20210430 April 340Buzz - April 340 Buzz: The flywheel effect

April 340 Buzz: The flywheel effect

In his best-selling book, Good to Great, Jim Collins describes the Flywheel Effect as the constant, sustained energy necessary to create the momentum behind any great change or undertaking. Good-to-Great transformations, Collins said, never happen in one fell swoop, but instead “the process resembles relentlessly pushing a giant, heavy flywheel, turn upon turn, building momentum until a point of breakthrough, and beyond.” Which single push was the most important? he was asked. “None of them,” he said. “Rather, it was all of them added together in an overall accumulation of effort applied in a consistent direction that made the difference.”

So it is with our evolving healthcare ecosystem, including the 340B safety net we strive to support and improve. Every day we step up to create the momentum necessary to keep the flywheel turning and to generate unstoppable momentum: a new presidential administration, a national strategy to combat coronavirus, the American Rescue Plan Act of 2021, a new HHS secretary, legislation to prevent 340B price discrimination, resistance to PBMs and manufacturers who challenge 340B pricing on their products. Turn upon turn, each effort works to sustain and increase our momentum. 

And April was no different.

Key agency confirmations

The Senate Finance Committee voted on two Biden administration nominations on April 22, voting 14-14 on the nomination of Chiquita Brooks-LaSure to be the CMS administrator and 20-8 on the nomination of Andrea Palm to be the HHS deputy secretary. 

The 14-14 party-line vote and subsequent confirmation holdup was the result of an objection by committee member Sen. John Cornyn (R-Texas) to the Biden administration’s decision on April 16 to revoke a 10-year, 1115 Medicaid waiver extension for the state of Texas, approved in January by the outgoing Trump administration. It is now up to Senate Majority Leader Chuck Schumer (D-N.Y.) or Senate Minority Leader Mitch McConnell (R-Ky.) to make a motion on the Senate floor to vote on the nomination despite not getting any recommendation from the Finance Committee. A vote has not yet been scheduled.

Perhaps the dog that didn’t bark in this nomination scenario is the lack of a clear nominee from the Biden administration for the HRSA administrator position, a spot that requires no congressional hearings or Senate confirmation. The leadership qualities of the individual in this role will be very important to the 340B program over the next quarter and, like Chiquita Brooks-LaSure and Andrea Palm, this person will need to be a good steward of the 340B program and be willing to carry out the ADR process. Until this position is filled, most likely by Secretary Becerra, this choice remains a big question mark for the safety net community and a critical deliverable for the administration.

Drug manufacturers continue harmful contract pharmacy operational changes

While it might have felt like a slight lull in the action between the Trump and Biden administrations, drug manufacturers press on and PBMs are at it again:

  • Third-party manufacturer representatives continue to march forward on duplicate discount claims outside of Medicaid, requesting unnecessary data, with new companies continuing to come to market.
  • Express Scripts/ESI (3/1/21): Announced burdensome and retrospective 340B claims identification procedures for participating pharmacies. 
  • United Therapeutics (5/13): 340B contract pharmacy claims data must be uploaded to its vendor, 340B ESP, twice monthly starting May 13. Failure to do so will result in the inability to replenish orders for United Therapeutics products dispensed through a contract pharmacy.
  • Humana (7/1/21): Humana has begun sending pharmacy provider agreements for 2022 to 340B-participating pharmacies, with claims-identification and data-reporting requirements that may signal Humana’s intent to audit 340B claims more aggressively in the future. 


Renewed interest in drug pricing regulations by Senate Democrats

In the legislative arena of the 117th Congress, H.R.3 is back with the stated intent “To establish a fair price negotiation program, protect the Medicare program from excessive price increases, and establish an out-of-pocket maximum for Medicare part D enrollees, and for other purposes.” Senate Democrats have a renewed interest in these drug pricing regulations for several reasons, one of which is specific language addressing the 340B program that was previously included in the 116th Congress’s bill, and which was duplicated in a Republican version of the same bill. Unfortunately, the language at issue was detrimental to the 340B program and requires modification with alternate language. Legislators will focus on altering the specific verbiage that affects a covered entity’s ability to recover additional savings they currently receive for some managed care Medicaid contracts.

Quick hits

State-level engagement increasing rapidly

As the Biden administration completes its first 100 days in office and cements its transition to power, we’re seeing a lot of 340B-related developments at the state level, with nine states engaging in protecting 340B in 2021. 

  • New York state lawmakers pushed back its Medicaid prescription drug benefit carve out for two years under heavy pressure from health care providers to support and protect 340B programs during the pandemic. 
  • With bipartisan support, Arkansas lawmakers drafted House Bill 1881 that seeks to establish the 340B Drug Pricing Discrimination Act, a law designed to prevent discrimination against many elements of the 340B program. Other states (Indiana, Illinois, Kansas, Nebraska, North Dakota, Mississippi and Tennessee) are following suit this year with similar anti-discriminatory bills and efforts aimed at protecting 340B.

The ADR, Biden’s priorities and the 2022 budget

  • Is the ADR back? On April 19, the federal government and Ryan White Clinics for 340B Access (RWC-340B) told a federal district judge that HHS can “move forward with implementing” the stalled ADR process, and it is “actively considering additional options for agency enforcement of the 340B statute.” The government and RWC-340B said HRSA sent HHS Secretary Xavier Becerra’s office “recommended new appointments to the ADR Board to correct for shortcomings in the prior slate of appointments.” Stay tuned.
  • We are eagerly awaiting the spring publication of The Unified Agenda and Regulatory Plan from the OMB, a key strategy document in which the Biden administration will specify their healthcare priorities for the near future, and their thinking about issues of interest to 340B stakeholders. We are likewise awaiting the publication of President Biden’s proposed FY2022 budget, which will also signal the administration’s priorities.

So how do we achieve the flywheel effect for the 340B program? Particularly when PBMs have now joined manufacturers in placing reporting requirements on covered entities and covered entity contract pharmacies? When HHS hasn’t yet appointed an HRSA administrator or curtailed the activities that go outside the confines of the 340B program requirements and place new challenges on covered entities and their partners? When, in July, Humana joins others in reducing reimbursements?

First, we insist that HHS step up – it’s time to turn up the pressure. Then we remember that it won’t be a single push, but all of them added together in an overall accumulation of effort, applied in a consistent direction, that will make the difference – creating the flywheel effect for 340B. It will take all of us working together.

Thank you for your continued support of the safety net that sustains the health and dignity of the people in our communities.