Measuring Community Health Center Success: Manufacturer CHC Impact

Covered entities have closely monitored the 340B Drug Pricing Program (340B Program) pricing struggle with manufacturers. There are multiple highly anticipated court decisions as manufacturers rescind 340B pricing and it is important that federal grantee 340B-covered entities begin to track the impact of these decisions on your organization.

Court Decision Updates

Courts have handed down mixed decisions on two manufacturer cases that were believed to set precedent:

• Novartis & United Therapeutics v. Espinosa:
  • The judge stated that the statute does not prevent manufacturers from setting any conditions on the use of contract pharmacies.
• Sanofi & Novo Nordisk v. U.S. Department of Health & Human Services (HHS): 
  • The judge upheld HHS’ interpretations of the 340B contract pharmacy arrangements as a dispensing mechanism and states that the manufacturer price  “violate[s] the 340B statute and they may not attach strings to 340B offers.”
  • Further, the decision stated that the manufacturers’ price denials constitute an overcharge.
  • The judge did not make a statement on if the 340B statute intended the use of unlimited contract pharmacies.

At this time, the verdicts have drawn us further from an overall resolution. Other active court cases are still pending decisions. We will be monitoring how these will further set the tone on the 340B manufacturer pricing denials.

Latest Manufacturer to Deny 340B Prices

Federal grantees and specialized clinics are not currently affected by the most recent manufacturer to opt out of offering 340B pricing. Amgen recently announced that it will stop offering 340B pricing to nonfederal grantee 340B-covered entities effective January 3, 2022. 

For prior manufacturer announcements as they occurred, check out our prior BKD Thoughtware™ article.

340B ADR Panel Reshuffle

The Biden administration has issued a Notice of Proposed Rulemaking on the Administrative Dispute Resolution (ADR) stating complete replacement of the final rule, which became effective January 13, 2021, but was never rolled out. This decision will further delay HHS’ oversight abilities on the manufacturer impact. 

Currently, covered entities cannot bring manufacturers to court. The ADR process was a hopeful form of authority for the 340B Program in which covered entities could file disputes and a board of elected members could review the dispute. It was thought that the ADR process would empower covered entities to combat the 340B price denials under legal means.

Measuring Community Health Center Success & Managing Impact

BKD has assisted clients in overseeing the total 340B savings impact caused by manufacturer 340B price denials. As court decisions are handed down, tracking 340B savings in general can become a benchmark for your covered entity. 

Step 1: Measure Historical Monthly Savings 

Covered entities should have an understanding of their monthly savings and consider savings from their pharmacy network as far back as before the contract pharmacy pricing denials began. 

The goal of historical tracking is to state the losses experienced by the manufacturer challenges and to trend data over time. From here, covered entities can see how these manufacturer actions are changing their take-home savings and appropriately develop an advocacy plan.

Step 2: Assign Manufacturers to National Drug Codes (NDC)

We would like to display just how much, and what that dollar value is, and then tie it to the 340B programs that align with the program intent and say, “Here is what we will have to cut from our community if these threats persist.”

By using the NDCs per manufacturer and claims data, we can get to that “% savings by manufacturer” figure. A covered entity can relate the 340B threats to 340B programs and services in a formulaic way. 

Step 3: Take Action

Once your organization can pin down individual products and their dollar losses, you can begin to 1) track for advocacy and 2) close the gap in product use. Your organization may benefit from considering the below perspectives or strategies:

• Filter NDCs associated with the manufacturers from highest dollar and/or volume impact.
• Review your drug catalogs for available substitutable products and discuss strategies with your providers. 
• Consider application of NDC blocks.
• If the manufacturers have stipulated one contract pharmacy may be used, make that election with the appropriate forms provided by the manufacturers.
• Engage in entity-owned pharmacy discussions to combat manufacturer impact and close the 340B revenue gap.

Covered entities should be proactive while court decisions are handed down. We offer support in the above calculations and discussions. Reach out to a BKD Trusted Advisor™ on these 340B strategies or submit the Contact Us form below.