The View From the Nation's Capital



Guest Contributor: Ted Slafsky
January 21, 2020

Time to Step Up Your Efforts at the State Level

With the start of the new year, many of us are setting resolutions for the coming year. If you’re a 340B stakeholder, I’m hoping I can convince you to add one more to your list: Engage with your state government officials and legislators. Until recently, the 340B program policy was primarily debated and effectuated in Washington, D.C. But as Congress remains at a stalemate on drug pricing, state capitols have suddenly leaped to the forefront of 340B legislative and regulatory activity.

A Remarkable Year in State Capitols
Last year, we saw unprecedented attention to 340B in state capitols, with seven states taking up legislation that would significantly impact the program. Five states—South Dakota, West Virginia, Minnesota, Montana, and Oregon—enacted 340B-friendly bills that prevent Pharmacy Benefit Managers (PBMs) and other payors from paying 340B pharmacies less than other pharmacies based on 340B status. These protective measures are necessary as more payors try to reduce reimbursement to 340B pharmacies. When covered entities have to pass on their drug savings to health plans and other payors, it undermines the purpose of the 340B program. I encourage 340B entities to work with their state legislators and governors to adopt similar legislation.

While 340B providers were making progress in one crucial area, two other states came close to enacting pharmaceutical industry-supported legislation that would have placed onerous reporting requirements on 340B hospitals. Both bills were framed as pro-transparency initiatives. However, the information that hospitals would have been required to submit to the government would have been difficult and time-consuming to collect, potentially creating a misleading picture of the 340B program. I anticipate there will be a renewed effort in state capitols to enact this type of legislation in 2020.

More Reasons to Get Involved in 2020
Earlier this month, the Centers for Medicare & Medicaid Services (CMS) issued long-awaited guidance outlining best practices states should consider to prevent manufacturers from having to provide a 340B discount and rebate to the state on the same drug. While the 340B provider community applauded some of the agency’s recommendations, CMS gave the green light “to limit the ability of some or all of the covered entities and/or contract pharmacies in the state to use 340B-purchased drugs for Medicaid beneficiaries.” 340B providers point out that they treat a disproportionate share of Medicaid patients. By depriving covered entities access to 340B pricing for these patients, it could increase costs and undermine care.

It is important to educate your governor, state Medicaid director, and legislators about any concerns you might have with the federal guidance and propose alternative arrangements with the state. 340B providers in a number of states– including Alabama and Indiana — have organized and been successful in blocking mandatory carve-out rules.  Covered entities in Michigan, Massachusetts and California are working together to try to prevent or mitigate harmful proposals in their states.

More generally, several states are making efforts to tackle high drug prices through various bills and regulations. These proposals run the gamut from bulk purchasing initiatives, drug importation, sunshine laws, and drug affordability boards. While many of these efforts are welcome and well-intended, some could have a negative impact on the 340B program and patients.

2020 State Legislative Sessions
Some state legislatures have already started their sessions and many more will be convening shortly. In total, 46 out of 50 states will be in session this year. In even-numbered years like 2020, most states only convene for a short period, so time is of the essence! The National Conference of State Legislatures has an excellent resource where you can find out if and when your state is in session. Just click your state on the map.

State and national associations representing 340B providers are ready to help with these advocacy efforts.
Your health system or clinic also will have a presence in the state capitol, so it is important to coordinate with your government relations representative.

 I look forward to continuing to report on state activity and ask that you keep me apprised of developments.



Ted Slafsky, a long-time health and pharmaceutical policy thought leader, is Founder & Principal of Wexford Solutions. Wexford, a consulting firm based in Washington, D.C., provides government relations, communications, and business development services. Wexford is proud to have PSG as one of its clients. You can follow Mr. Slafsky on Twitter at @tslafsky or reach him at [email protected] or 703-517-1325.