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January 340Buzz - Manufacturer mayhem and the messy middle

by Lisa Scholz, PharmD, MBA, FACHE, Senior Vice President Industry Relations
January 31, 2022

After the spate of rulings in the various federal court cases over contract pharmacy exclusions, the on-again, off-again effort to rein in drug prices by Congress and the Supreme Court hearing arguments over reimbursement cuts to Medicare Part B outpatient drugs, it seemed like a quiet start to 2022 for 340B.

Then three more manufacturers announced plans to place their own conditions on 340B contract pharmacies, adding to the pain. A new report from 340B Health finds that large and mostly urban hospitals have lost 23% of their savings due to the restrictions, while critical access hospitals have lost an average of 39%. That report only captured the effect of eight manufacturer exclusions, so the numbers will likely only grow dramatically.

But there were also some positive developments in January, including:

  • Longtime Democratic health policy guru Carole Johnson taking the helm of HRSA and the 340B program
  • Continued 340B flexibility from another 90-day extension of the public health emergency
  • The official scrapping of the Trump-era most-favored nation drug pricing rule for Part B

It all leaves us wondering whether this is the calm before the storm, especially with the 340B Coalition Winter Conference kicking off Monday. Will HHS drop its proposed new Administrative Dispute Resolution (ADR) regulation to give us something to talk about in sunny San Diego? We shall see.

The unluckiest number

The biggest news this month was the addition of three more manufacturers — and these were big ones — to make it 13 companies imposing conditions on 340B contract pharmacies.

The first to wish everyone a happy new year was AbbVie, maker of the blockbuster immunosuppressive drug Humira, which alone racked up sales of $5.4 billion in the third quarter. For many covered entities that were previously holding out on sharing claims data in exchange for 340B pricing at contract pharmacies, AbbVie was a big blow. Added to the others, it cumulatively means over $4 billion in lost savings to our nation’s safety net in the throes of battling a pandemic. To give data or not to give data? That is the question.

Then Bristol Myers Squibb became No. 12 with a very different set of conditions. First, the company opened the door for the first time to limited 340B pricing on its IMiD  (immunomodulator) specialty cancer drugs Revlimid, Pomalyst and Thalomid at an entity’s in-house outpatient pharmacy or, barring that, a single contract pharmacy. Second, covered entities that opt to participate must send their IMiD data directly to BMS, not to a third-party platform. It seems to us a way to exert control over its specialty myeloma drugs, making things so complicated that 340B hospitals essentially throw up their hands and decide it isn’t worth the trouble.

That still leaves the data question, though not for Bristol Myers Squibb’s non-IMiD drugs. This is a limited distribution model without any consideration for contract pharmacy participation if you have an in-house pharmacy. Your data is safe. Your access for patients at your contract pharmacy network? Not so safe.

Then came Pfizer as No. 13, imposing limits on access to its immunosuppressive drug Xeljanz and 11 oral oncology drugs in a letter that it starts off by saying, “Pfizer is a strong proponent of the 340B program.”

Incidentally, we’ll be discussing these and the other 10 manufacturer exclusions in a webinar, “Keeping Up with the Manufacturer Mayhem” at 2 p.m. ET Wednesday, Feb. 16. Covered entities and our contract pharmacy partners can contact our account management team to register.

340B in the courts

As noted above, it’s been relatively quiet in the legal system for the various 340B cases and appeals. A federal court halted Eli Lilly’s appeal of a judge’s ruling because U.S. Senior District Judge Sarah Evans Barker’s order “may not be ready for appellate review.” Barker had ruled that HRSA was within its rights when it sent a letter informing Lilly that it had violated the 340B statute and that manufacturers should not be allowed to unilaterally restrict 340B drug distribution. But she also set aside HRSA’s letter because the agency failed to explain its sudden turnaround regarding its ability to enforce the rules.

Meanwhile, we’re still awaiting the decision from U.S. District Judge Leonard Stark, the judge in AstraZeneca’s contract pharmacy lawsuit. Stark has been nominated to a seat on the U.S. Court of Appeals for the Federal Circuit in Washington D.C., so the final opinion could be released by a different judge.

In another case, AstraZeneca and Sanofi want the ADR panels appointed against them over disputes on its contract pharmacy restrictions to halt until the federal cases are finished and the government releases its new 340B ADR regulation.

Finally, the feds told a judge that its appeal of her joint ruling in the Novartis and United Therapeutics contract pharmacy suits justifies her pausing a lawsuit against the government by drug industry vendor and 340B-as-a-rebate proponent Kalderos.

One of the other big stories in January was the start of Medi-Cal Rx, California’s switch from Medicaid managed care to a fee-for-service model. As noted in a recent New and Noteworthy, the change means covered entities will have to bill at acquisition costs for 340B drugs dispensed through the Medi-Cal program, effectively surrendering all savings to the state.

In its lawsuit against the state of California, a group representing 31 federally qualified health centers sought a temporary restraining order against the transfer. But a judge denied the motion, arguing that the plaintiffs, who submitted their request two days before the transfer took effect, had yet to demonstrate any economic harm from it.

After a month of Medi-Cal Rx, in a state where one in three residents depends on Medicaid for coverage, we can expect more to come in this case.

340B in Congress

A bipartisan group of six U.S. House members co-signed a letter to HHS Secretary Xavier Becerra urging that the agency “move quickly” to enforce the law and issue civil monetary penalties against drug makers. Yours truly was quoted in a press release from Rep. Abigail Spanberger, D-Va., who led the effort:

“Given the unprecedented health crisis our nation is now experiencing, the 340B Drug Discount Program provides an indispensable financial lifeline for our nation’s safety net hospitals and the communities they serve. Sentry appreciates the ongoing bipartisan efforts in Congress to preserve and protect this vital drug discount program.”

Last March, the same group of lawmakers — three Democrats and three Republicans — led a bipartisan group of 220 House members to sign a letter urging HHS to act against the six manufacturers that were then restricting 340B access to contract pharmacies. HHS eventually issued enforcement letters to those six manufacturers, and later referred them to the HHS Office of Inspector General. “Unfortunately, this ongoing inaction has emboldened at least six more drug companies to join the original six companies in flouting the law,” the lawmakers wrote in the Jan. 21 letter.

On another note, the American Hospital Association asked lawmakers to include, as part of the appropriations budget that has been kicked down the road several times now, measures that would protect disproportionate share hospitals from losing their 340B eligibility because of changed patient and payer mixes during the pandemic.

340B in the states

In a positive development, more state legislatures have seen bills introduced to ban discrimination of 340B covered entities by pharmacy benefit managers:

In West Virginia, newly signed legislation that went into effect Jan. 1 amends regulations governing PBMs by, among other things, prohibiting them from reimbursing 340B entities at rates lower than those paid for the same drug to non-340B pharmacies, or assessing “any fee, charge-back, or other adjustment upon the 340B entity.”

It’s a small reminder that, despite the messy middle of where things are, good things are happening and there are still plenty of champions of 340B in positions of power. Have faith because we are on the right path.

If you’re in San Diego this week, please do come by and say hello. We’re in Booth 117.