While the 340B world remains in wait-and-see mode regarding the remaining two contract pharmacy court decisions, the contours of the battle over the future of the program have become clear. This is a fight being waged on two fronts — one in the states, which are growing more emboldened, and the other in Congress, at the federal level.
Federal 340B reform
The big news is the request for information put out by the bipartisan “group of six” U.S. senators as part of their draft legislation known as the SUSTAIN 340B Act, explaining in an accompanying letter that they “believe it is necessary” to pass reform legislation this year “that provides clarity, transparency, and accountability in the 340B program in order to ensure the program remains strong, long into the future.”
The senators established a deadline of April 1 for submitting feedback. We are working to compile comments from The Craneware Group and encourage those of you reading to make your voices heard as well.
The lawmakers last year issued a similar RFI and received more than 250 responses. “We are committed to addressing the concerns that have been raised by stakeholders as part of this process, including HRSA’s authorities and resources; contract pharmacy arrangements; the role of PBMs in the program; duplicate discounts; and the promotion of transparency and program integrity,” they wrote in an accompanying letter.
Not surprisingly, transparency figures prominently. For now, the senators propose requiring covered entities to report things like their amount of program savings and how they use it, the number of patients who received 340B drugs and their demographics, number of contract pharmacies, and so on. In many cases, gathering this information would be burdensome on teams already spread thin, and making the information public makes a lot of entities nervous, since it could be used to determine the basic outlines of contracts with payers.
More encouragingly, the senators want to prohibit drugmakers from collecting data or imposing other conditions on contract pharmacy usage and strengthen penalties. But they also ask whether there should be any limits on the use of contract pharmacies, and they require entities to extend financial assistance to patients who get their prescriptions at a retail pharmacy or in the mail. The lawmakers also want ideas for how to grant rural providers more leeway to ensure access to contract pharmacies and how to maintain access to specialty pharmacies.
Interestingly, the lawmakers also ask for feedback on the patient definition — a clear reference to the ambiguity resulting from November’s Genesis ruling.
Other areas the senators want feedback on include:
- Requirements for child sites
- Creating a user fee to help fund program administration
- Creating a national clearinghouse to prevent duplicate discounts, which we believe strongly should go to a government-selected third party, closer to a Bizzell Group than a drug industry vendor like 340B ESP
- Requiring new studies and reports, including on dispensing fees for contract pharmacies
Of course, it’s an election year, and Congress is once again consumed with avoiding a government shutdown. The odds are not on the side of major 340B reform happening in 2024, but you never know. And what’s happening at the state level is only ramping up pressure on Congress to act.
States step into fill the void
Inspired by state laws in effect in Arkansas and Louisiana, bills to ban drugmaker restrictions on 340B contract pharmacies have been cropping up like daffodils in spring. According to 340B Report, bills prohibiting contract pharmacy restrictions have now been introduced in 18 states. They’ve been approved by the state Senate in two states — Massachusetts and Virginia — and out of legislative committees in two others (Oregon and Oklahoma).
State lawmakers are hearing from their healthcare provider constituents that they are suffering and cannot afford to wait for a federal fix, which is good. But the pharma industry is aggressively fighting the Arkansas and Louisiana laws in court, arguing that 340B is a federal program and should be subject only to federal oversight, not left to the whims of individual states.
The flurry of state-level activity comes as 340B lobbying generated a record 1,364 disclosure filings in 2023, per 340B Report. PhRMA also ran a nearly 900-word anti-340B advertorial in The Washington Post, and it released a highly critical, interactive map of contract pharmacy data by state.
One key point: The drug industry’s PR strategy is to redefine 340B as a discount program intended to help low-income patients access medications they might not otherwise be able to afford. That allows pharma to portray covered entities as greedy profiteers.
Whereas the draft SUSTAIN 340B language reiterates the original 1992 intent: “It is the sense of Congress that the purpose of the drug discount program … is to stretch scarce Federal resources and help safety net providers maintain, improve, and expand patient access to health care services by requiring drug manufacturers … to provide discounts to covered entities that serve a disproportionate share of low-income and underserved patients.”
It’s a big difference, and the general public needs to better understand the real intent of the law — and the value it provides to communities.
Meanwhile, the South Dakota Legislature sent a bill prohibiting PBMs from discriminating against 340B providers to Gov. Kristi Noem to sign. And in an unwelcome development, lawmakers in Connecticut introduced a bill that would require reporting for covered entities after Gov. Ned Lamont proposed the same thing in his fiscal 2025 state budget.
Other developments
- In Alabama, Baptist Health sued Humana over alleged 340B underpayments over five years by the insurer’s Medicare Advantage plans. The underpayments mirror the nearly 30% cut in Medicare Part B payments that the Supreme Court ruled were illegal in 2022. While that ruling did not address private MA plans, groups including the American Hospital Association have urged CMS to order commercial MA plans to follow suit with their own remedial payments for the affected period between 2018 and 2022.
- Amgen announced its restrictions on contract pharmacy access to six drugs will apply to grantees starting March 19.
- S. Rep. Cathy McMorris Rodgers (R-Wash.), the chair of the powerful House Energy and Commerce Committee, announced she will not run for re-election this fall after serving 10 terms. That sets up a scramble for chairmanship of E&C, which has purview over 340B, and which is losing at least 11 members to retirement.
More background intrigue in a busy election year. Be sure to make your voices heard and keep doing the good work.
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