It’s hard to believe the end of the year is here already. In some ways, things have been quiet on the 340B front, but a closer look reveals there is still plenty to discuss, a mix of wins and challenges.
CMS issued its final rule outlining the $9 billion lump sum Medicare Part B payments to 340B hospitals. However hospitals are still lobbying to overturn the offsetting $7.8 billion in non-drug cuts over 16 years, which are now set to start in 2026. The government says affected hospitals should start receiving the payments in early 2024.
The 340B patient definition
Of course, most of the Buzz lately is around the blockbuster federal court ruling throwing into question the definition of a 340B patient.
In a nutshell, the judge in Genesis Health Care v. Becerra ruled that HRSA had been relying on a definition it proposed in 2015 but later rescinded. That definition, he wrote, was never backed by regulation and “contradicts the plain language” of the 340B statute.
We’ve been getting plenty of questions about what the ruling means for capturing eligible prescriptions. Our best advice? Talk to your legal and compliance teams.
Chief District Judge R. Bryan Harwell rejected the government’s argument that the covered entity must originate the healthcare service leading to the prescription to be eligible. But, he was careful to note his decision applied only to Genesis, a small federally qualified health center. His decision also abides by the original definition of patient from 1996.
Still, some covered entities may see this as an opportunity to try their luck, which could raise issues for them. It also poses challenges to 340B TPA vendors like The Craneware Group.
For example, let’s say a patient visits a specialist who is credentialed with two different 340B health systems that use separate TPAs, and who writes the patient a prescription. Citing Genesis, both covered entities could claim that prescription for their own 340B discount. How do the TPAs determine who has the rightful claim to the benefit?
It’s another example of the ambiguity of the 340B statute that Congress may need to address.
More manufacturer mayhem
Sandoz, a new division of Novartis that makes generic drugs and biosimilars, became the 28th manufacturer to limit access to 340B pricing at contract pharmacies. Starting Dec. 1, hospitals will have to designate a single pharmacy location within 40 miles of the parent site and submit claims data.
Meanwhile, drugmakers continue to tighten their contract pharmacy restrictions. Eli Lilly told covered entities Nov. 6 it would no longer allow access to an unlimited number of 340B contract pharmacies in exchange for submitting claims data, citing what it said was a high rate of Medicaid duplicate discounts and “Covered entity gaming” of its limited distribution program by “misrepresenting” bill to/ship to relationships. Accordingly, Lilly is now limiting deliveries to either wholly owned pharmacies or a single designated contracted location.
Lilly later said the new policy would not apply in Arkansas due to that state’s law prohibiting manufacturer restrictions on contract pharmacies; it was not clear whether it will also exempt Louisiana over its similar law. Organon says its contract pharmacy restrictions won’t apply in either state.
State prohibitions
Speaking of Louisiana, the trade organization Pharmaceutical Research and Manufacturers of America (PhRMA) filed a motion in its case targeting the state’s contract pharmacy law asking the judge to throw it out before going to trial because it is unconstitutional and preempted by federal statute.
As for Arkansas, the federal court announced a trial date of Nov. 12, 2024 for Novo Nordisk in its lawsuit challenging the state’s law. The company sued after the state alleged it had violated the law and sought fines of $100,000 and rising.
PhRMA is also challenging Arkansas’ law before a three-judge panel in St. Louis after a federal court sided with the state. If the Eighth Circuit Court again sides with the state and covered entities, I think we can expect many other states to copy their playbook and pass similar laws — which could give Congress more time to address the issue at the federal level.
And indeed, states are doing just that. In Michigan, state lawmakers have introduced H.B. 5350, which would similarly prohibit contract pharmacy restrictions. The bill’s sponsor told 340B Report he expects a committee hearing on the proposal when the Legislature reconvenes in January. The state adopted a PBM antidiscrimination law in 2022.
Also, the Massachusetts Senate unanimously passed a bill that would prohibit manufacturer restrictions on 340B contract pharmacies, sending it to the state House. Unlike the Arkansas and Louisiana laws, and the proposed legislation in Michigan, the measure does not apply to all 340B hospital types.
Losing 340B clout?
As of this writing, 36 incumbent members of Congress have said they will not seek re-election next year — seven in the Senate and 29 in the House, according to Ballotpedia.
The list includes some prominent 340B supporters like Sens. Debbie Stabenow (D-Mich.), Benjamin Cardin (D-Md.), and Joe Manchin (D-W.Va.), and Reps. Abigail Spanberger (D-Va.) and Anna Eshoo (D-Calif.).
Spanberger, who plans to run for governor of Virginia in 2025, has sponsored the PROTECT 340B Act in the last two sessions of Congress. Stabenow and Cardin are members of the “Gang of Six” senators who recently asked for suggestions on how to strengthen the program.
Of course, there are others we’ll be less sorry to see moving on, such as Sen. Mike Braun (R-Ind.) and Rep. Michael Burgess (R-Texas), who’ve been antagonistic toward the program.
Pandemic fallout
The National Rural Health Association and 36 hospital groups and health systems signed a letter urging lawmakers to extend a pandemic-era policy allowing certain 340B hospitals to retain their program eligibility despite changes in their disproportionate share percentage. In the letter addressed to the chairs and ranking members of the House Committees on Energy and Commerce and Appropriations, NRHA says more than 400 hospitals in 47 states are at risk of losing 340B eligibility. They’re asking for a two-year extension.
In adjacent news, nearly four dozen health systems and hospitals are suing over HRSA’s announcement in October that it would end a pandemic-era waiver on 340B child site eligibility. The lawsuit cites the agency’s statement to 340B Report in 2020 that the offsite flexibilities would be permanent.
I hope you all have a happy and healthy holiday season.
If you'd like to continue the conversation with me, please contact me at [email protected].