The 340B Drug Pricing Program continues to face challenges and opportunities as we head into the fall. In this article, we’ll help you stay up to date with the headlines that emerged over the past few months.
Medicare Advantage Plans & CMS’ 340B Hospital Remedy Plan
Medicare Advantage plans are not addressed in the recently proposed Medicare fee-for-service remedy (lump-sum payments) to 340B hospitals. This lump-sum payment results from an improper five-year rate reduction from 2018 through September 2022 (see the previous alert issued by FORVIS regarding the CMS 340B underpayment remedy for traditional Medicare). Currently, Medicare Advantage plans are waiting on guidance from CMS (see our FORsights™ article, “Supplemental Response: 340B Underpayment Remedy for Managed Care Plans,” for our recommendations on Medicare Advantage plans).
Manufacturer Restrictions: An Ongoing Challenge
Since 2020, drug manufacturers have steadily expanded barriers and restrictions to access 340B drugs, impacting covered entities and their ability to realize savings through the program. By reducing the volume of 340B-eligible dispensations, manufacturers increase the cost to covered entities and patients while expanding profit margins for themselves.
In January 2023, the Third Circuit Appellate Court sided with the manufacturers, stating that manufacturers are not required to ship 340B drugs to an unlimited amount of contract pharmacies for covered entities. Similar lawsuits are pending in the District of Columbia and Seventh Circuits. Should the circuits issue diverging opinions, it is possible that the issue will end up in the U.S. Supreme Court. The big question remains, what will happen in Congress during these court decisions and afterward?
Health Resources & Services Administration (HRSA) Urged by Senate Appropriation Committee to Penalize Drug Manufacturers
Released July 27, 2023, the U.S. Senate Committee on Appropriations included the following statement in its fiscal year (FY) 2024 spending bill for labor, health and human services, education, and related agencies:
“The Committee is concerned that manufacturers continue to deny 340B pricing for drugs purchased by covered entities for use in contract pharmacies, which threatens the ability of safety-net providers to care for patients in need. The Committee supports HRSA’s continued use of its authorities and any available measures, including the impositions of civil penalties, as appropriate, to hold those drug manufacturers in violation of the law directly accountable.”
The Senate bill would not give HRSA regulatory oversight, as requested by the Biden administration. The administration also requested $5 million more than the $12.2 million the committee reports to give for FY 2024 in the bill. Specific funding levels within HRSA are not detailed in the bill, and these details are expected to be released one day before the full committee votes on the bill, which has not been scheduled yet.
States Act Against Manufacturer Restrictions
Arkansas and Louisiana have passed legislation to counter manufacturers’ attacks on contract pharmacies.1 These laws contain similar language regarding the prohibition of certain actions taken by manufacturers, distributors, pharmacy benefit managers (PBMs), insurers, and other third parties. Examples include:
- Requiring claims modifiers to identify drugs purchased through the 340B program
- Discriminatory fees for 340B program participants
- Restricting access to 340B drugs through additional contract pharmacy requirements
Violators of the law may face investigations, remedies, and/or penalties.
While some manufacturers, such as Merck and Teva, have complied with the legislation, Pharmaceutical Research and Manufacturers of America (PhRMA) has responded with litigation,2 asserting that the states have violated the U.S. Supremacy Clause. Both lawsuits remain pending in their respective judiciary proceedings.
Also at the state level, 23 attorneys general have come together to endorse 340B. These attorneys general recently sent a letter addressed to the U.S. Senate 340B Working Group. This bipartisan support is critical to underpin the nation’s healthcare safety net and sends a strong message to Congress.
Navigating Manufacturers’ Restrictions
Manufacturers’ restrictions on contract pharmacies often present covered entities with two options to regain access to 340B pricing:
- Designation of a single contract pharmacy, often through completion of a designation form
- Submission of contract pharmacy claims to a third-party software vendor, e.g., 340B ESP, on a bimonthly basis
Entities that do not choose one of these options forfeit their access to 340B pricing at applicable contract pharmacy locations. To help reduce the financial impact of these attacks, entities should review their existing pharmacy networks and prescription claims data. Understanding where your entity’s patients are filling their prescriptions can be helpful in choosing a single strategic contract pharmacy or expanding your contract pharmacy network. Before pursuing any options to restore access to 340B pricing, covered entities should consult with their legal counsel. Given the severity of the manufacturer’s restrictions, covered entities are now considering the option of opening their own entity-owned pharmacies.
The Power of Entity-Owned Pharmacies
In today’s rapidly evolving healthcare landscape, the advantages of entity-owned pharmacies are becoming more important than ever. These pharmacies owned and operated by covered entities are setting new benchmarks in patient care and financial stability.
Why consider an entity-owned pharmacy for your organization? First, with the escalating fees of third-party administrators and increasingly restrictive manufacturer policies for contract pharmacies, entity-owned pharmacies present an alternative. By overseeing pharmacy operations directly, organizations not only tap into a potential revenue stream, but also help provide high-quality patient care, granting better accessibility to crucial medications through the 340B program. In addition, these pharmacies have the potential to dispense specialty medications and can serve as a convenient option for employees to obtain their prescriptions.
Pharmacists’ Role in Improving Patient Outcomes Through the 340B Program
The 340B program provides patients with essential access to discounted medications. Improved access to medications can lead to better adherence, which in turn helps improve patient outcomes. However, care teams may not fully integrate the benefits of the 340B program into their therapeutic decision-making process.
Pharmacists with an understanding of the 340B program are well positioned to address this gap. Leveraging the program’s discounted pricing and their clinical expertise can help them make informed recommendations for therapy adjustments that do not compromise patient outcomes. This allows patients to not only benefit from reduced drug costs but also receive appropriate treatment. Furthermore, their expertise can aid in navigating the restrictive environment set forth by the manufacturers to continue to help patients have access to the medications they need. Integrating a clinical pharmacist into the care team with 340B knowledge is an often-overlooked component for covered entities looking to improve outcomes and place patients at the front of every decision.
Advocacy for the 340B Program: Beyond the Senate’s RFI
On June 16, 2023, the Senate issued a request for information (RFI) regarding the 340B Drug Discount Program, aiming to gather insights to improve the program’s oversight, integrity, and transparency. This initiative, which concluded on July 28, 2023, drew responses from various advocacy groups. Notably, 340B Health and the American Hospital Association highlighted the program’s pivotal role in allowing healthcare providers to take advantage of federal resources and provide services for low-income and rural communities. As the healthcare landscape continues to change, the Senate’s RFI and the collective responses emphasize the bipartisan support for the program’s original intent and benefits. While the RFI phase has concluded, the imperative for advocacy has not. We strongly encourage covered entities to continue their support for the 340B program and engage with state representatives.
Our professionals can assist in untangling the impact on your organization from the efforts of manufacturers, third-party entities, and the U.S. Department of Health and Human Services. To learn more, please reach out to a professional at FORVIS or use the Contact Us form below.