by Lisa Scholz, PharmD, MBA, FACHE, Senior Vice President Industry Relations
November 29. 2022
Welcome back from your turkey torpor as we dive straight into the holiday season! Those of us in 340B can have extra reason to be thankful this year: While it attracted little fanfare, the program turned 30 years old on Nov. 4.
As readers of the Buzz know, the program has been mired in legal disputes with drugmakers and withering assault from Big Pharma and its allies. As covered entities tally their financial losses from the contract pharmacy restrictions of 18 manufacturers, and the federal appeals cases drag on, it hardly feels like time to celebrate. But 340B has given us much to be thankful for.
Since its inclusion in Section 340B of the Public Health Service Act as part of the larger Veterans Health Care Act of 1992, our favorite safety net discount drug program has had many accomplishments we can be proud of. I’ll highlight three:
- Enhanced integrity. In the early days of 340B, there was no such thing as a program audit from the Health Resources and Services Administration. Since it instituted them in 2012, HRSA has conducted nearly 1,800 audits of covered entities. This has lent an important check and balance to the program.
- Expanding to include rural hospitals. Community hospitals have important but incredibly difficult missions. Since 2005, 183 rural hospitals have closed their doors. The Affordable Care Act of 2010 expanded 340B eligibility to critical access and other rural hospitals, providing a critical financial and safety net lifeline to many of them. Without 340B benefits, the total number of closures would probably be higher.
- It helps patients. If anything, we don’t talk enough about how the program benefits patients, who qualify to receive discounted drugs they otherwise wouldn’t be able to afford, or access services for at-risk patients that covered entities otherwise would not be able to offer. At a time when 340B is under constant attack, this is a drum we need to beat loudly.
And in fact, that’s the gist of a new report from the American Hospital Association that says the manufacturer policies restricting access to 340B pricing at contract pharmacies are harming access to critical care for patients. The report says the average annualized financial losses range from $507,000 for critical access hospitals to nearly $3 million for disproportionate share hospitals.
340B and the midterms
The Nov. 8 elections brought some surprising results. Democrats are assured control of the Senate, with a runoff in Georgia next month to decide the final composition of the chamber, while Republicans won a much narrower control over the House than the party had hoped for. Prospects for 340B in the next Congress could have been much worse.
While we are losing some key 340B allies, the closely divided Congress will make it harder to push through ambitious or divisive legislation. But we can probably expect more 340B oversight hearings in the House and bills calling for increased transparency and reporting.
We’ll have more to say on the midterm election results and 340B in the next Congress in the coming weeks.
New ADR coming?
The Biden administration has given HRSA the go-ahead to publish its proposed replacement administrative dispute resolution for the final rule that went into effect in the waning days of the Trump administration. All we know about it is what the Biden administration said nearly a year ago, that the proposal “better aligns with the president’s priorities on drug pricing, better reflects the current state of the 340B program, and seeks to correct procedural deficiencies in the 340B ADR process.”
In September, a HRSA ADR panel dismissed the National Association of Community Health Centers’ claims against Sanofi and AstraZeneca, citing ongoing federal contract pharmacy lawsuits that also challenge the rule. The Pharmaceutical Research and Manufacturers Association (PhRMA) also sued over the ADR rule in January 2021.
It’s possible — maybe even likely — that the administration wants to wait to publish until the verdicts are rendered on all six contract pharmacy lawsuits. Once published, the proposed rule will be open for a 60-day comment period.
Speaking of the legal morass, three judges in Philadelphia head oral arguments Nov. 15 on the consolidated AstraZeneca, NovoNordisk and Sanofi cases, effectively wrapping up the last of the six lawsuits at the appellate level. Two of the three reportedly grilled the government about its assertion that manufacturers cannot impose conditions on contract pharmacy sales, which is not a great sign for 340B.
Part B payments and new waste modifiers
We got some good news last month when CMS confirmed it will resort to paying average sales price plus 6% to 340B hospitals for Medicare Part B drugs, ending a nearly 30% reimbursement cut that was the subject of a recent Supreme Court decision. The government will unveil its remedy for the nearly five years of illegal underpayments, spanning from 2018 through September of this year, before it publishes it proposed 2024 Outpatient Prospective Payment System (OPPS), which normally comes out in July.
Another change anticipated from the Physician Fee Schedule is related to modifiers for wasted portions of single-dose containers that will be subject to refunds. The “JW” modifier will now be required for reporting discarded amounts of drugs, with “JZ” as a new modifier to attest there was no discarded amount. Use of the JW modifier will be required beginning Jan. 1, 2023, in all outpatient settings, with JZ required effective July 1, 2023.
Happy holidays to you and yours!
If you’d like to continue the conversation with me, schedule a time that works for you and I’ll be in touch!