While the dust settles from the news of a limited 340B rebates pilot program, the most important thing for all of us who believe in the safety net program is to make our voices heard, loud and clear. HRSA has extended the public comment period by six days to Sept. 8; as of this writing, there were 73 comments published.
In comments The Craneware Group has prepared to submit to HRSA, we wrote that the pilot program as drafted “is operationally unworkable and may leave hospitals and the communities that depend on them financially at risk and unable to meet their mission.”
Our team analyzed six months worth of data on the 10 drugs covered by the rebate pilot program from 81 covered entities, 573 pharmacies and 908 contract pharmacy relationships. The sample comprised more than 160,000 total prescription claims.
We found that under the rebate model, these transactions would require covered entities to pay upfront WAC pricing that is more than five times higher ($430.4 million) than current 340B acquisition costs ($81.8 million). “That represents a $348.7 million increase in short-term cash outlay that providers would need to float while awaiting reimbursement, even under best-case rebate processing timelines,” we write.
“This model risks straining provider cash flow, particularly among safety-net hospitals, rural health centers, and other vulnerable entities. While manufacturers benefit from deferred payout and interest accrual, the financial exposure for covered entities is substantial and deeply concerning.”
The American Hospital Association (AHA) published its comments, calling rebates “a ‘solution’ in search of a problem” and arguing that the pilot program “must contain crystal clear guardrails — accompanied by robust enforcement mechanisms — to ensure that drug companies do not abuse it.”
In case you missed it, we published a blog post exploring unanswered questions and offering tips for how covered entities can prepare for the massive change.
Note that HRSA has published an FAQ that offers more details about how the program will work. Keep your eyes peeled for more of the same as the agency fields more comments from program stakeholders.
In other news about the all-consuming 340B rebates:
- A federal appeals court granted a motion that gave Briston Myers Squibb, Eli Lilly, Johnson & Johnson and Novartis, plus industry vendor Kalderos, until Aug. 29 to file opening briefs, an extra week. They’re challenging two lower-court rulings siding with HHS in its ability to pre-approve 340B rebate models. The court also granted a request by 340B Health to postpone oral arguments, which had been scheduled for Oct. 23, with no new date set. The deadline for HHS to approve or deny manufacturers’ rebate proposals is Oct. 15.
- In a filing in the case, HHS points to its voluntary pilot program as evidence it has the authority to pre-approve any 340B rebate model before implementation. It said Health Secretary Robert F. Kennedy Jr. “has not yet reached a decision as to whether to approve their proposed rebate models.”
- Trade groups led by the AHA are asking HRSA to extend the timelines for its pilot program rollout. In a letter dated Aug. 8, they ask to allow public comments until Sept. 15, require manufacturer rebate proposals by Oct. 20 and approve or deny those proposals by Nov. 3. “With the fundamental changes a rebate model will impose on all 340B stakeholders, it is impossible for the agency to meaningfully consider, in just seven days, all the feedback it will surely receive,” the organizations write. “Moreover, drug companies have spent years developing and preparing for a rebate model, but the agency’s current timeline would give 340B hospitals far less time to prepare.”
Most favored nation
President Trump is pressing his “most-favored nation” (MFN) policy to bring drug prices down to levels enjoyed by other developed nations that he first proposed in an executive order in May. In letters to 17 major drug manufacturers dated July 31, Trump directed them to:
- Extend “most favored nation” pricing to Medicaid, which already gets drug rebates
- Guarantee MFN pricing for all new drugs
- “Repatriate” increased revenues earned abroad to help lower drug prices “through an explicit agreement with the United States”
- Provide for direct-to-consumer or direct-to-business distribution models “so all Americans get the same low MFN prices that manufacturers already offer to third-party payers.”
The president says if manufacturers don’t comply, “we will deploy every tool in our arsenal to protect American families from continued abusive drug pricing practices.”
This directive comes as many of the same companies are preparing for the maximum fair pricing under the Medicare Part D drug-price negotiation program and Inflation Reduction Act rebates. So you can imagine that plenty of pharma execs, attorneys and lobbyists are working overtime trying to figure out how to respond by the Sept. 29 deadline. Not that we feel sorry for them.
Expect lawsuits.
Careful what you wish for
Remember ASAP 340B, the strange bedfellows alliance between the National Association of Community Health Centers and the Pharmaceutical Research and Manufacturers of America (PhRMA)? Well, 340B Report is out with an analysis that finds the number of PhRMA members that have enacted contract pharmacy restrictions on health centers has more than doubled, from seven to 16, since the alliance launched in 2023.
It’s hard to be surprised that pharma companies would betray health centers to pad their bottom lines. Ted Slafsky, the 340B Report founder and CEO, even writes that NACHC should withdraw from ASAP 340B.
A ray of hope
I’ll end with a bit of good news: A federal appeals court in New York reversed a lower court’s ruling denying the claim of two health clinics that found drugmakers colluded to deny 340B pricing on insulin and other diabetes medications.
The ruling sends the case back to the U.S. District Court and allows the plaintiffs — Mosaic Health of Rochester, N.Y. and Central Virginia Health Services — to file a second amended complaint, which the three-judge ruling concluded “plead enough facts to give rise to a plausible inference of a horizontal price-fixing conspiracy.”
The plaintiffs argue that AstraZeneca, Lilly, Novo Nordisk and Sanofi illegally colluded to enact contract pharmacy restrictions.
Keep fighting the good fight!
If you’d like to continue this conversation, please contact me at [email protected].