by Lisa Scholz, PharmD, MBA, FACHE, Senior Vice President Industry Relations
June 7, 2023
Friends and allies, it’s been a busy time on the 340B front, and things may be coming to a head. I recently made an unexpected visit to Washington D.C., where House lawmakers sent a pair of bills to require reporting from covered entities to the full House for consideration as part of a raft of 19 healthcare-related bills marked up at the committee level.
Meanwhile, 340B Health and the American Hospital Association (AHA) now say they will lobby for congressional action on the drug industry’s contract pharmacy restrictions, reversing their earlier insistence on letting the issue play out in the courts. Rep. Doris Matsui, D-Calif., is reportedly working on a bill to address the issue.
Also, the CMS administrator publicly stated the agency is getting ready to issue draft guidance on repayment of Medicare Part B cuts to 340B providers “very soon” and has reportedly sent its proposed remedy to the White House for approval. April was the original target date for release of a proposal, so we believe the Part B plan could come any week now.
House bills on 340B
The House Committee on Energy and Commerce voted to send two bills to the full House: HR 3290, sponsored by Rep. Larry Buschon (R-Ind.); and HR 3561, sponsored by Rep. Cathy McMorris Rogers (R-Wash.).
HR 3290 would subject 340B disproportionate share hospitals to several reporting requirements, including patients who receive 340B drugs, the amount of program benefits and how it’s used, and spending on charity care. Non-compliance would be punishable by civil monetary penalty.
In a statement, the AHA said the bill “would impose onerous transparency requirements that will not provide policymakers with meaningful information on the true value of the program to providers and their patients.” It said the bill would require hospitals to collect data at each child site and report by location the total number of patients receiving 340B drugs by payer, total costs, payments and savings. “None of these data points individually or collectively will tell the full story of how 340B hospitals use the program to benefit the patients and communities they serve,” the AHA said. (The organization also issued a timely report outlining the history of the 340B program and how it delivers value to patients and hospitals.)
My sense is that Buschon is concerned mostly about how much charity care tax-exempt nonprofit hospitals are providing and leaving out the larger issue of uncompensated care in all its forms. His bill makes no effort to look at Medicare or Medicaid payment levels, for example, and it asks hospitals to devise new financial systems to account for service-line costs, reimbursements by category, and 340B dispensations.
The bill needs co-sponsors to get a vote from the full House — and that likely wouldn’t happen until September at the earliest — and its fortunes don’t look good in the Democrat-controlled Senate.
More concerning is the second bill, HR 3561. It would allow Medicaid MCOs and pharmacy benefit managers to limit drug payments to acquisition cost plus a dispensing fee, essentially mirroring new state laws in California and New York.
There is evidence that eliminating 340B spread pricing may have been an accidental byproduct of legislative sausage making. It came out of what originally was supposed to be an amendment prohibiting pharmacy benefit manager meddling in 340B offered by Rep. Buddy Carter (R-Ga.), a pharmacist and pharmacy business owner. That amendment provided an exemption for covered entities, with the caveat they must report both their costs for the drug under Medicaid managed care and the reimbursement spread, and then making this information publicly available.
Bottom line: If you have concerns about these bills, it’s time to talk to your hospital’s congressional representatives.
A short-lived truce
File under, Honeymoons That Didn’t Last Long: A new study from the organization behind contract pharmacy claims reporting platform 340B ESP and funded by drugmaker Gilead Sciences says federal grantees deserve scrutiny and likely enjoy a greater chunk of 340B program benefits than believed (13.1% of overall 340B sales in 2021, per HRSA’s Office of Pharmacy Affairs). By analyzing Medicare Part D prescriptions, “grantees and their contract pharmacies receive reimbursement from certain payers that is well above the discounted 340B purchase price, contributing to an estimated $8 billion to $12 billion in 340B drug margin for 2020,” the report concludes.
I recently listened in on a National Association of Community Health Centers (NACHC) call where a participant asked why grantees and health centers were being targeted when they had recently joined forces with Big Pharma via the ASAP 340B alliance. A NACHC representative explained that, just as many of its members were reluctant to join the alliance, drugmakers were likewise far from unanimous about linking with 340B health centers.
To which I say, who could have possibly predicted that the drug manufacturers would throw their new health center buddies under the bus ASAP (pun intended) in favor of making a buck?
340B contract pharmacy developments
- Organon became the 22nd manufacturer to announce contract pharmacy restrictions, starting July 1 and applying only to 340B hospitals. It will allow all to designate a single contract pharmacy and submit claims via 340B ESP.
- Sanofi, Merck and Novo Nordisk tightened their 340B contract pharmacy restrictions. Sanofi’s policy allows hospitals that lack an in-house pharmacy to designate a single contract pharmacy site via 340B ESP. Merck’s policy stipulates that the contracted pharmacy be located within 40 miles of the parent hospital or health center, while NN said it would no longer allow hospitals to access 340B pricing at an unlimited number of contracted retail pharmacies in exchange for claims data, unless they own and operate those pharmacies.
- Exelixis enacted a 45-day lookback limit to reclassify purchases under 340B pricing for its cancer orphan drugs Cometriq and Cabometryx.
- Louisiana: The state Senate was set to vote on a House-approved PBM antidiscrimination bill that would also prohibit restrictions on 340B contract pharmacies. If approved and signed into law, HB 548 would become the second law of its kind, after Arkansas, where the pharmaceutical industry is challenging the law in court.
- New York: A federal lawsuit that appeared dead may have new life after a judge agreed with two community health centers who said they should be allowed to file an amended antitrust complaint. Mosaic Health in New York and Central Virginia Health Services allege that AstraZeneca, Eli Lilly, Novo Nordisk and Sanofi in 2021 coordinated their contract pharmacy restrictions to deny 340B pricing on insulin and other diabetes drugs. The judge dismissed the lawsuit last September, but the health centers filed their amended complaints last fall. Oral arguments are now expected to proceed July 20.
State of 340B
A new whitepaper from IQVIA concludes that 340B spending in 2022 rose to $105.9 billion, an annual increase of 12.2% but down from 15.9% in 2021 and 18.1% in 2020. Once again, IQVIA bases its calculations on WAC pricing, it should be said, which greatly inflates the numbers.
The report said while contract pharmacy restrictions “flattened” retail and mail order sales, hospitals and clinics made up for it by directing eligible patients to in-house pharmacies and allowable contract pharmacies.
Lastly, the 340B Coalition Summer Conference takes place next month just outside Washington D.C., and we hope to see you there. For the second year, advocacy group Community Voices for 340B plans to hold a Defend 340B March July 12 on Capitol Hill.
Recognizing that the heat is on 340B, I revert to Sun Tzu’s military manuscript “The Art of War”:
We can form a single united body, while the enemy must split up into fractions. Hence there will be a whole pitted against separate parts of a whole, which means that we shall be many to the enemy’s few.
Have courage, friends.
If you’d like to continue the conversation with me, schedule a time that works for you and I’ll be in touch!