Safety net healthcare providers who rely on 340B have been weathering a stormy era for the program, which has been under sustained assault from drug manufacturers, industry groups and their allies in Congress for years. Now, after voters re-elected former President Trump and gave Republicans control over both chambers of Congress, what’s next for the federal discount drug program?
With more than 20 years of experience and through our advocacy and government relations efforts, The Craneware Group has cultivated relationships with expert insiders 340B and Capitol Hill. We recently enlisted their help answering that very question.
Trump administration 2.0
Because the 340B program did not factor as a campaign issue between Trump and Vice President Kamala Harris, we can only look back to the former president’s limited record on the issue during his first term for clues.
On the one hand, HRSA under the former president deserves credit for trying to oppose manufacturer efforts to restrict contract pharmacy access (even if the courts have mostly ruled against it). Yet the Trump administration also pushed through a nearly 30% cut in Medicare Part B reimbursements to 340B hospitals that the Supreme Court ended up striking down as unlawful.
Next year, the Department of Health and Human Services will inherit the issue of 340B rebates, which four different manufacturers have attempted to foist on covered entities in quick succession. The agency won’t have much of a grace period, considering the messy business of handling new lawsuits from Johnson & Johnson, Eli Lilly, Bristol Myers Squibb and now Sanofi.
Many 340B observers believe that rebates, which could be financially calamitous for many covered entities, are likely to materialize one way or another. And unfortunately, they may be right. Yet we’re not so sure the drug industry’s devious proposal will find a receptive ear in HHS, at least.
The reason is Robert F. Kennedy Jr., Trump’s pick to lead HHS. Like many previous HHS secretaries, Kennedy has never worked in healthcare, yet his anti-vax and pro-raw milk stances seem concerning for public health. Yet the populist has also been outspoken in his opposition to big anything — including Big Pharma — and will likely not be eager to do the industry’s bidding. It seems safe to say the drug industry was much more enamored of Trump’s first-term HHS appointment, Alex Azar, a former Lilly executive.
If they are confirmed, it’s an open question whether either RFK Jr. or Dr. Mehmet Oz, Trump’s pick to lead the Centers for Medicare and Medicaid Services, has even heard of 340B. But RFK Jr.’s distrust of Big Pharma could also be countered by populist appeals to require greater transparency from covered entities. Much will depend on who is picked to be the next HRSA administrator.
New Congress
Voters in November flipped control of the Senate to Republicans, who will have a 53-47 majority. Let’s start with the good news here, which is the nomination of stalwart 340B supporter John Thune (R-S.D.) to serve as Senate majority leader when the next Congress is sworn in.
A strong supporter of 340B hospitals in his home state, Thune will have final say over what comes to the floor for a vote. Yet he’ll also have to play nice with his Republican colleagues, such as Sen. Bill Cassidy (R-La.), a notorious 340B foe who will be taking over the Senate Committee on Health, Education, Labor and Pensions (HELP), which has purview over the program. So we can probably expect more requests for information, hearings and stepped-up oversight of the program from him. As Chair, Sen. Cassidy will also have subpoena power.
Thune is also a member of the Senate “gang of six,” a bipartisan workgroup of 340B proponents who tried, unsuccessfully, to bring the SUSTAIN 340B Act to fruition in 2024. His appointment to the top position in the Senate means he’ll likely remove himself from that group, which has been around now for years and is also losing two Democratic members to retirement. So we’re due to see at least three new faces on the pro-340B workgroup.
As Senate majority leader, Thune will also need to work with House Speaker Mike Johnson (R-La.), a much more ardent Trump acolyte, to get legislation to the president’s desk. Johnson will preside over a narrow majority — it could be 217-215 until special elections are held to replace several members who were nominated to join the Trump — that also includes the far-right Freedom Caucus, which was instrumental in ousting his predecessor, Kevin McCarthy. Johnson will have his work cut out for him in the early going, especially.
Republicans have chosen Rep. Brett Guthrie of Kentucky to chair the House Energy and Commerce Committee, taking over for Rep. Cathy McMorris Rodgers (R-Wash.), who is retiring as one of several lawmakers from both parties set to depart the panel at year’s end. Guthrie is a veteran legislator who, in our dealings with him, reluctantly recognizes the important role 340B plays for hospitals but notably opposes contract pharmacies.
Let’s all remember that the GOP had the majority in the House for the last two years and given 340B’s importance and interwovenness to the healthcare system, they did very little to harm it. Republicans don’t like taxes and realize someone has to pay. Given pharma’s lucrative profits in Medicaid and Medicare, why not them?<h2>340B and other healthcare issues
To hear the president-elect tell it, the biggest healthcare issue on the table for Republicans is curtailing the Inflation Reduction Act of 2022. Yet while they may be able to delay implementation or claw back unspent funds, few observers expect they’ll be able to outright repeal the signature achievement of the Biden administration.
As the GOP learned trying to repeal the Affordable Care Act, the hardest thing to do in politics is take something away from people. And by lowering drug prices for seniors and capping out-of-pocket costs for insulin — to say nothing of the green energy provisions that will benefit rural red states — the IRA has a lot of diverse benefits that will prove popular and difficult to undo.
As healthcare “reform” efforts go, it may prove easier to target lower-hanging fruit, such as reining in pharmacy benefit managers — or, we regret to say, indulging the pharmaceutical industry’s push to convert 340B to some sort of a rebate program. The latter would be purely up to the incoming Trump administration, with no involvement needed from Congress. And if it were to happen, sources tell us covered entities would have no real legal recourse to challenge it, other than concerns over the data being requested.
Finally, we wish we were more optimistic about the chances for comprehensive 340B legislation that could protect and strengthen contract pharmacies and settle the issue of rebates (even if it involved giving up other concessions, such as reporting). Here, the SUSTAIN 340B Act provides a useful precedent to build upon.
Its backers did an enormous amount of work trying to draft bipartisan, compromise legislation that incorporated the input they solicited from stakeholders. In the end, they were unable to get past certain undisclosed differences between workgroup members to coalesce around a final bill, only getting as far as releasing “discussion draft” legislation back in February.
Their experience shows how hard it is to find a solution on 340B that will bridge differences across the aisle. And it may suggest that the courts and executive branch continue to be the center of activity around the program in 2025.
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