September 4, 2023
It’s late summer, schools are back in session across the country, and the Biden administration just announced the first 10 drugs selected for price negotiation by Medicare as part of the Inflation Reduction Act. It’s big news — Fierce Pharma wins with the introduction to its story, which begins “The day drugmakers have been dreading has arrived” — and it feels a bit like the film “Return of the Jedi” following “The Empire Strikes Back” in the epic, seesaw battle over access to affordable medications.
The 10 drugs, which treat diabetes, autoimmune disease, cardiovascular disease and other conditions, racked up $50.5 billion in Part D spending over a year and cost beneficiaries $3.4 billion in out-of-pocket costs in 2022, the government says.
While the pharmaceutical industry and other groups are fighting the policy in court, negotiations are set to take place this year and next, with new maximum fair prices published by Sept. 1, 2024 and the prices taking effect Jan. 1, 2026. CMS also says it plans a series of virtual “listening sessions” this fall with patients and caregivers to hear their thoughts about the first batch of drugs selected for price-wrangling.
For covered entities, the big question is what lower-negotiated prices will mean for 340B, since reducing the prices of these high-priced drugs also shrinks the available benefit. The government has issued guidance saying that drugmakers must give covered entities access to maximum fair price of any of the negotiated drugs if that price is lower than the 340B ceiling price.
Some good news on 340B
There have been some encouraging developments for 340B.
The comment period has closed for providing feedback to the bipartisan working group of six pro-340B senators who solicited suggestions for how to reform the program. In late July, Connecticut Attorney General William Tong submitted a letter signed by 23 attorneys general (including the AG from the District of Columbia) — a strong endorsement that is sure to get the senators’ attention.
In the letter, the AGs say they agree with the lawmakers’ contention that the program “may have outgrown its current statutory and regulatory regime” and offer three broad principles to “clarify and strengthen” the program.
“Any effort at legislative reform by Congress of the 340B program must prioritize codifying the use of contract pharmacies by 340B covered entities and granting HRSA express and sole authority to regulate the use of 340B contract pharmacies to ensure that the 340B program operates in a manner consistent with its expressly stated original legislative intent in establishing the program,” reads one key passage.
I was also pleased to submit comments on behalf of The Craneware Group in which we advocated for greater regulatory authority for HRSA, reinforcing the definition of an eligible patient, submitting annual reports on community benefits, and more.
Elsewhere, HRSA’s enforcement authority got a boost from the Senate Appropriations Committee in explaining its proposed $12.2 million to fund the Office of Pharmacy Affairs. “The Committee supports HRSA’s continued use of its authorities and any available measures, including the imposition of civil penalties, as appropriate, to hold those drug manufacturers in violation of the law directly accountable,” the budget proposal reads. “The Committee urges HRSA to continue to take actions to safeguard covered entities’ lawful access to discounted drugs.”
Meanwhile, 340B Report writes that drugmakers hired four lobbying firms in the second quarter, while provider-manufacturer alliances brought on two more to advocate on their behalf as Congress weighs changes to 340B.
Arkansas flexes its muscle
At the state level, all eyes are on Arkansas, where the state says it has begun to enforce its 2021 law prohibiting manufacturers from denying 340B pricing at contact pharmacies. It has already told at least four drugmakers they may be in violation, according to 340B Report.
Arkansas had agreed to pause enforcement of its law in March pending review of a legal challenge by the Pharmaceutical Research and Manufacturers of America (PhRMA). The state says it lifted the stay due to the “indeterminate time period” for the federal appellate review and the “immediate need” of hospitals, adding it will proceed with enforcement of current and prospective complaints. Oral arguments in PhRMA’s appeal are scheduled for Sept. 20.
Some drugmakers have loosened their contract pharmacy restrictions in response. Merck eased its restrictions in both Arkansas and Louisiana, whose similar law went into effect Aug. 1. Teva Pharmaceuticals also lifted its policy in Louisiana, where it had agreed to settle separate lawsuits involving opioids and price fixing in recent years.
AstraZeneca, meanwhile, has filed a federal lawsuit against Louisiana over its law, which it argues is unconstitutional. PhRMA has also sued to stop the law.
Part B remedy fallout
The Centers for Medicare and Medicaid Services has extended the deadline for submitting feedback on its proposed Part B remedy to 340B hospitals by six days until Sept. 11. The American Hospital Association told CMS it is “greatly disappointed” that HHS, in devising its remedy for nearly five years of reduced Medicare Part B payments that the Supreme Court ruled were illegal, proposes $7.8 billion worth of budget-neutral cuts in other areas to hospitals over 16 years.
In a highly detailed, 30-page letter filled with legal citations, the hospital group argues there is no legal precedent for the policy and that HHS should scrap or drastically reduce the budget neutrality adjustment to “avoid exposing itself to potential litigation from any of the thousands of OPPS entities” subject to the cuts.
We’ve been expecting lawsuits over the budget-neutral offset — remember, AHA was the lead plaintiff in the Part B case that SCOTUS decided last year — but those will probably come if and when the remedy proposal becomes final policy. Stay tuned.
Finally, the FDA said it will delay by one year the implementation of new electronic tracking for prescription drugs outlined under the Drug Supply Chain Security Act, to Nov. 27, 2024. With so many other demands on pharmacists’ time, this is one requirement we’re happy to see pushed back.
We hope you had a restful Labor Day weekend. It promises to be a busy fall on the 340B front and we’re excited to see what comes next.