There’s a lot happening these days in 340B and healthcare more broadly. In April, Dr. Mehmet Oz was narrowly confirmed to lead the Centers for Medicare and Medicaid Services, and the Department of Health and Human Services filed supporting motions opposing 340B rebate schemes proposed by Bristol Myers Squibb, Eli Lilly, Novartis and Sanofi, with a similar filing opposing drug-industry platform Kalderos in its long-running dispute with the government. On April 29, a federal judge heard hearings on motions from both sides for summary judgment. If those are denied, the cases will proceed to trial.
It’s been challenging to follow the news coming from the Trump administration and know what will stick and what will pass. I’ve taken to time- and date-stamping my advocacy presentation decks, because I know the information I include in it is subject to change in the blink of an eye.
But it’s increasingly clear that change may be coming for 340B.
Cassidy releases report
We’ll start with the long-awaited release of the result of an investigation into 340B by Sen. Bill Cassidy, a Republican who chairs the Senate Committee on Health, Education, Labor and Pensions (HELP).
Cassidy, a physician and longtime 340B skeptic, launched his investigation in 2023. He sought information from eight participating organizations — two each of 340B hospitals, health centers, contract pharmacy chains (CVS Health and Walgreens) and drugmakers (Eli Lilly and Amgen).
His 195-page report finds that 340B hospitals generate hundreds of millions of dollars in program benefits but don’t pass discounts directly to patients — even as it acknowledges the statute “does not specify how covered entities must use 340B revenue and whether it should directly benefit patients.” It also says the hospitals did not track which specific expenses 340B savings helped pay for.
Cassidy’s report says 340B suffers from “transparency and oversight concerns” and doesn’t improve access or lower costs for patients. It recommends that Congress:
- Require annual reporting from covered entities that outlines how program benefits “ensure direct savings” and otherwise benefit patients
- Address “potential logistical challenges caused by increased administrative complexity” that may limit the benefit to patients
- Investigate how contract pharmacies and third-party administrators (TPAs) benefit financially “to ensure that increasing fees do not disadvantage covered entities and patients”
- Require reporting from contract pharmacies and TPAs
- Ensure that 340B discounts benefit patients by establishing guidelines including changes to the definition of an eligible patient and contract pharmacies’ use of the replenishment model
Given his influence as the chair of Senate HELP, we should expect hearings to follow. Sen. Cassidy should keep in mind the good things 340B makes possible and the communities served by 340B-eligible entities. And we should all remind him that the concept of transparency should apply to covered entities and drugmakers alike.
Shuffling the deck?
Confirming a long-rumored move, the Trump administration wants to move HRSA and the Office of Pharmacy Affairs (OPA), which oversees 340B, under CMS. The proposal is spelled out in a leaked version of the president’s proposed budget and is part of the administration’s larger reorganization of the Department of Health and Human Services.
The proposal is framed as a way to give the Trump administration more regulatory authority over 340B and require reporting. It’s hardly new; calls to move 340B under CMS go back at least 25 years to when Jimmy Mitchell oversaw OPA.
It’s worth noting that no presidential budgets get voted on exactly as submitted. Congress has also consistently declined to explicitly grant regulatory authority over 340B, and it’s not clear that this time would be any different.
Relatedly, a wide-ranging April 15 executive order from the president shows that Trump wants to revive two 340B proposals from his first term:
- Requiring health centers to pass along 340B discounts for insulin and injectible epinephrine to patients, an order that the Biden administration scrapped before it took effect
- Directing HHS to survey hospitals on their 340B acquisition costs of covered outpatient drugs in Medicare, a likely precursor to resuscitating the steep Part B cuts that the Supreme Court struck down in 2022
In this way, Trump’s reshuffling proposal makes sense, as CMS is probably best-equipped to conduct surveys of hospitals.
Meanwhile, as part of that HHS reshuffling, the leaders of four health systems met with Secretary Robert F. Kennedy Jr. One CEO stressed the importance of preserving 340B, according to University Hospitals in Cleveland. It might’ve been the first time RFK Jr. had heard of 340B — at least from the perspective of a participant.
States fill the vacuum
States continue to step into the vacuum left by congressional inaction by protecting covered entities. North Dakota and Nebraska became the 11th and 12th states to prohibit manufacturer restrictions on 340B contract pharmacies, while New Mexico signed a similar law that applies only to health centers.
Yet there’s also an uptick in provider reporting requirements from the states:
- Idaho became the fourth state to require reporting from all covered entity types
- Minnesota updated its 2024 law with additional reporting requirements while extending the deadline to May 30
- Lawmakers in Indiana sent a reporting bill to Mike Braun for his signature
Hat tip
Genesis Healthcare, the South Carolina health center that was at the heart of a high-profile federal lawsuit regarding the definition of an eligible 340B patient, is wading into advocacy.
It launched a website called 340B Voice that argues the drug industry’s cuts to the program will harm FQHCs like itself. But in a juicy twist, it also specifically targets ASAP 340B, the organization jointly formed by the National Association of Community Health Centers, or NACHC, and PhRMA, the big drug-industry trade group.
As the backer of fellow advocacy organization 340B Matters, The Craneware Group welcomes Genesis’ efforts and tips our hat. The more informed voices, the better.
If you’d like to continue this conversation, please contact me at [email protected].