Key Takeaways from the 340B Coalition Summer Conference

Guest Contributor: Ted Slafsky
August 6, 2019

The 340B Coalition, the umbrella group for the 13 national trade associations that represent the providers participating in the 340B drug discount program, held its annual meeting July 15-17 in Washington, D.C. In this month’s column, I will share some key highlights from the 340B Coalition Summer Conference and get you prepared for increased federal oversight as well as state-level challenges and opportunities.

First, it was heartening to see the 340B community gather together with the same commitment and passion to affordable, high quality patient care that has been the program’s hallmark for more than two decades. While the number of attendees has grown dramatically since the first meeting 23 years ago, the dedication to 340B’s mission of enabling covered entities “to stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services,” remains the same.

Here are some key takeaways from the event:

Big legislation unlikely — but be prepared for additional reporting requirements
With a divided Congress, the chances for any dramatic legislative changes to the 340B program remain unlikely. Now that the Democrats are in control of the U.S. House, there is little appetite in the lower chamber to place restrictions on a program that the majority party generally believes is working well. This is a sea change from the last Congress, where close to 20 bills were introduced in the House and several hearings were held – all with the goal to shrink the program.

340B hospitals have had some scares in the Senate and will likely have some more. Senator Bill Cassidy (R-Louis.), who is an influential voice in the Republican caucus and has the ear of President Trump, continues to be the lead advocate for narrowing the program’s scope. On June 25th, 24 hours prior to the mark-up of the Senate HELP Committee’s bipartisan cost reduction bill (S. 1895, Lower Health Care Costs Act), 340B advocates got word of a draft amendment from Sen. Cassidy that could have forced a number of private, non-profit hospitals to withdraw from the program. The bill would have also made it more difficult for these hospitals to access discounts at child sites and would have imposed significant new reporting requirements. The amendment was withdrawn but could reappear, so I encourage you to stay on guard.

Senator Lamar Alexander (R-TN), who chairs the HELP Committee and likes to work in a bipartisan nature, continues to push the hospital community to provide more details regarding how they are using their 340B savings. The pharmaceutical industry argues that hospitals are profiting off of the 340B program and not necessarily investing their 340B savings towards taking care of low-income and other vulnerable patient populations.

Draft legislative language, which the committee eventually omitted from S.1895, would have required detailed reporting information from hospitals and their child sites. The data, which hospitals would have been required to submit to HRSA, would have covered a wide variety of areas, such as how much hospitals spend for pharmaceuticals and how much reimbursement they receive – rather than the traditional and more relevant metric of the difference between 340B pricing and GPO pricing.

Hospital groups told lawmakers that while they support transparency, the requirements would be too burdensome and complex. Hospital groups point out that they already have to report thousands of pages each year to CMS and the IRS and that some of the information requested in the proposal would not be relevant to the purpose of the 340B program.

During a hearing a week before S. 1895 was voted on by the committee, Chairman Alexander stated that 340B hospitals should be required to meet the same standards as federal grantees on how they are using their 340B dollars. In response, American Hospital Association Senior Vice President Tom Nickels told the Chairman that his association will voluntarily submit data from its members that are taking part in its Commitment to Good Stewardship Principles program by the end of the summer. Under the program, which is largely based on 340B Health’s long-standing transparency initiative, hospitals disclose how much they are saving, communicate the value of the 340B to their community and pledge continuous rigorous internal oversight. Nickels said that 1,100 hospitals have submitted their reports so far.

I strongly encourage all hospitals to participate in these initiatives. You should also be publishing this information on your institution’s web site. Please reach out to AHA and 340B Health if you have any questions. While I expect policymakers to continue to push for even more granular data, this is an important way to demonstrate your commitment to telling your 340B story.

Keep an eye out for state legislation
Speaking of 340B reporting requirements, the efforts to require more information from covered entities has spread to the state level. The pharmaceutical industry has started to lobby states to pass legislation that would require covered entities to report similar data to what is being discussed in Washington, D.C. Onerous reporting requirements made it into a government funding bill passed by the Ohio House of Representatives. Fortunately, the provision was dropped from the final legislation signed by Governor DeWine (R) on July 14.

Wisconsin’s Senate Bill 59 (see page 60) would have required each 340B hospital to report “the per unit margin for each drug dispensed in the previous year, the total margin, and how the margin revenue was used.” Wisconsin’s Insurance Commissioner would be required to post this information publicly, analyze the data, publish an annual report and hold a public hearing. Hospital groups correctly pointed out that the information requested would have been virtually impossible to collect since pharmaceutical payments for drugs are often included in a bundled payment for multiple services. It also would have provided a misleading picture of 340B revenue since it focused on total drug revenue, rather than the difference between the 340B and GPO price. Hospital groups were successful in striking the requirements from the final legislation that was signed into law.

While neither of these bills came to fruition, it is clear that the drug industry has found a new avenue to place burdens on 340B providers. This underscores the need to be vigilant at the state capitol level.

Progress on preventing discriminatory reimbursement
While the pharmaceutical industry has been hard at work at the state level, so have covered entities. Four states, South Dakota, West Virginia, Montana and Minnesota, have enacted legislation this year that prevents health insurers, PBMs and other payors from paying less to 340B covered entities and pharmacies than non-340B facilities. Considering that the 340B program was never intended to subsidize the insurance industry, these bills are warmly welcome.

I expect that payors in other states will continue to try to ratchet down payment to 340B entities. It would be very wise to work with your state legislators to enact similar protections against discriminatory reimbursement. Reach out to your 340B advocacy organizations for assistance.

More GAO reports coming
The Government Accountability Office, Congress’s watchdog agency, is scheduled to publish two reports on 340B in the coming months. One will be focused on the indigent care contracts that private non-profit hospitals are required to have in order to qualify for 340B. Under the law, private non-profit hospitals must have “a contract with a state or local government to provide health care services to low-income individuals who are not entitled to benefits under [Medicare or Medicaid].” HRSA requires that the indigent care services provided by the hospital be either unreimbursed or reimbursed at substantially-reduced rates, and that the amount of indigent care be significant.

Program detractors have argued that these contracts can require an insufficient amount of indigent care, in addition to being inconsistent and vague. HRSA has also started to look more closely at these contracts, including during the agency’s audits of 340B entities.

Another report will focus on efforts to prevent drug manufacturers from having to provide an upfront 340B discount and a rebate to the state Medicaid program. The 340B law prohibits duplicate discounts, and the federal government has provided guidance and regulations to help states, managed care plans and covered entities comply with the rule. Nonetheless, there continue to be significant challenges identifying 340B claims, and a number of covered entities have been cited by HRSA for instances of non-compliance.

Once the reports come out, we should expect that HRSA will increase enforcement in these areas and provide new guidance and rules.

Be Engaged on Pricing Disputes
As I reported in last month’s column, there has been a significant uptick in the number of manufacturers announcing they owe refunds for overcharges. This is likely due to new rules that require drug companies to provide detailed pricing data to HRSA and give the agency the power to penalize manufacturers for overcharges. HRSA has asked for feedback on their new ceiling price database and has called on covered entities to report potential overcharges or instances where they are not receiving access to a covered outpatient drug at a 340B discount. While the agency wants you to first try to work it out with the wholesaler and manufacturer, the Office of Pharmacy Affairs is ready to help when you can’t get it resolved. I encourage you to remain on top of these issues and to work closely with your 340B advocacy organizations and Apexus to ensure that you are receiving the right price. Not only are you helping your own institution, but you are also providing a service to the entire 340B provider community.


Other “View From the Nation’s Capital” Posts from Mr. Slafsky:

Clearing Off the Desk – June 2019

Be Vigilant on State 340B Activity

A Welcome Addition to the 340B Debate

Clearing Off the Desk – April 2019

Ted Slafsky, a leading pharmaceutical policy thought leader, is Publisher & CEO of 340B Report, the first and only independent news service covering the federal 340B drug pricing program.  He is also Founder & Principal of Wexford Solutions, a Washington, D.C. based firm that provides government relations, communications, and business development services. You can follow Mr. Slafsky on Twitter at @tslafsky or reach him at [email protected] or (703) 517-1325.


About 340B Report:

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