by Lidia Rodriguez-Hupp, Chief Customer Officer
October 2, 2023

Our favorite safety net drug program continues to be immersed in politics, used as a punching bag by drug-industry defenders, with more discussions in Congress about adding onerous new requirements for 340B entities, usually as part of larger healthcare legislation.

To the surprise of many, Congress managed at the last second to avoid the 15th government shutdown since 1980 — for now, at least, thanks to a 45-day extension. We verified with HRSA that the normal Oct. 1-15 OPAIS registration window for 340B sites would have remained in effect and available even if federal funding had been cut off.

The politics of 340B

In September, the House Energy and Commerce Committee held some contentious hearings on a bill from Rep. Cathy McMorris Rodgers (R-Wash.), the committee chair, addressing drug shortages. Her bill would exempt certain injectable generic drugs from 340B discounts, which has proved controversial and exposed partisan splits. The full House was also expected to vote on the Lower Costs, More Transparency Act, which would require covered entities to report the difference between their acquisition costs and reimbursements from Medicaid managed care plans.

However, the extended debt ceiling standoff ground most other sausage-making business to a halt.

In the Senate, the Health, Education, Labor and Pensions (HELP) Committee rejected an amendment to a larger healthcare bill that would have required private, nonprofit 340B hospitals to submit annual verification to HHS of their contracts with state and local governments to serve indigent patients. The amendment, sponsored by Sen. Ted Budd (R-N.C.), would have duplicated a requirement from HRSA affecting nongovernmental hospitals during both 340B registration and compliance audits. It went down by a 5-14 vote.

Meanwhile, HELP Committee ranking member Sen. Bill Cassidy (R-La.), a 340B foe, announced the launch of an investigation into two health systems that came under scrutiny for how they used their program benefits.

340B in the Courts

While we continue to await rulings from two federal appellate courts over the contract pharmacy issue, all legal action has been at the state level — and specifically, two Republican-led Southern states.

Oral arguments took place Sept. 20 in a federal appeals court in St. Louis in the drug industry’s lawsuit against the state of Arkansas over its 340B contract pharmacy law. The Plaintiffs, the Pharmaceutical Research and Manufacturers of America (PhRMA), are essentially rehashing the same argument it used unsuccessfully in a lower court — that Arkansas’ law conflicts with the federal 340B statute. Last month, Arkansas said it intended to begin enforcing the law, which prohibits drug makers from placing restrictions on 340B pricing at contract pharmacies. Accordingly, Teva Pharmaceuticals ended its contract pharmacy restrictions in the state effective Sept. 26.

Next door in Louisiana, state Attorney General Jeff Landry asked a federal judge to throw out PhRMA’s lawsuit challenging its law, which similarly prohibits 340B contract pharmacy restrictions by drug manufacturers. Landry argued the plaintiff failed to demonstrate any harm from the law.

340B Potpourri

Speaking of contract pharmacies:

  • Jazz Pharmaceuticals and Incyte Corp. became the 25th and 26th manufacturers with contract pharmacy restrictions, with their policies effective Oct. 9 and 16, respectively.
  • Sanofi began denying access to 340B contract pharmacies for some health centers, citing discrepancies between purchases and claims submitted using 340B ESP.
  • EMD Serono expanded its contract pharmacy restrictions to all products effective Oct. 1. Its policy previously limited the restrictions to its multiple sclerosis medication Rebif and fertility drug Gonal-f.

In an interesting development, the head of the trade organization America’s Health Insurance Plans wants the government to reject any proposal requiring Medicare Advantage plans to issue remedy payments to hospitals that mirror CMS’s proposed Part B repayments, according to 340B Report.

Some hospitals apparently want CMS to go beyond Medicare fee-for-service in issuing $9 billion in Part B repayments and require a similar remedy from MA plans, which are offered by commercial insurers. It should be noted that CMS’s proposed plan to issue lump-sum payments and offsetting cuts for non-drug items does not mention Medicare Advantage, even though those plans paid the same decreased rates that the Supreme Court ruled were illegal.

Other news:

  • The California State Legislature sent Gavin Newsom SB 786 bill prohibiting pharmacy benefit managers from discriminating against 340B entities, after the state Senate approved it unanimously. This would make California the 30th state to outlaw discriminatory reimbursement by PBMs.
  • Drug purchases made at 340B pricing reached $53.7 billion in 2022, up by $9.8 billion or 22.3% from 2021, according to the blog Drug Channels, a critic of the program that cites data from HRSA obtained through a Freedom of Information Act request. Of that total, it said 340B hospitals comprised $46.4 billion (or 87%) in spending, up 21.8%.
  • In related news, healthcare consulting firm Avalere found that the total number of 340B covered entities rose 228% from 17,491 in 2012 to 57,372 in 2022, including a near doubling in the number of 340B grantee sites. It notes that the passage of the Affordable Care Act in 2010, which expanded eligibility to different hospital types, played a major role in the program’s growth.

Meanwhile, I encourage you to join us virtually for The Craneware Group’s 10th Annual Performance Summit Oct. 10-11, where you’ll hear from a variety of revenue integrity and 340B experts discussing ways to optimize your margins. I’ll be leading a session with one of our eagle-eyed Washington D.C. lobbyists, Deborah Outlaw, along with Laurie Chiumento,

Director of Federal Relations at the University of Rochester, on 340B advocacy. The Summit promises to be a highly educational use of your time.

See you there!

If you'd like to continue the conversation with me, please contact me at [email protected].