House released the
Administration’s budget proposal for Fiscal Year (FY) 2021, A
Budget For America’s Future. This document summarizes the President’s
recommendations for funding levels and legislative proposals throughout the
federal government for the upcoming fiscal year, which begins on October 1,
2021. While the budget provides important insight into the Administration’s
regulatory agenda and priorities, it remains a largely symbolic, political
document. Congressional appropriators retain the power to apportion government
funding, and leaders on both sides of the aisle have emphasized their intention
to conduct the appropriations process on their own terms, abiding by the budget
caps set last year in a bipartisan deal and hammering out agency funding levels
While these budget provisions are highly unlikely to be
approved by Congress, there are two major proposals contained in the
president’s budget that would impact the 340B Program. Details can be found
within the Health Resources and Services Administration’s (HRSA) congressional
budget justification document, which expands on the proposals in the
President’s summary, available here.
budget request would require covered entities to retain records of the net
income obtained from 340B purchases and their use of such income (included
in last year’s budget proposal). HHS would be authorized to audit these
records. This proposal will likely be opposed by 340B advocates for three
reasons. First, they may take issue with how 340B income is measured
in the proposal since it includes reimbursement received by covered
entities. Reimbursement of 340B drugs is not regulated under the 340B
program and, for this reason, covered entities believe it should be
excluded from the calculation. Second, covered entities assert that
these data collection and reporting requirements are burdensome.
Third, covered entities complain that they are already reporting large
amounts of financial data as a result of other federal and state laws.
proposal would also grant HRSA broad regulatory authority over all aspects
of the 340B Program. Following a 2015 ruling
that recognized HRSA’s limited regulatory authority, HRSA has repeatedly
requested broader authority from Congress to regulate the 340B Program.
340B advocates may oppose this amendment because HRSA would likely use
such authority to implement prior 340B guidance that has been viewed as
overly restrictive of covered entity practices and as undermining the
original congressional intent of the 340B statute.
budget proposes a user fee mechanism that would permit HRSA to collect a
fee of 0.1% of each purchase of 340B drugs from participating covered
entities based on sales data submitted by manufacturers. Note that several
Administrations have included 340B user fees in their budgets and such
proposals have never advanced in Congress. These user fees would
result in $24 million of new revenue, according to HRSA. The Department of
Health and Human Services has frequently emphasized HRSA’s lack of
resources to administer the 340B Program and would direct the revenue from
these fees to improving HRSA’s program oversight capabilities. The budget
proposes new statutory language to authorize the collection of these fees
but would require Congress to enact such a provision. 340B advocates
will likely oppose this proposal because it levies additional fees on
resources that are already scarce for many covered entities.
budget request includes $10.2 million in funding to the Office of Pharmacy
Affairs, which is equal to the enacted level for FY 2020.
Powers will continue to monitor additional
developments regarding these proposals as Congress undergoes the appropriations
process for FY 2021.