January 340Buzz: With the new year and new Congress, change is coming
Happy new year! Now let’s all take a deep breath and gird ourselves for what may lay ahead.
For 340B, 2022 was the year of the manufacturers and lawsuits. More drug makers — there are now 19 — rolled out contract pharmacy exclusions, while on the legal front, we notched a victory in June when the Supreme Court knocked down the nearly 30% cut in Medicare Part B reimbursements in place since 2018. The three manufacturer appeals over contract pharmacy are awaiting decisions, with Amgen entering a new case in December. All the while, CMS has yet to reveal the scope of the remedy from the Supreme Court victory for those nearly five years of Part B underpayments. Anticipate more court proceedings in the new year.
Thanks to the Genesis Health Care court case, the definition of a 340B patient may be in flux. I’m hearing plenty of anecdotal evidence that audits are softening as a result, with less emphasis on scrutinizing eligible patients. Some covered entities hope the case provides needed flexibility. Put it all together and we have a perfect storm for change, from the manufacturers writing their own 340B script, pharmacy benefit managers enforcing restrictive burdens on covered entities and covered entities’ modernized approach to providing patient care.
Meanwhile, cracks are starting to show in the program. The AIDS Healthcare Foundation is suing Apexus, the 340B prime vendor, alleging that it failed to negotiate sub-ceiling discounts on HIV and AIDS drugs and is only paying attention to hospitals. It recalls the proposal to create a “340C” discount drug program specifically for community health centers, rural hospitals and federal grantees. Why are we fighting each other instead of working to strengthen the program?
Some would say something is going to break. Others would say it has already broken.
340B comes to the fore
In November, the 340B program turned 30. Since 1992, society has undergone enormous change. Think of the phone in your pocket, or how you shop for clothing or home goods. How we access care has changed enormously in that time, with the rise of urgent care, retail clinics and telehealth services. The 340B program may need modernization; it’s up to us to make sure it continues benefiting patients and strengthening the safety net.
Much of what happens in 2023 will be determined by the courts, which have wrapped up oral arguments in the three contract pharmacy lawsuit appeals and should issue decisions soon. And yet, it’s likely that those decisions will once again be inconclusive and narrowly focused, with judges suggesting that HRSA and especially Congress needs to make some long-term fixes, just like the lower-court rulings. The drug manufacturers could ask SCOTUS to take the cases, further putting off any resolution, since Congress will likely wait until the judicial process plays out.
As I’ve noted, we’re likely to encounter more scrutiny from the GOP-led House in 2023. Divided government could also leave a bumpy path for implementing the Medicare drug-price negotiation regulations of the Inflation Reduction Act. Will we hear from the Federal Trade Commission in its investigation of pharmacy benefit managers and how they treat 340B transactions? And what kind of financial remedy will CMS propose for the nearly five years of unlawful Part B cuts? That will be critical, and much dissected.
The year ahead promises to be a busy and eventful one for 340B. Entities will need to be vigilant in educating incoming freshmen members of Congress — there are more than 70 in the House! Meet with them early. Give them a 340B information sheet and share your impact report with them. They need to know how important this program is to their constituents.
New proposed ADR
Just as we were publishing last month’s Buzz, the Biden administration released its long-awaited proposal for 340B administrative dispute resolutions, which it says “should be a more expeditious and less formal process for parties to resolve disputes.”
The biggest change is removing CMS and the HHS Office of Inspector General from ADR panels hearing disputes between covered entities and drug makers, making HRSA’s Office of Pharmacy Affairs the sole arbiter with all three seats. It would replace an ADR process put in place in late 2020 by the previous administration.
Comments are due by Jan. 30.
Buzzworthy 340B news
- Biogen became the 19th manufacturer to restrict contract pharmacy pricing on two injectable drugs that treat multiple sclerosis.
- Novo Nordisk amended its policy to allow an unlimited number of contract pharmacies if entities agree to submit data starting Jan. 1.
- Amgen sued HHS over its enforcement letter notifying the company that its contract pharmacy policies are unlawful. Amgen becomes the 10th drug company to sue the government over the issue.
- In a surprise move, AbbVie is leaving the Pharmaceutical Research and Manufacturers of America (PhRMA), along with two other business organizations. AbbVie, the fourth largest drug manufacturer by revenue, was an outspoken critic of the drug-pricing provisions of the IRA.
- CMS says it will require all covered entities to use JG or TB claims modifiers to carve out 340B drugs when billing Medicare Part B. The requirement is effective Jan. 1, 2024, but the agency is encouraging participants to start using the modifiers “as soon as possible.”
Finally, a judge in Arkansas ruled that federal law does not preempt the state’s 340B antidiscrimination law, delivering a blow to PhRMA. Like other state antidiscrimination measures, Arkansas’ 2021 law prohibits insurers and pharmacy benefit managers from discriminating against covered entities. But it goes further than other state laws by prohibiting the practice of denying 340B pricing on drugs dispensed at contracted retail pharmacies.
U.S. District Judge Billy Roy Wilson ruled that the Arkansas law makes no attempt to alter or set ceiling prices and instead deals only with distribution. It’s a much-needed win for the safety net.
Start to write down your 340B New Year’s Resolutions. I have 10 for you to consider in an upcoming blog.
Best wishes for 2023.
If you’d like to continue the conversation with me, schedule a time that works for you and I’ll be in touch!