2017 340B Summer recap

340B Coalition Summer Conference recap and recent news

I recently attended the 340B Coalition Summer Conference, held July 10-12 in Washington, DC, with a record-breaking audience. The conference could not have come at a more tumultuous time for the 340B program this year, with promises by the White House to lower the cost of drugs as well as possible impending program regulations being on everyone’s mind. Following are some highlights from our time at the conference and some recent happenings since:

  • The White House’s take on 340B regulation – Heading into the conference, much of the buzz was around a leak of an executive order (obtained by The New York Times) from the White House that contained language directing the HHS Secretary to find ways to reduce the size of the 340B program. “That’s one that sticks out as a bit of a head scratcher,” said Dr. Joshua M. Sharfstein, a professor at Johns Hopkins Bloomberg School of Public Health in a New York Times article published on June 20, 2017. “This is the executive order to lower drug prices — why would you put in a provision that would raise drug prices?” This fueled a lot of discussion from conference attendees and speakers alike, but no one had any definite answers or a confirmed date when the executive order would actually be released. A recent article from Modern Healthcare, published July 12, 2017, provides an update: “In recent days, government affairs staffers at both the American Hospital Association and America’s Essential Hospitals, as well as other industry insiders, have heard that the 340B recommendation won’t be included in the final drug pricing executive order whenever it’s released,” the article says. “None were sure why it was omitted, but they believe it’s likely Trump would rather let Congress decide if there should be revisions to the program. Multiple requests for comments to the White House were not returned.”
  • Civil monetary penalties still on hold – Civil monetary penalties for manufacturers was another hot conference topic. One of the first actions the new White House administration took in January of this year was to issue a memorandum entitled “Regulatory Freeze Pending Review,” which directed agencies to delay certain regulations that had not yet gone into effect, and later issued an interim final rule that delayed the effective date of the regulations to May 22, 2017. According to an article published on the website of law firm K&L Gates, “HRSA [the Health Resources and Services Administration, an agency in the U.S. Department of Health and Human Services] published a final rule on January 5, 2017, that set forth the calculation of 340B ceiling prices and the application of civil monetary penalties to drug manufacturers that sell drugs to 340B covered entities.” However, the regulatory freeze from the White House put the implementation of those ceiling prices and penalties on hold. After considering public comments, the article says, “HRSA has now decided to delay the effective date and the enforcement date of the regulations to October 1, 2017, which aligns with HRSA’s quarterly 340B Program enrollment and participation schedule. HRSA wrote in the Federal Register that the delay is ‘necessary to provide adequate time for compliance and to mitigate implementation concerns,” as well as “enhance program integrity.’”
  • CMS’ proposed reimbursement cuts – Just as the conference came to a close, another new development in 340B news came to light. On July 13,2017, the Centers for Medicare and Medicaid Services (CMS) issued a proposal that would significantly lower the reimbursement rates CMS currently pays to hospitals for Medicare Part B drugs for 340B hospitals. The current CMS 340B reimbursement for drugs is 6% on top of the average sales price, and the new proposal would bring that rate down to 22.5% less than the average sales price. CMS says this plan would benefit patients in the form of lower copays for those drugs, while hospitals maintain that it would undercut any profits made from the 340B program, thus eliminating their ability to help the patients that the program was intended to benefit. CMS has put out a call for comments on the proposal, with responses due back by September 11 of this year.
  • Congressional hearing – The week after the conference, the Subcommittee on Oversight and Investigations held a hearing entitled “Examining HRSA’s Oversight of the 340B Drug Pricing Program.” Much of what was said in the hearing reflected the hot topics of discussion during the conference. Diana Degette, U.S. Representative for Colorado’s 1st congressional district, had this to say in her opening statement: “As the HHS Office of the Inspector General has found, there’s a need for more oversight of this important program to ensure that it achieves its critical mission… Of course, to conduct that oversight, HRSA must have the tools it needs to implement better controls over the program. These tools may require additional authority from Congress, which I’d like to explore today. And also, given the size of the agency, if you want more robust oversight, you’re going to have to give more funding. I also want to point out…that I’m troubled by the rule that the Centers for Medicare and Medicaid Services proposed last week, which would dramatically reduce reimbursements to Medicare Part B drugs for 340B hospitals. The Trump administration claimed that this proposed rule was an important step to lower the cost of drugs for the American people…The proposed rule will do nothing to achieve the goal of making prescription drugs more affordable to the general population. Reducing the repayment rate that 340B hospitals receive for Medicare Part B drugs does nothing to get to the root of high drug prices. And frankly, it tries to solve one problem by creating many others.”

While 340B program participants understand the need for further regulation and clarity around the program and how the resulting profits are used, they also maintain that heavily regulating or eliminating the 340B program—a small piece of the pie in terms of total drug spend—is not the solution to lowering the country’s skyrocketing drug costs. The problem runs much deeper than 340B—a program designed to help those in greatest need. From the perspective of Sentry Data Systems, no matter the current climate, legislation, or administration, we will continue to advocate the importance of the 340B program and help our customers optimize their participation.