340Buzz November

March 340Buzz Part I: 100 days of Biden

President Joe Biden has piled a lot on his plate during his first 100 days. Curbing the spread of COVID-19 and delivering economic assistance to families in need are his top two priorities. Vaccinating 100 million Americans by April 30th, his 100th day in office, is next after that. Reviving the economy, addressing climate change, confronting institutionalized racism and fixing immigration are on his agenda too. While it’s unlikely he’ll solve any of these problems during this time period, it’s entirely possible he’ll make some progress toward some of them. So what can we expect during these same 100 days for 340B? With the lingering hangover from the last administration, the realignment of personnel in the new administration, and the shift in tone President Biden’s already signaled through dozens of executive actions reversing previous orders, will ‘46’ be able to focus any leftover energy toward strengthening our communal safety net?

The signs are promising.

The rose ceremony

As of February 23, 2021, of the 23 nominees for Biden’s cabinet, nine have been confirmed (rose in hand), 12 have had confirmation hearings, (date with Congress) and two have not yet had a confirmation hearing (date pending). Of particular interest to us is Xavier Becerra, nominated for Secretary of Health and Human Services. A strong proponent of protecting the integrity of the 340B program, Becerra was grilled by Republicans on February 23rd and 24th for his lack of background in the health profession, his previous support for the Affordable Care Act and his stance on abortion rights. When pressed by Senator Bill Cassidy (R-La.), a vocal critic of the 340B statute, Becerra said that “340B is an indispensable program for some of our most underserved communities. What we must do is make sure that the law is followed.” Becerra stated his willingness to work with members of Congress and to “build on the work that’s been done in the past,” referencing the previous administration’s advisory opinion on contract pharmacies. The full Senate vote on Becerra’s confirmation has not yet been scheduled. While his nomination is expected to go through, perhaps on a party line vote, it is not a certainty given the somewhat chilly reception he received.

In another relevant appointment, there’s news of President Biden having selected Chiquita Brooks-LaSure to head the Centers for Medicare and Medicaid Services (CMS), according to a report in the Washington Post. Brooks-LaSure is an Obama-era policy official who helped implement the Affordable Care Act, and has served federal stints as deputy director of policy and regulation at the Center for Consumer Information and Insurance Oversight within CMS and director of coverage policy at the Department of Health and Human Services. Most recently she was a managing director at Manatt Health, where she provided policy analysis and strategic advice to healthcare stakeholders across the private and public sectors. If she is confirmed by the Senate, Brooks-LaSure will oversee the $1 trillion agency that controls Medicare and Medicaid. Interestingly, and like Becerra, Brooks-LaSure’s name was not on the short-list of candidates thought to be under consideration for this position.

A Cinderella story – Midnight regulations

Unfortunately, until Becerra is confirmed, not much will happen during these first 100 days, other than addressing the midnight regulations passed by the previous administration in November and December. As is the custom, these executive orders were frozen so that the incoming administration could take time to examine them more carefully and decide on their disposition. Here’s what we’re keeping our eyes on and our impressions about where they might land:

  • Most Favored Nation Pricing – This incarnation of the order will probably go away, but we don’t believe that Democrats are going to steer away from how Medicare can negotiate going forward. It may come back in some different form, and 340B may be impacted, depending upon how prices are negotiated. However, we don’t see how the federal government is going to change something that is bringing such good cost savings to the Medicare program. In fact, Medicare Part B cuts may be evaluated, improving the 340B reimbursement.
  • Contract pharmacy space – No quick solution here and this issue likely has a very long road ahead of it. It won’t be a surprise to see multiple manufacturers charging into the fray (and we’re aware of at least two manufacturers waiting for Becerra’s confirmation, in order to enter the fight). The expectation is that manufacturers will pursue a strategy of stopping the 340B binding administrative dispute resolution process implemented in January through the courts. There is also the idea of seeking the legislative relief that Congress is presently hesitant to provide to allow the administration the opportunity to resolve it. This “run-out-the-clock” strategy is predicated on the belief that, eventually, manufacturers will seek judicial action after a lot of money, time and lawyers have been expended, all while manufacturers continue to block discounts to covered entities that are rightfully owed.
  • 340B insulin pass-through rule – HHS froze a final rule that would have blocked community health centers from receiving future grant funding unless the health centers provided a complete pass-through of 340B discounts on insulin and epi-pens to low-income patients. We expect the new administration will dispose of this executive order, as it was tightly focused on community health centers, a group Democrats tend to support.

Policy and legislative activities

In a letter to state governors in late January, HHS Acting Secretary Norris Cochran signaled that the public health emergency (PHE) declaration originally tied to the COVID-19 pandemic will “likely remain in place for the entirety of 2021.” He stated that “when a decision is made to terminate the declaration or let it expire, HHS will provide states with 60 days’ notice prior to termination.”

This is a welcome announcement in that the PHE declaration is an important element in supporting the nation’s public health response to the pandemic, as well as the mechanisms we have at our disposal to help families. The 60-day notification period creates more predictability on future extensions of the PHE and enhanced federal funding for Medicaid. The PHE also guarantees that continuous enrollment in Medicaid and 340B programs will be extended through January 2022, which will prevent the coverage gaps that can occur when a PHE is not in place. Finally, extension of the PHE helps provide more time for administrators to return to normal operations once the emergency is over and to plan for contingencies when the additional aid is finally curtailed.

Quick hits

  • A bipartisan group of more than 200 U.S. House members continues to circulate a sign-on letter to Secretary of Health and Human Services nominee Xavier Becerra opposing efforts to replace up-front 340B drug discounts with back-end rebates and demanding immediate action on drug manufacturers’ denials of 340B pricing.
  • Anti-price discrimination bills are flourishing at the state level and already at least six states are attempting to prohibit state pharmacy benefit managers (PBMs) from discriminating against covered entities. In a trend we saw start last year (eight states created anti-discrimination policies in 2020), states are getting much more involved in the 340B space so as to control, at the state level, activities they see frozen on the federal level.

According to the Los Angeles Times, California Atty. Gen. Xavier Becerra appears to be headed toward confirmation as secretary of Health and Human Services after a pivotal hearing passed on February 24th “with few fireworks and no serious blows inflicted by Republicans hoping to derail him.” With Becerra’s confirmation comes a potential host of changes in the healthcare ecosystem in which we all work to sustain the communal safety net that protects those who are most vulnerable. Progress.

We now have three vaccines (Pfizer, Moderna and Johnson & Johnson) to administer to every high-risk adult in this country, followed by those less-at-risk adults, to help us defeat this indefatigable virus. We’re already seeing exciting results and a decrease in deaths and new infections. Progress.

More lies ahead in these first 100 days, and we are hopeful to also see progress in 340B as the leadership falls into place. Let’s use this forward energy to keep working together to ensure a safe, equitable healthcare system that serves everyone – fairly. Because that certainly would be progress.