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Summer 340Buzz: A dog’s breakfast or a beehive of activity?

The expression a “dog’s breakfast,” is British slang for a confused mess or mixture. Things in the 340B space did seem a little like that during July and early August, with legislation launched and stalled, lawsuits initiated and mired in limbo, and new drug makers jumping into the fray while others pulled back. Some long-awaited (and surprise) announcements from the administration and the judiciary rounded off the early summer, which went from unassuming to auspicious.

While it’s tempting to describe all the 340B goings-on this summer as a “dog’s breakfast,” I prefer to look upon this commotion as a “beehive of activity” – lots of noise and movement, but steady, incremental progress toward something positive. It may not look pretty, but it eventually – after much effort – gets the job done. Remember the 340B energy bus from June’s 340Buzz? Well, we’re on it!

Here’s why:

The Legislature

New pro-340B legislation – On July 9, Reps. David McKinley (R-WV) and Abigail Spanberger (D-VA) introduced a bipartisan bill to protect 340B providers from reimbursement cuts and address the duplicate discount challenge. The PROTECT 340B Act of 2021, H.R. 4390, prohibits pharmacy benefit managers (PBMs) and other third-party payers from paying 340B providers below-market rates, and from engaging in other contracting practices perceived as discriminatory. More than a dozen states have already enacted similar legislation in the absence of this much-needed federal legislation. The bill also requires HHS to contract with a “neutral third-party” to serve as a claims data clearinghouse to prevent duplicate discounts on the same drugs – an attractive feature of the legislation to drug manufacturers. The next step for this bill is the House Energy and Commerce Committee, should it gain further momentum. Unfortunately, this bill does not address contract pharmacies, which are currently mired in litigation in several federal courts.

Pro-340B amendment included in House health funding bill – 340B supporters Spanberger and McKinley proposed an amendment that was included in the House-passed health funding bill for the coming fiscal year. The amendment lends support to federal government efforts to order pharmaceutical companies to restore 340B pricing for those drugs impacted by the recent contract pharmacy restrictions. Rep. Spanberger spoke on the House floor in support of the amendment, telling drug companies to: “Stop hiking drug prices on consumers and discriminating against our 340B providers and pharmacies.”

House report is a mixed bag for 340B – The House Appropriations Committee issued a report in mid-July that accompanied its funding bill for the coming fiscal year. Reports like these are issued each year as an explanation of the bill’s purpose and intent, and while they don’t carry the weight of law, they do provide insights into areas where Congress has particular interests and where it is encouraging federal agencies to take action. The accompanying report to the mammoth public health bill includes several specific 340B mentions. First, it notes the vital importance of 340B to both health clinics and hospitals and the benefits that accrue to communities. Second, it fully supports HRSA actions to hold drug manufacturers in violation of the 340B statute accountable, including through CMPS, and asks HRSA to report back on actions it takes to safeguard access to 340B. Finally, it directs HRSA to implement decade-old recommendations to clarify patient and provider eligibility.

Support for S. 773/H.R. 3203 grows – A Senate bill introduced by Sen. Thune (R-SD) that would allow 340B hospitals to maintain eligibility during the COVID pandemic continues to attract bipartisan support over the last month and currently has 24 cosponsors. A similar House bill (Matsui, D-CA) currently has 21 bipartisan supporters.

The Administration

Support for the Trump administration’s 340B hospital drug payment cuts – In a surprising development, the Biden administration announced on July 19 its support for continuing a nearly 30% reduction in Medicare Part B reimbursements for hospitals’ 340B-purchased drugs, a policy that originated in the previous administration. Hospital groups estimate this payment reduction costs them $1.6 billion a year and had been lobbying the Biden administration to end the cut, citing the harm it does to safety-net hospitals and low-income patients. Understandably, reactions to the announcement were swift and heated from the likes of the American Hospital Association, America’s Essential Hospitals, the Association of American Medical Colleges, and the American Society of Health-System Pharmacists, to name a few.

The proposed plans for 340B-purchased drugs, first implemented in 2018, were included in the administration’s hospital outpatient prospective payment system (OPPS) proposed rule for 2022, which was just released. You may comment on the proposed OPPS rule during the comment period, ending Sept. 17, and Sentry encourages you to do so at your earliest convenience.

Biden still expected to rescind insulin rule — Momentarily, if not by the time you’re reading this, we expect to hear that the Biden administration has officially rescinded the Trump administration’s controversial final rule requiring community health centers to pass along all 340B drug discount savings on insulin and injectable epinephrine to low-income patients as a condition for keeping their federal health center program grants. The Biden administration first signaled its intent to rescind the rule by pausing it twice, in January and March, which was followed by an official proposed rule in June. Comments on the proposal ended on July 16 and we expect it to be finalized at any time.

The Courts

The Supremes are listening – The U.S. Supreme Court has agreed to hear American Hospital Association v. Becerra, which focuses on the Medicare reimbursement rate paid for outpatient drugs and whether HHS singled out 340-covered entities. The AHA is challenging the nearly 30% cut in Medicare outpatient prospective payment system drug payments for hospitals participating the 340B drug pricing program. The court agreed to hear the case during its next term that begins in October, with a decision to be rendered sometime next year. The magnitude of these cuts is significant and undercut the spirit of the 340B Program. An unfavorable decision by the Supreme Court could result in compromising access to comprehensive health services to vulnerable communities, including lifesaving prescription drugs. This will be a closely watched case with significant consequences for the many people we serve.

AstraZeneca trial – HHS withdrew its advisory opinion on June 18, 2021 in an attempt to “avoid confusion and unnecessary litigation,” just one week after a judge denied HHS’ motion for summary judgment. HHS litigators, thinking the lawsuit brought by AstraZeneca over the 340B Program would now be moot, thought their work was done. The judge in the case, however, hasn’t dismissed it. What this portends is a long, drawn-out process for all of the drug manufacturers. In addition, pending litigation prevents HHS and HRSA from putting AstraZeneca and Eli Lilly (and potentially others) through the ADR process. Convenient, huh?

UnitedHealthcare/Novartis – The judge in these two cases combined them into a single hearing at a date to be determined this fall. It is uncertain whether the judge will issue one final decision or rule on the merits of the lawsuits separately.

More on UnitedHealthcare – The law firm representing UnitedHealthcare has filed its own lawsuit against HHS, alleging that HRSA failed to respond to FOIA (Freedom of Information Act) requests.

Sanofi – A September 14 hearing date has been set.

New Antitrust Lawsuit by FQHC – A group of New York health centers have sued insulin manufacturers Sanofi, Eli Lilly, Novo Nordisk and AstraZeneca for anti-trust violations, claiming the companies colluded to raise prices in violation of federal and state antitrust laws.

Drug Manufacturers

Humana’s contract changes went into effect July 1 – All covered entities should be carefully monitoring their reimbursements from Humana to ensure they are accurate. If you’re in one of the dozen or so states that has already passed anti-discriminatory laws (Georgia and Tennessee, for example), make sure Humana’s new contract language does not apply to you. And more importantly, don’t sign anything before your contract department and legal team have examined any new contracts to ensure they reflect the correct reimbursement rate for your state.

Boehringer Ingelheim, Merck make it the “Egregious Eight” – Two more drug makers have joined the contract pharmacy pile-on. On July 1, Boehringer Ingelheim (BI) announced they will stop shipping 340B-purchased drugs to hospitals’ contract pharmacies beginning Aug. 1. BI will make community health centers, HIV/AIDS clinics, and other federal grantee covered entities exempt from the new policy. More recently, Merck has begun informing covered entities that it will stop honoring 340B pricing to hospitals that use contract pharmacies, effective Sept. 1, unless those hospitals share their 340B claims data with its third-party vendor. Merck had previously asked CEs to voluntarily submit their claims data to be checked for duplicate discounts and rebates. Like some other manufacturers, Merck is allowing hospitals that lack an on-site pharmacy to designate a single contract pharmacy for 340B dispensations, and it is excluding federal grantee covered entities from the policy.

BI and Merck join Eli Lilly, AstraZeneca, Sanofi, Novartis, Novo Nordisk and United Therapeutics as the seventh and eighth drug manufacturer to announce 340B contract pharmacy restrictions. Their announcements were brave, particularly after seeing the lawsuits that were filed and the letter HRSA delivered to other drug manufacturers. In spite of this, we expect more manufacturers will likely do the same.

Quick Hits

• Advocacy webinar – Make sure to watch for more information about an advocacy webinar Sentry will host in September.

• Boehringer Ingelheim – With BI’s announcement, will HRSA send them a letter stating that manufacturers’ actions to limit access to 340B Program pricing for covered entities that dispense medications through contract pharmacies has resulted in overcharges and are in direct violation of the 340B statute? Possibly sometime after August 1?

• HRSA – Will HRSA be providing us with a status report on where it stands with Eli Lilly, AstraZeneca, Sanofi, Novartis, Novo Nordisk and United Therapeutics now that its deadline has come and gone?

• Drug pricing bills – Prescription drug pricing is still top-of-mind with voters and, as we approach the mid-term elections in 2022, it will become even more important. Legislators have asked the General Accounting Office (GAO) to evaluate pricing for 340B Program drugs as well as orphan drug pricing, amongst others. This, as much lower prescription drug prices abroad contradict the sky-high prices Americans currently pay. What gives?

News from the 340B Coalition Summer Conference

On the advocacy front, the 340B Summer Conference speakers focused on the need for grassroots involvement by the 340B community to help keep the pressure on Congress to stop contract pharmacy manufacturer actions, and to pass H.R. 4390 (PROTECT 340B Act of 2021) and S. 773/H.R. 3203 to maintain DSH eligibility for 340B during the pandemic. Other speakers speculated that it was unlikely for a major drug pricing overhaul bill to pass in the near term, but that it did not preclude Congress from taking other incremental steps that could impact drug prices and the 340B Program. Some expressed the opinion that litigation would drag on indefinitely, until Congress stepped in to address contract pharmacy directly or, indirectly, by allowing HRSA more authority over the program. 340B Health pushed for industry unanimity on the issue of legislative relief. Since Congress will be on recess for most of August, the drama will return in September.

Possible changes to 340B compliance and audits

Biden’s FY22 budget proposal includes the following elements relevant to 340B:

• Calls for increasing audits from 200 to 225 in FY22 for CEs

• Doubling manufacturer audits from 5 to 10

• Investigating how covered entities are using 340B net income from purchases under the 340B Drug Pricing Program

More on audits and compliance

Speakers also shared the latest insights in 340B compliance matters.

• There appears to be flexibility around the location where a prescription is written:

• The script may not be required to be written on the premises, and might not be tied to receiving referral notes from non-hospital clinic. Referral requests from the Covered Entity are still required by auditors.

• The Covered Entity must show:

• Patient received services at the hospital documented in the health record – to ensure that the patient is a patient of the covered entity

• Hospital owns, or has access to, the record that documents the care (shared EHR systems)

• Continued application of patient definition for both discharge medications and infusion orders

    • May be written by outside providers; hospital does not need access to records maintained by outside providers but must administer the infusion to the patient – an intake P&P is still needed for infusion services

340B Best Practices

Let’s recognize that not all 340B-related operations are governed by the 340B Statute or HRSA/OPA. Here are some best practices:

• Non-compliance with 340B requirements can involve significant consequences imposed by federal and state government for covered entities, and additional penalties for manufacturers

• Non-compliance with 340B-related contractual requirements can involve significant consequences imposed by payers and PBMs

• Ensure that both compliance and pharmacy staff are engaged to manage 340B program compliance

• Covered entities should seek outside counsel for legal advice or interpretation

• Exercise caution when making 340B-related billing and eligibility decisions

• Compliance elements and risks governed by 340B Statute/HRSA should not be the only factors evaluated

• Drugs prescribed from telehealth encounters are eligible for 340B, if the definition of patient is met. For example, as long as the prescriber is logged into an electronic medical record in the same way as if in a covered entity location, the service may be viewed as being provided in an eligible site.

• HRSA is unable to waive the 340B statutory requirements, specifically with respect to the GPO prohibition

• 340B participants need to have fully auditable purchasing and dispensing records that document compliance with all 340B requirements including the GPO prohibition, diversion and duplicate discounts

• Ensure that the policies & procedures are thoroughly documented

• Random sample review – mixed-use, clinic administered drugs, and/or contract pharmacy settings

• Conduct monthly audits, and issue a monthly memo with findings and next steps; consider placing 340B Program compliance reviews under privilege

340B Coalition Winter Conference

The 18th Annual Winter Conference – San Diego, CA – January 31 – February 2, 2022 has been announced. Stay tuned to for onsite versus remote due to the COVID-19 Delta variant.

The safety net that sustains the health and dignity of the people in our communities is intact and strong. A beehive of activity works to build and strengthen it every day in spite of the forces against it. As we approach the fall, we look to Congress returning from recess and working on the President’s recent request to lower drug pricing.

As always, Sentry will be there along the way as a voice for covered entities and to support you in your effort to optimize the 340B Program and serve its vulnerable patients.

Let’s continue to build this hive, and this safety net, together!

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