by Lisa Scholz, PharmD, MBA, FACHE, Senior Vice President Industry Relations
May 3, 2023

April was a fairly noisy month in the nation’s capital for 340B, with our favorite healthcare safety net frequently mentioned in committee hearings in Congress. Yet at this point, it’s mostly just noise.

With control of Congress divided, and both political parties already deep into strategizing about the 2024 presidential election, lawmakers are unlikely to take substantial action while the various contract pharmacy cases are still playing out in the legal system. We’re still awaiting decisions from the appeals court cases for Eli Lilly and the enjoined Novartis/United Therapeutics, which could come now at any time.

Meanwhile, Bayer has updated its contract pharmacy restrictions to stipulate that 340B hospitals that don’t have an in-house pharmacy may now select only one retail pharmacy within 40 miles of the parent site, following the latest trend of moving to a single designated pharmacy with mileage limitations and voluntary data submission. It also added its pulmonary hypertension drug Adempas to the exclusions.

Medicaid duplicate discounts

Turning back to Lilly, the Indianapolis-based drugmaker has turned up the heat in its ongoing feud with covered entities. Lilly has contacted an unknown number of covered entities to question 340B claims that the company contends it paid as Medicaid rebates.

The company appears to be targeting Medicaid managed care, an area where states — not covered entities — are supposed to implement processes to prevent duplicate discounts.

Lilly isn’t saying how they’re identifying the claims it’s scrutinizing. Did the recipients neglect to include a modifier? Is it from claims data uploaded to 340B ESP? It seems safe to assume the latter because the company now has reams of claims data it didn’t have before. It’s unfortunate but not surprising, and we should expect more of the same from other manufacturers, who seem to be playing a cruel game of follow the leader.

One recipient told me the company is playing hardball. Lilly told them their organization had a long history of violating the program, based on claims review only, and ordered it to pay it back via direct deposit, with no ability to dispute the accusation. The recipient said they couldn’t get anyone at Lilly to discuss the matter with him on the phone.

If you receive a message from Lilly alleging duplicate Medicaid discounts, you should take the matter up with your legal counsel.

Scrutiny in Congress

Now about all that activity in Congress, which has been a decidedly mixed bag.

The House the Energy & Commerce subcommittee on health has been a locus of activity on 340B. HRSA Administrator Carole Johnson told the subcommittee last month the agency would welcome Congress’ help ensuring “accountability and transparency” in 340B. She also asked for help resolving the issue of manufacturer restrictions on 340B contract pharmacies.

Later, the subcommittee discussed a variety of legislation meant to increase transparency and competition in healthcare, including a draft bill by Rep. Larry Bucshon (R-Ind.), a cardiothoracic surgeon, to impose reporting requirements on disproportionate share hospitals. Finally, the American Hospital Association went on record opposing new reporting requirements for 340B hospitals.

In addition, the House Ways and Means subcommittee on oversight scrutinized the tax exemptions enjoyed by nonprofit hospitals and questioned whether many were abusing 340B. Over in the Senate, the Finance Committee discussed a popular topic — pharmacy benefit managers — and their interference in 340B.

Meanwhile, Rep. Abigail Spanberger (D-Va.) has reintroduced the PROTECT 340B Act, which would bar pharmacy benefit managers and insurers from reimbursing covered entities at a lower rate than other non-entities, bringing along Rep. Dusty Johnson (R-S.D.) as a cosponsor. In the Senate, Sen. Mike Braun (R-Ind.) reintroduced his 340B Accountability Act, which would allow HHS to audit covered entities over their use of program benefits, and Sen. John Kennedy (R-La.) re-introduced his bill to require reporting and the passing of 340B pricing directly to patients.

State legislation

State legislatures continue to be hotbeds of 340B activity, for good and bad. Hospital transparency bills have now been introduced in four states — Connecticut, Indiana, Maine and Virginia — 340B Report writes.

Meanwhile, more states are embracing 340B anti-discrimination protections, including New Mexico, where Democratic Gov. Michelle Lujan Grisham signed a bill into law, and Iowa, where lawmakers sent legislation to Gov. Kim Reynolds, a Republican, for her signature. In Missouri, legislators advanced two different anti-discrimination bills, including a Republican-sponsored measure that would bar manufacturers from placing restrictions on 340B contract pharmacies, similar to the Arkansas state law, which is currently in a federal appeals court.

Seeking the Truth

A new nonprofit advocacy organization called 340B Truth has hit the scene and is seeking to be recognized as a 501(c)(4) social welfare organization. I contacted this organization in my role with the group 340B Matters asking who they are and expressing a kinship. The group is keeping its identity secret while it pursues 501(c)(4) nonprofit status from the IRS, and they seem to be striving to play the role of a trade association and directly draft and introduce legislation in Congress.

The organization is taking shape out of frustration with a lack of resolution to the contract pharmacy conflict with big pharma and the divisions taking shape with groups such as ASAP 340B. The group’s LinkedIn bio reads:

“Today starts a fierce legislative advocacy push to save 340B for all CE types! We are ablaze already, but we will need the help of all our CE members and CE advocates to push this across the finish line. We have stood by the sidelines long enough as 340B has been viciously attacked by Big Pharma, and we still stand quiet no more!”

The new org may find it difficult to compete with the likes of 340B Health and the American Hospital Association that have deeper pockets and deeper roots on Capitol Hill.

Regulatory matters

On behalf of The Craneware Group, I submitted comments to CMS regarding proposed guidance for the Inflation Reduction Act. Specifically, we urge CMS to:

  • Ensure that Medicare Part B and D claims in which the maximum fair price is less than the 340B purchase price are subject to inflation reduction rebates for covered entities
  • Make maximum fair price available through bill-to and ship-to mechanisms and ensure any difference between acquisition cost and MFP is reimbursed within 14 days, without a transaction fee
  • Give third-party administrators access to MFP files on the HRSA Office of Pharmacy Affairs Information System to validate data received from wholesalers

Looking ahead, CMS released guidance for billing Medicare Part B once its $35 monthly out-of-pocket caps for insulin start July 1, one of the major provisions of the Inflation Reduction Act, including two new modifiers to the HCPCS quarterly update file.

Lastly, a quick reminder that the COVID-19 public health emergency ends May 11. The Craneware Group will be launching informational resources including an FAQ, and a webinar series to help hospitals understand the changes to waivers and flexibilities. Keep your eyes on our website for more information or contact us.

The road before us is a long one. Stay focused on your safety net missions and keep doing good work.

If you’d like to continue the conversation with me, schedule a time that works for you and I’ll be in touch!