July 12, 2004
Washington, D.C.
I am pleased to be here today with members of the 340B Coalition.
HRSA Administrator Betty Duke sends her regrets that she cannot be here, but today she is in Texas, where planning continues for a major bilateral effort with the Mexican government to promote better health care along the common border we share.
These plans will culminate in a series of events to celebrate Border Binational Health Week in mid-October.
I encourage any organization here today with sites or resources along the U.S.-Mexico border to join with us, our grantees, and other participating entities in helping to make this event a powerful example of binational cooperation and friendship.
A great deal has happened that affects the world of the 340B program since I addressed you last year.
New Medicare legislation was passed by Congress and signed by President Bush.
HRSA’s expansion of the health center network and the National Health Service Corps is beginning to really gain traction and have a major impact on the delivery of health care services to truly needy people across the country.
And the Department’s Office of Inspector General has again turned its attention to 340B.
Before talking specifically about developments in pharmacy affairs, I’d like to bring all of you up to date on HRSA’s continuing progress in expanding access to health care to uninsured and underinsured Americans.
HRSA is now in the third year of implementing President Bush’s five-year health center expansion initiative.
So far we’re ahead of schedule.
In 2002, the first year of the expansion, HRSA funded 171 new center sites and expanded capacity at 131 existing centers.
In 2003, year two of the initiative, we funded 100 new centers and expanded capacity at more than 88 existing centers.
By the end of 2004, HRSA will support about 3,650 health center sites across the country, serving an estimated 13.2 million people.
According to just-released statistics, health centers served 12.4 million people in 2003, an increase of more than 2 million patients in just two years.
Patient encounters totaled more than 49 million, up from about 40 million in 2001.
Those are remarkable achievements!
Health centers did even better than before serving low-income patients and those who prefer to speak a language other than English.
In 2003, 90 percent of patients had incomes below 200 percent of the poverty line, up from 88 percent in 2001.
And 30 percent were best served in a language other than English, up from 28 percent in 2001.
Minorities continued to make up 64 percent and the uninsured 39 percent of health centers patients in 2003, percentages that haven’t changed over the past two years.
But the overall growth in services means that health centers served nearly 4.9 million uninsured patients in 2003, almost 900,000 more than in 2001.
Dental encounters were up 40 percent from 2001 to 2003, reaching a total of almost 4.5 million dental treatments last year.
That reflects a determined effort by HRSA Administrator Betty Duke to improve dental care in health centers that offer it now, and to expand dental care services into those centers that don’t currently offer it.
The President's budget for FY 2005 asks for just over $1.8 billion for health centers, an increase of $219 million above the FY 2004 appropriation.
One of the biggest responsibilities of the health center expansion is finding the right people to fill many new positions. We estimate that the system will need to add 36,000 new health center staff positions through 2006, including more than 11,000 clinicians.
The National Health Service Corps plays a fundamental role in the staffing strategy. As part of his plan to expand health centers, President Bush also directed HRSA to expand the Corps.
That makes sense, since about half of all NHSC scholars and loan repayors work in health centers.
With support from both sides of the aisle in Congress, we’re dramatically expanding the Corps’ numbers. The NHSC has grown from a base of about 2,400 clinicians in 2001 to an estimated 3,400 in 2003. This year we hope to boost the field strength of Corps clinicians to 4,000, which would be an increase of about 70 percent in just three years.
The NHSC works like this: in return for the government’s commitment to pay off student loans or award scholarships to study, NHSC clinicians agree to spend at least two years treating patients in underserved, often remote, areas of
America. Currently, these clinicians include doctors, dentists, nurse practitioners, physician assistants and mental and behavioral health professionals.
Last year the NHSC launched a loan repayment demonstration project for pharmacists and chiropractors.
Twenty-four pharmacists were selected for participation.
We’re now developing an evaluation of the demonstration, as required by statute, to determine the feasibility of including pharmacists and chiropractors in the regular NHSC loan repayment program.
The President's budget for FY 2005 asks for $205 million for the NHSC, an increase of $35 million above the FY 2004 appropriation.
The most recent Presidential initiative affecting HRSA is the effort to cut drug treatment backlogs among HIV/AIDS patients.
On June 23, President Bush announced that he would make available $20 million to help people waiting to get HIV medication through the AIDS Drug Assistance program, or ADAP, which HRSA’s HIV/AIDS Bureau administers.
ADAP funds are distributed to states and territories under a formula based on AIDS prevalence.
However, 3 percent of total funds can be reserved for grants to areas with severe needs for more medication to cut waiting lists.
Currently, the Department is examining the best way to deliver the extra $20 million to 10 states that in June reported having patients on waiting lists for ADAP medications.
We also hope to target the entire $35 million increase for ADAP included in the President’s FY 2005 budget proposal to these severely impacted areas.
That increase for 2005 will raise ADAP funding to $784 million, which will support the purchase of pharmaceuticals for about 100,000 persons per month, up from almost 94,000 per month this year.
President Bush also indicated that he intends to refocus the CARE Act, when it comes up for reauthorization next year, to provide more resources for antiretroviral drugs, doctor visits and lab tests.
The President said he wants to make it possible to “make sure that as many patients as possible receive the modern care they deserve.”
Probably the most significant event that occurred since last year’s 340B conference is the enactment of the Medicare Prescription Drug, Improvement and Modernization Act of 2003.
The new legislation has had a significant impact on the 340B program by expanding the criteria for participation by
Disproportionate Share Hospitals, or “dish hospitals,” as they are often called.
The new criteria increase the number of eligible small rural and urban DSH hospitals by up to as many as 1,000 hospitals.
Through our contractor -- the
Pharmacy Services Support Center – the Office of Pharmacy Affairs is providing the technical assistance that these hospitals need to benefit from the 340B authority.
Based on a working agreement with the Centers for Medicare and Medicaid Services, we can register a newly eligible “dish” hospital if its application includes a letter from its fiscal intermediary documenting that its “dish” adjustment percentage meets the new criteria.
Overall, the number of covered entities participating in the 340B program reached 11,442 on July 1, an increase of 1,117 entities, or 11 percent, from July 1 of last year.
The number of registered “dish” hospital sites increased by 260 over the same time period.
Much of this increase in “dish” (DSH) participation is thought to reflect the impact of the new Medicare law on the 340B program.
Passage of the Medicare legislation has sparked considerable discussion on the impact of the new Prescription Drug Discount Card Program on health centers and other entities participating in the 340B program.
Of the 12.4 million patients health centers served in 2003, more than 895,000 were Medicare beneficiaries.
Because health centers provide access to a large number of Medicare patients, it is important that they be able to take advantage of the Drug Discount Card at their in-house or contract health center pharmacy.
On April 22, CMS sent a fact sheet on health centers and 340B to drug card sponsors.
It “encourage[d] Medicare-approved drug card programs to include health centers in the pharmacy networks.”
CMS has been working closely with HRSA on ways to expand cost-saving opportunities for Medicare recipients who have access to prescription drugs through both a drug discount card and a safety-net provider participating in the 340B program.
CMS has determined that drug card sponsors are not required to -- but may -- recognize the 340B discount prices available to “covered entities” at the point of sale
. In that case, eligible patients may use the $600 in transitional assistance when buying 340B drugs from 340B covered entities.
Enabling such low prices to be realized through the program will assure that patients of covered entities – like health centers -- can continue to receive their drugs through the 340B program while also benefiting from the $600 credit.
CMS and HRSA staff currently are discussing the best way our health center grantees and other 340B covered grantees can explain this to the Medicare beneficiaries they serve.
The new Medicare legislation also contained a provision requiring the Department of Health and Human Services to complete a study of the impact of drug importation by December 2004.
In March, Secretary Thompson announced the formation of a Task Force on Drug Importation to explore how it might be conducted and what its impact might be on drug safety, prices, and the development of new medications.
Surgeon General Carmona is the task force chairman, and HRSA Administrator Duke is one of 13 HHS officials on the panel.
The task force has completed 6 day-long listening sessions during which a wide spectrum of public and professional representatives provided information and recommendations.
The Task Force is now deliberating and drafting its report for consideration by the Secretary.
Let me turn now to the workings of HRSA’s Pharmacy Affairs Branch and the report released late last month by the HHS Office of Inspector General on the “Appropriateness of 340B Drug Prices.”
As all of you know, the Pharmacy Affairs Branch has a broad mission to help health centers, states and other safety-net providers deliver comprehensive, cost-efficient pharmacy services.
In addition to managing the 340B drug discount authority and providing technical assistance, the branch manages grants and provides technical assistance to start pharmacy services or upgrade existing pharmacies and integrate them with the delivery of clinical care.
Regarding our oversight of 340B, HRSA is now reviewing ideas to improve administration of the program.
Many of these ideas are based on the findings and recommendations in the two most recent IG reports, as well as our own internal assessments of program operations.
We have taken some steps to improve the program data base, but most of the IG’s recommendations to improve both the data base and monitoring of drug prices will require additional resources.
Until those resources are identified, I cannot give you a timetable for when specific improvements will occur.
I can, however, say that our plan emphasizes:
· manufacturer compliance with the 340B pricing formula;
· covered entity compliance with the 340B law and HRSA guidance;
· expanded efforts to increase the participation of eligible grantees in the 340B program; and
· correcting errors in the databases used to administer the 340B program.
In a related matter, last year we awarded a contract to Mathematica Policy Research Inc. to evaluate the impact of the 340B program and track changes in program performance over the last three years.
Mathematica obtained information from covered entities and other stakeholders about key program issues and challenges, and has included recommendations for improvements in its draft final report.
We are currently reviewing that draft report, and recommendations Mathematica made will be reflected in the plan we eventually implement to improve 340B.
As a first step in improving internal operations, we plan to transfer the Pharmacy Affairs Branch staff from HRSA’s Bureau of Primary Health Care to our Special Programs Bureau.
The reorganization will establish an Office of Pharmacy Affairs there that reports to the Bureau Director.
The change will place the office in a bureau whose other programs are as broad and complex as those of Pharmacy Affairs.
The Special Programs Bureau, for example, currently is responsible for the federal government’s organ procurement and donation oversight efforts.
It also administers the Hospital Preparedness Program, HRSA’s part of the Federal counter-bioterror effort it shares with CDC, and the Vaccine Injury Compensation Program.
These programs, like the 340B program, often involve considerable interaction with other HHS and federal agencies.
The director of the SPB, Michelle Snyder, is a knowledgeable and experienced veteran of CMS as chief financial officer, and she has great insight into the people, programs and procedures of CMS.
The move will not reduce Pharmacy Affairs’ role in supporting HRSA’s primary health care programs.
It will, we believe, enhance Pharmacy Affairs’ visibility and its ability to carry out our plan to improve the program.
HRSA is now in the process of soliciting new proposals to operate the 340B Prime Vendor Program.
The solicitation was posted on the Internet on May 25 and proposals must be submitted by close of business July 19.
We expect to make an announcement on the selection by the end of September.
The draft agreement included in the solicitation retains the flexibility in the current Prime Vendor arrangement for price negotiations and recruitment of new members.
It also includes performance standards for the new Prime Vendor.
This flexibility has increased the purchasing volume in the Prime Vendor program by attracting many more disproportionate share hospitals.
It is now much more likely that manufacturers will be willing to offer pharmaceuticals to prime vendor customers at prices lower than required by the pricing formula in section 340B of the Public Health Service Act, and our goal is to use the marketplace to reduce prices below the ceiling level for brand name as well as generic drugs.
Let me close by telling you that Secretary Thompson will present the Secretary’s Award for Distinguished Service to Jimmy Mitchell and his Pharmacy Affairs staff later this month.
The award carries the following citation: “For supporting the President’s Initiative for community health centers and DHHS programs by increasing access to pharmaceuticals through aggressive, innovative implementation of the 340B legislation.”
Please join me in congratulating Jimmy Mitchell and the Pharmacy Affairs staff in receiving the Department’s highest award.
I thank you for inviting me to speak here today.
I speak for Administrator Duke in extending our appreciation to all of you for your strong commitment to expand access to quality medical care for all Americans.
At this point, I’ll be glad to answer any questions you may have.
