Perhaps the biggest 340B news of the month is that the US Court of Appeals for the DC Circuit has denied the AHA’s lawsuit against CMS, writing that “AHA failed to present a reimbursement claim to HHS secretary Alex Azar before filing its lawsuit,” reports Healthcare Dive. The hospital groups have said they plan to refile in district court.
Despite the lawsuit dismissal, there has been a great deal of other 340B debate and news in the past several weeks. Transparency has been the buzzword over the past month, with both pharma and hospitals each demanding it from the other. While the two sides can’t agree on much, they do seem to agree that transparency is key—even if they have different ideas of what it means and how to achieve it.
SERV bill calls for transparency
On June 12, Congresswoman Doris Matsui (D-CA) introduced H.R. 6071, the SERV (Stretching Entity Resources for Vulnerable) Communities Act. The bill calls “to amend the Public Health Service Act to clarify the intent of the 340B program and provide for enhanced 340B program integrity.” As Inside Health Policy reports, the bill calls for a variety of changes, “including explicitly laying out a purpose for the 340B program that says hospitals do not necessarily have to forward drug discounts to patients” and reversing the January 1 CMS reimbursement cuts. Modern Healthcare adds that the bill would require the HHS secretary to audit both 340B providers and drug manufacturers, and “would force drug manufacturers to disclose drug pricing information publicly.”
“By holding pharmaceutical manufacturers accountable for their actions and providing pricing transparency to the thousands of safety net providers that participate in the program, the SERV Communities Act will reduce costs and expand access to needed care,” said Maureen Testoni, interim president and CEO of hospital trade association 340B Health, in a statement. “Pharmaceutical manufacturers have deflected concerns regarding pricing transparency for too long.”
Testoni’s comment about a lack of manufacturer transparency stems from the fact that currently, pharma manufacturers are required to offer the drugs to covered entities at a price that does not exceed a particular ceiling price under the 340B program, but individual hospitals have no way of knowing whether pharma companies are meeting that requirement or not, or what the hospitals’ competitors are being charged for the same drug. And the rule solidifying and clarifying those ceiling prices has now been delayed by CMS a total of five times, most recently until July of 2019.
At a Senate Health, Education, Labor and Pensions (HELP) Committee meeting in May, Ann Maxwell, assistant inspector general for evaluation and inspections at HHS’ Office of the Inspector General (OIG), reported that “providers just pay what they are charged” and have to trust that pharmaceutical companies are providing the discount mandated by 340B, notes Healthcare Dive. In fact, it was pointed out by Representative Tina Smith of Minnesota during the hearing that a 2005 OIG report estimated that 14% of all purchases made by covered entities were overcharged by manufacturers, adding up to $3.9 million for the month of June 2005 alone.
Transparency takes center stage at Senate hearing
Meanwhile, though pharma offers no transparency on pricing to covered entities, manufacturers still demand transparency from hospitals when it comes to how, and for whom, 340B savings are being used.
At the June 19 Senate HELP Committee meeting—the third centering on 340B in recent months—HRSA director Krista Pedley said that in order to enforce either the pricing transparency hospitals have requested, or the stricter oversight of the 340B program that pharma companies are calling for, HRSA needs more legal authority over the program. Pedley told those at the meeting that “legislation is the only way her agency can obtain the authority it needs,” according to Healthcare Dive.
Democrat representatives spoke up at the meeting, voicing concerns over the delayed civil monetary penalties rule, and the fact that to date, no pharma manufacturer has ever been penalized for overcharging under the program. Those present also pointed out the imbalance in the number of HRSA audits for hospitals vs. pharma companies participating in 340B (12 of 600 manufacturers and 981 out of 12,700 hospitals in the past five years).
As Pedley noted during the meeting, covered entities are far more likely to be audited than pharma manufacturers because they are subject to more program requirements and regulation. Sentry recognizes this and therefore stands by hospitals in maintaining that even further oversight and regulation of the 340B program, as many pharma companies and Republicans have called for over the past year, will place an undue burden on already-strapped safety net hospitals, especially in comparison to the lack of accountability on the manufacturers’ side. Sentry recognizes that 340B compliance and maintenance is very complex, and that human and technology resources must be in place to prepare for audits while working to make the most of program savings. Sentry will continue to offer its customers a robust mix of technology services and expert guidance and advice to maximize program participation in this volatile climate and beyond.
“Integrity, transparency and accountability are critical to any program,” Senator Patty Murray (D-Wash.) said during the meeting. “We can strengthen the 340B program by increasing accountability for drug companies that currently have very little.”
Additionally, the House Energy & Commerce Health Subcommittee held a hearing on July 11, titled “Opportunities to improve the 340B Drug Pricing Program.” The purpose of the meeting was to discuss the Government Accountability Office (GAO) report released last month, which recommended ways to improve oversight of providers’ use of 340B contract pharmacies. The July 11 House hearing was also an opportunity to review old and new bills from the House and Senate related to the 340B program (seven previously introduced bills and eight discussion drafts). Debate in the meeting centered around the original intended purpose of the program, potential oversight measures, the definition of which patients should benefit from the program and the number of audits of 340B hospitals vs. audits of drug makers. After nearly four hours the meeting ended with no indication of next steps or future meetings, reported 340B Health.
New 340B Health studies and member survey
The announcement of the July 11 Energy and Commerce Committee Hearing prompted stakeholders to review 11 newly introduced bills. Bills that were designed to curtail the program, or to require savings/information reporting, manufacturer oversight, program intent or HRSA administration, were major topics of discussion in recent weeks. 340B Health focused in particular on a bill introduced by Representative Barton (TX) that would change the DSH% for eligibility in the program from 11.75% to 18%. A study from 340B Health revealed that such a change could result in 573 hospitals possibly losing eligibility to participate in the 340B program.
On June 22, 340B Health released a report based on the inaugural survey of its 1,300 safety net hospital members, which “shows hospitals are using 340B savings to provide care to low-income and rural patients and the communities they serve,” according to a press release. Survey results include:
- 80 percent of DSH hospitals said they used 340B discount savings to offset low Medicaid reimbursement rates in their state.
- Nearly 3/4 of rural hospitals (74 percent) said they used 340B savings to keep their doors open and preserve access to care for their patients and communities.
- All hospitals indicated that cuts to reimbursement or limits on eligibility for 340B would harm access to care for the low-income and rural patients and communities they serve.
- Three-fourths of hospitals (75 percent) reported they would have to cut back on the amount of uncompensated care they provide.
- Nearly as many (70 percent) reported they would have to look for ways to cut costly but often underpaid services.
- Nearly 40 percent of hospitals also reported that cuts in 340B program savings would hurt their ability to provide discounted and/or free drugs to patients in need.
“This is crystal clear evidence that the money saved from 340B drug discounts is being invested in more care for vulnerable patients and the expansion of needed, but often underpaid, services,” said Maureen Testoni, interim CEO of 340B Health. “The findings illustrate the critical role that 340B plays in preserving the healthcare safety net.”
On June 26, just four days after the survey was released, Testoni published an op-ed in the Denton Record-Chronicle, reiterating the support of the 340B program and the SERV bill and urging Congress not to give in to pressures from pharmaceutical manufacturers. “This level of assistance and the added services 340B hospitals and clinics provide in communities would be in peril if the program were to be scaled back,” she said. “Unfortunately, scaling back 340B is exactly what the very profitable pharmaceutical industry is pushing Congress to do…the program doesn’t cost taxpayers a dime, and eliminating it would result in higher drug prices and reduced availability of care for the most vulnerable patients.” Sentry Data Systems sent a letter to Matsui’s office commending her for supporting 340B through the introduction of the SERV bill.