The View From the Nation's Capital

Guest Contributor: Ted Slafsky
February 25, 2020

Four Key Takeaways from the 340B Coalition Annual Winter Conference

It was a pleasure to join over 1,900 stakeholders in a surprisingly chilly San Diego for the 16th Annual 340B Coalition Winter Conference. As usual, the content and networking opportunities were great. Here are four key takeaways from the event:

  1. Covered entities should feel empowered to challenge audit findings
    As 340B providers begin to challenge audit findings that they find unfair or contrary to law, the Health Resources and Services Administration (HRSA) is acknowledging its limits in enforcing its own findings. Audit letters now include a statement indicating that any findings are based on the agency’s interpretation of the 340B law and that providers that decide to challenge the findings should “submit any applicable, alternative interpretation.”Last year, HRSA voided audit findings against a South Carolina FQHC after the health center sued the agency. More recently, HRSA disagreed with recommendations from the Government Accountability Office that the agency incorporate formal assessments of covered entity compliance into its audit process to prevent duplicate discounts in Medicaid managed care, citing a lack of regulatory authority. While HRSA expects covered entities to include a description of state Medicaid policies in their policies and procedures manual, it also disagreed with the watchdog’s recommendation that it require covered entities to repay drug manufacturers. As Powers Law attorney Bill von Oehsen told attendees during PSG’s View from Capitol Hill luncheon, 340B providers should use their appeal rights when they think they have been wronged.
  2. It is more important than ever to be proactive at the state level
    As state governments become more entangled in 340B policy, you need to be actively engaged with your state legislators, governor and Medicaid agency from day one. In addition to the numerous bills being debated by your state legislature that could impact 340B stakeholders, state Medicaid departments are increasingly issuing policies that could have a profound impact on your 340B savings and ability to administer patient care. For instance, in July 2019, Kentucky Medicaid proposed significant changes for 340B providers participating in Medicaid managed care plans. 340B providers argued that the proposals—which included requiring the use of HRSA’s Medicaid exclusion file to prevent duplicate discounts in managed care and requiring contract pharmacies to be within 30 miles of the covered entity—were either contrary to federal law or would limit access to care.

    Considering that the new rules were slated to go into effect in just three months, Kentucky covered entities quickly jumped into action and fortunately prevented some of the most harmful ideas. Nonetheless, 340B stakeholders are back at work trying to prevent or amend a state Senate bill that they say would require 340B pharmacies to determine at the point of sale whether a prescription for a Medicaid patient is 340B-eligible, rather than utilizing the more workable retrospective approach.

  3. Coalition building is crucial . . . even with strange bedfellows
    Coalition building was a key theme throughout the conference. Covered entities at the state and local level are realizing that they need to forge alliances — not only with other types of 340B providers, but also with other parties that are influential in the state. To address the growing challenge of discriminatory reimbursement (when a payer lowers reimbursement due to a pharmacy’s 340B status), South Dakota covered entities reached out to community pharmacies that share concerns about payment cuts. They quickly learned that PhRMA was already supporting a bill in the state that would protect pharmacies from PBM cuts. “We asked if we could piggyback on their bill, and it must have been the first time that covered entities had worked with drug manufacturers on a bill to fight discriminatory reimbursement,” said Steve Petersen, Vice President of Pharmacy Services for Avera Health. The unlikely alliance paid off when Gov. Kristi Noem (R) signed the bill into law.
  4. Despite state victories, some matters need to be addressed nationally
    After being inspired by South Dakota’s strange bedfellows’ story, conference attendees learned that the celebration was short-lived. PBMs informed Avera and other South Dakota health systems that they do not have to abide by the new law because it is preempted by the federal Employee Retirement Income Security Act (ERISA) and the laws establishing Medicare Parts C and D. The U.S. Supreme Court will play an important role in deciding the matter via Rutledge v. Pharmaceutical Care Management Association, scheduled to be heard on April 27. This case, filed by Arkansas Attorney General, Leslie Rutledge, challenges whether ERISA preempts Arkansas state law regulating PBMs’ drug-reimbursement rates and is expected to impact the 37 states that regulate PBM reimbursement. “It is very disappointing to us that PBMs think they can essentially ignore our state laws,” Petersen said.

    While the preemption argument has apparently not been raised in the other states that have enacted anti-discrimination laws, it looks like 340B providers will need to seek a federal remedy. First, the Supreme Court case is limited to the question of ERISA preemption. Even if the court sides with Arkansas and upholds that they can regulate PBM payment rates, payors can still argue that they are exempt due to federal Medicare laws. In addition, a federal law would be preferable to a patchwork quilt of state laws, according to Powers Law attorney Stephen Kuperberg. While it will be tough to pass a bill through Congress during an election year, 340B providers may need to redouble their efforts in Washington, gain protection from this growing threat.

Check Out 340B Report
One final note: I am very excited to announce the launch of 340B Report, the first and only independent news service covering all things 340B. The 340B Report team has a combined six decades of experience with the 340B program and in journalism. I encourage you to sign up and let others know about it! The news service is free for a limited time and then will require a subscription. 340B Report has also just published a special report on the 340B Coalition conference that provides detailed coverage of the event. Feel free to contact me at [email protected] to let me know what you think.


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

Time to Step Up Your Efforts at the State Level – January 2020
Pro-340B Group Gains Momentum with Grassroots Tactics – December 2019
More States Embrace 340B Program as a Win-Win for Taxpayers, Patients and the General Public – November 2019
AIR340B Quietly Steps Up Advocacy Efforts – October 2019

Recent 340B Developments of Interest – September 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:

340B Report is the only independent news service that provides breaking news and analysis about the federal 340B Drug Pricing Program. We follow all 340B program developments big and small—in federal government agencies, Congress, courts, the states, associations, the private sector, academia, and more.