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January 340Buzz: What will 2024 bring for 340B?

Happy New Year to you and yours! I hope your holiday season was warm and bright and that you are refreshed and ready to tackle the challenges of the year ahead.

As for 2023, it was another tumultuous year for the 340B program. Emboldened by the first ruling siding with manufacturers from three high-profile federal appeals cases, more manufacturers restricted contract pharmacy access or expanded their existing limitations (more on both below). Meanwhile, the federal government finalized its $9 billion Medicare Part B remedy for 340B hospitals, with $7.8 billion in offsetting cuts set to begin in 2025, sparking a wave of lawsuits. Our safety net discount drug program endured more than its share of negative press in 2023, and Congress has started nibbling around the edges, for better or worse.

Finally, late in the year came the blockbuster ruling from a federal judge in the Genesis lawsuit challenging the government’s definition of a 340B patient.

The road ahead

What’s it all mean for 2024?

Let’s start with the patient definition case, in which the judge ruled HRSA was applying too narrow a definition in saying eligibility was limited to prescriptions from services that originated from the covered entity. The government has until Jan. 2 to file an appeal in the case; plenty of covered entities have been awaiting that decision because they are interested in testing the limits of the ruling, which the judge took pains to say was limited strictly to the Genesis case.

Staying with the courts, we should expect rulings from the remaining two contract pharmacy cases involving Eli Lilly in one and an enjoined Novartis and United Therapeutics in the other. We’ve been expecting those rulings since last summer; the oral arguments for each case took place in 2022.

The courts are also tied to the program’s political fate in 2024. Will the contract pharmacy decisions all go in favor of the manufacturers and prompt Congress to step in? (The alternative, a series of split rulings, increases the odds the matter ends up before the Supreme Court.) Given that 2024 is an election year, it’s hard to see Congress undertaking substantive 340B reform and instead continuing to nibble at the edges — and more on that below.

More and more states are signing laws barring pharmacy benefit managers from discriminating against covered entities. Many states will be watching the drug industry’s legal challenges to Arkansas’ state law, which adds a prohibition on manufacturers restricting 340B pricing at contract pharmacies, to see if they can follow suit. And if enough states follow Arkansas’ lead, it could spur Congress into action. Read more >

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