Despite a government shutdown that is stretching into its second month and leaving federal agencies with skeleton staffing, HRSA announced on Oct. 30 it has approved 340B rebate proposals from eight of the nine manufacturers that submitted them, marking a seismic change in how the program has operated for more than 30 years.
While the agency missed its initial Oct. 15 deadline to approve manufacturer rebate proposals, its announcement appears to be consistent with its own direction that drugmakers must give covered entities 60 calendar days notice to prepare for implementation. HRSA said the eight rebate plans go into effect Jan. 1, 2026, as originally intended.
The 340B rebate pilot was open to all 10 drugs subjected to Medicare Part D drug price negotiation, which also goes into effect Jan. 1. The list of approved plans leaves out Entresto, a heart failure medication made by Novartis. It wasn’t immediately clear why its proposal was rejected.
More details:
- The rebate pilot will apply to all covered entity types.
- There are additional new medical claims data requirements for submission.
- All plans will use the Beacon platform to submit claims for rebates.
- Entities must buy the drugs through their wholesaler account before dispensing them.
- Rebates will be determined on a unit basis.
- Manufacturers cannot require the submission of purchase data.
More information is available from HRSA’s website.
Meanwhile, The Craneware Group last week hosted customers and a couple stakeholder guests to discuss what we knew so far based on the limited information available before HRSA’s announcement and what we’ve developed to help them operationalize rebates. Attendees got to see the workflows of the rebate process and how we tie it all together. We’ve also created a 340B Rebate Resource Center to help connect entities with help preparing.
As a reminder, you have until Nov. 12 to tell HRSA how complying with rebates will burden your organization. With no further guidance on the costs for covered entities to implement the rebate pilot, it’s imperative to make your displeasure known! Remember, the original Aug. 7 guidance stated that the rebate plan “should include assurances that all costs for data submission … be borne by the manufacturer and no additional costs of running the rebate model shall be passed onto the covered entities” (emphasis mine).
HELP hearing on 340B goes awry
While the government shuts down for business, healthcare doesn’t stop — and neither do attempts to undermine 340B.
Sen. Bill Cassidy, R-La., convened a hearing of the Senate HELP Committee Oct. 23 to rake 340B over the coals. He called witnesses from the Congressional Budget Office, which recently issued a controversial report on program growth, and the Government Accountability Office. It also coincided with a mid-six-figure ad buy and digital billboard parked outside the Capitol during the hearing courtesy of anti-340B dark-money group Building America’s Future.
Suffice it to say I did not expect things to go the way they did.
After delivering opening remarks that echoed Big Pharma talking points about the need to rein in 340B, Cassidy quickly lost control of the narrative. Several of Cassidy’s Republican colleagues on the committee rose in defense of the program, including Sens. Susan Collins of Maine, who noted 340B made the difference between negative and positive operating margins for many hospitals in her state, and Lisa Murkowski of Alaska, who highlighted the importance of contract pharmacies for providing access to residents in remote rural areas.
Perhaps most surprising was Sen. Tommy Tuberville, a MAGA Republican from Alabama who noted 340B relies on no taxpayer funding and helps hospitals offset losses from uncompensated care.
“We should be expanding this, not reforming it,” he said.
Amen, senator!
It was an encouraging affirmation of the bipartisan support the program enjoys. While a few GOP committee members did voice support for overhauling 340B, Democrats defended the program and criticized inaction on expiring ACA Marketplace subsidies and looming Medicaid cuts. Even Sen. Josh Hawley, another Trump-aligned Republican, used his time to attack Big Pharma for its TV advertising and exorbitant price-setting practices.
A special shout-out goes to the American Society of Health-System Pharmacists (ASHP), which sent a statement before the hearing that criticized 340B rebates and said maintaining the program would be critical to offset coming Medicaid cuts. ASHP added that newly launched drug prices rose by 17,397% from 2008 to 2024, adding that “Manufactures have no one to blame for growth of 340B discounts but themselves.”
The same goes for the American Hospital Association, which released a report that found 340B hospitals provided nearly $100 billion in community benefits in 2022, nearly 14.7% of their total expenses.
340B in the states
There was more activity at the state level in October:
- Drugmakers Alkermes, Organon, Novartis, and Sobi have exempted their contract pharmacy restrictions in states that enacted laws prohibiting them or where court rulings have upheld them.
- AstraZeneca sued Maine and Oklahoma over those states’ new contract pharmacy access laws, while the trade group PhRMA sued to block similar laws in Oregon and Rhode Island.
In other 340B news of interest:
- Pfizer recently notified several 340B hospitals that they could lose their single contract pharmacy exemption as of Nov. 1 because of “shipments to address locations inconsistent” with its exclusion policy. It’s believed to be a backlash to alternative distribution models designed to get around the restrictions.
- Eight large health systems have sued HRSA for failing to act on their administrative dispute resolution petition from November 2023 against Teva Pharmaceuticals over its contract pharmacy restrictions. HRSA issued its first ADR final rule in 2020, but the Biden administration issued a new version that went into effect last year.
- Four major hospitals and HRSA agreed to dismiss a lawsuit in which the plaintiffs were suing the government over its approval of Johnson & Johnson’s request to audit their 340B programs. Neither side has commented on why.
We’ll have more to come regarding the just-announced rebate pilot program. Stay informed and remain vigilant!
If you’d like to continue this conversation, please contact me at [email protected].