Everything you need to know about 340B in 2023

Top 3 Things You’ll Learn

  • Advocacy groups disagree about proposed legislation
  • Federal Court decisions are on the horizon
  • Biparisan leglislation in the works to address contract pharmacy questions

The 340B Drug Pricing Program is under scrutiny by advocacy groups, courts, and legislators. Keeping up with all of the developments for this federal program that aims to provide safety-net providers with the resources they need to serve more patients can be daunting. In this rundown, I’ll share a  high-level summary of major developments that have taken place in 340B over the past 6 months.

Deepening division between 340B hospitals and 340B grantees.

Last March, in response to the National Hospital Association’s longstanding disinterest in opening up the 340B statute and refusal to propose new statute language and legislation that would end drug manufacturer 340B contract pharmacy restrictions, the NACHC (National Association of Community Health Centers) created their own 340B movement called ASAP 340B. ASAP 340B, in partnership with PhRMA (the Pharmaceutical Research and Manufacturers of America, an industry lobbying group), set forth legislation that would protect 340B contract pharmacy access for Federal 340B grantees, which includes community health centers, Ryan White Clinics, and rural referral centers.

This movement was immediately met with resistance from 340B Health (a 340B hospital advocacy group) and the American Hospital Association. Even though the movement sought to protect many 340B grantee types, it didn’t incorporate the interests of 340B hospitals. 340B Health stated that ASAP 340B “would reduce drug manufacturers’ contributions to the health care safety net by reducing the number of hospitals in 340B, preventing many specialty drugs from being subject to 340B discounts, and otherwise limiting hospitals’ ability to rely on 340B to support the provision of services to their underserved patients and communities.”

Still awaiting two other Federal Appeals Court decisions

In January 2023 the Third Circuit Court of Appeals ruled in favor of Sanofi, Novo Nordisk, and Astra Zeneca and said these three drug companies were not required to offer 340B discounts to a covered entity on any of its claims filled through community and specialty pharmacy partners. We’re still awaiting decisions from the other two Federal Appeals Courts on the two upcoming court cases (one in Washington D.C. and one in Chicago) involving Health Resources and Services Administration’s attempt to sanction drug manufacturers for restricting 340B savings access to covered entities. Industry pundits predict that the two cases will likely rule similarly to the previously ruled 340B Third Circuit Appellate Court case, but in the event of a circuit split, the possibility exists that the case could make its way to the Supreme Court.

New Legislation is in the works

In the past month, two 340B-related bills have passed the Committee on Energy and Commerce in the U.S. House of Representatives and are awaiting a vote in the Senate:

  • H.R. 3290 (introduced by Rep. Larry Bucschon, R-IN-8) would require hospital covered entities and any other covered entity designated by HHS to report on 340B savings and would allow HHS to audit how 340B savings are used. 340B Health is opposed to the bill, saying the bill “impose(s) burdensome information submission requirements on most 340B hospitals on top of the many forms of reporting they already do voluntarily or as required by law. The mandated information would represent a misleading picture of 340B and would not show the real impact that savings have on care for the patients and communities that 340B hospitals serve. The associations are calling for the committee to reject the legislation.”
  • H.R. 3561 (introduced by Rep McMorris Rodgers, R-WA-5) which has a provision in a broader health access and transparency bill that would require covered entities receiving Medicaid managed care (MCO) payments for 340B drugs that exceed the 340B purchase price to submit annual reports to the government detailing the aggregate amount of this 340B benefit. The American Society of Hospital Pharmacists argues that “these reports would further burden providers, potentially compromise proprietary financial data, and be duplicative of state laws and regulations.”

Absent in both pieces of legislation is language addressing the need for 340B contract pharmacy protections for covered entities, which is badly needed right now. Covered entities continue to be financially impacted by 340B drug manufacturer contract pharmacy restrictions, which are dramatically limiting hospitals’ access to 340B savings from their community and specialty pharmacy partners and have already resulted in hospitals being forced to make cuts to vital health services and patient assistance programs.

340B Health and AHA shift their stance and actively lobby for new legislation

After publicly stating that the AHA was not quite ready for legislation as of two months ago, according to a recent story in the 340B Report, “340BHealth and the American Hospital Association have both decided to support federal legislation to prohibit drug manufacturer restrictions on 340B covered entities’ use of contract pharmacies.” Both interest groups are now said to be actively working on a bipartisan bill that will be put forth by Rep. Doris Matsui (D-CA). Ted Slafsky, publisher and CEO of the 340B Report, says he “feel(s) confident that any deal will preserve the contract pharmacy program for all covered entities even if it is not as robust a program as it was prior to 2020. New reporting requirements are inevitable considering both HRSA and the House Republicans, which control the House agenda, support this effort. However, hospitals have enough allies in Congress to ensure that additional requirements will be manageable.”

No matter what the future holds for 340B, our expert team will be here to help you navigate through the changes. Stay up-to-date with industry developments by signing up for our newsletter.

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