California Attorney General Xavier Becerra, President Joe Biden’s choice to lead the Department of Health and Human Services (HHS), pledged to strictly enforce price transparency violations but was more ambivalent on a feud surrounding the 340B drug discount program.
The Senate Health, Education, Labor and Pensions Committee held a confirmation hearing Tuesday on Becerra’s nomination. Becerra will also have a confirmation hearing Wednesday before the Senate Finance Committee, which will vote on whether to send the nomination to the full Senate.
While Becerra gave clear answers on his approach to price transparency and the controversial rebate rule, he also demurred on how he would handle a feud surrounding the 340B drug discount program.
Here are three takeaways from Becerra’s testimony:
Strict enforcement of price transparency
Several senators asked Becerra about his $575 million settlement with Northern California-based hospital system Sutter Health. The 2019 agreement settled allegations that Sutter increased prices for several procedures so customers paid more than those in the southern part of the state for the same procedures.
Becerra said that, if confirmed, HHS will “do robust enforcement of price transparency. People have never had an idea of what they are going to pay when they walk into a hospital.”
He added that to rein in high prices you “have to go behind the curtain.” Congress can also give the agency more tools to enforce price transparency, Becerra said.
Becerra’s remarks come nearly two months after hospitals have had to comply with a rule that requires them to post payer-negotiated rates for 300 shoppable services.
Hospitals that do not comply could face a $300-a-day penalty. Becerra’s comments suggest that the agency will not backtrack on the Trump-era rule unlike other initiatives such as Medicaid work requirements.
Criticism of ‘rushed’ rebate rule
Becerra did criticize a rule finalized shortly before the end of the Trump administration that gets rid of the anti-kickback safe harbor for Part D drug rebates.
The controversial rule was originally proposed in 2018 but was shelved by the White House after concerns it would raise premiums on Medicare seniors too much.
Former President Donald Trump called for HHS to resurrect the rule in an executive order targeting drug prices before the presidential election. The rule gets rid of the safe harbor for the rebates and creates a new safe harbor for discounts offered at the point of sale.
Sen. Bill Cassidy, R-Louisiana, asked Becerra whether 100% of rebates should be passed on to the patient, which the final rule would do. The Biden administration has decided to delay the implementation of the rule.
Becerra did not specifically answer whether he was in favor of directly passing along the savings, but he did say that there was a “proposal that I believe was rushed out that in many ways would take sides in this debate.”
He added that he is willing to look into the program if he is confirmed.
Becerra did say that pharmacy benefit managers play a role in the healthcare system but that role “can’t just be middlemen and to gouge the [drug] price.”
Will ‘follow the law’ on 340B
Becerra was noncommittal on how he would handle a major dispute between drug companies and 340B-covered entities.
Cassidy asked Becerra about the statutory definition of a contract pharmacy and a patient under the program. The question was a likely reference to the moves by several drugmakers to restrict sales of 340B-discounted products to contract pharmacies, which are third-party entities that dispense drugs to patients.
A group of bipartisan lawmakers has joined hospital groups in calling for HHS to quash the drugmakers’ moves. However, some legal experts question whether the Health Resources and Services Administration, a part of HHS that oversees 340B, has the authority to do so.
Becerra did mention that there was an advisory opinion from HHS’ general counsel that concluded the drug companies’ actions violated the federal law that created 340B, where drug companies offer discounts to safety net providers in exchange for participating in Medicare and Medicaid.
HHS finalized a rule last year that created an administrative dispute resolution process to address disagreements between covered entities and drug companies.
“We will try to build on the work that’s been done in the past,” Becerra said. “340B has become an indispensable program for some of these providers who are really helping some of our neediest populations.”