Pharmaceutical Manufacturers Overcharged 340B-Covered Entities

EXECUTIVE SUMMARY:

This final report points out that five pharmaceutical manufacturers, makers of the 11 prescription drugs included in our review, overcharged 340B-covered entities an estimated $6.1 million for the drugs during the year ended September 30, 1999. The overcharges represented 45 percent of the amount paid by the covered entities, and occurred because the drug manufacturers inappropriately excluded sales to health maintenance organization repackagers in calculating their best price determinations, thereby increasing the prices charged to 340B entities. We recommended that the Health Resources and Services Administration require the five drug manufacturers to identify the exact amount of the overcharges for each of the affected 340B entities and apply the overcharge amounts as offsets or credits to each entity's future purchases. The HRSA concurred with our recommendation.