By the time you read this, much will have changed. A new Supreme Court Justice has been confirmed, shifting the political balance of the court. A presidential election will transpire shortly, with its many implications for the Affordable Care Act, the 340B program, drug pricing, Medicaid and Medicare – no matter who wins. While we wait for change, we’ll take a closer look at some important October events – from continued actions by manufacturers, congressional actions and the potential impact of the Supreme Court.
Manufacturers continue to dodge 340B law
With regard to drug company actions impacting 340B contract pharmacy and the overall structure of the 340B program, there are currently more than 250 House and 50 Senate members of Congress who have weighed in with their concerns to either Health and Human Services (HHS) or the individual drug companies. Anecdotally, we understand that even more members of Congress have chosen to reach out personally to HHS. Governors, attorneys general and state health departments are also starting to understand the repercussions of the manufacturer actions on their states. Lastly, two separate lawsuits have already been filed by the Ryan White Clinics for 340B Access and the National Association of Community Health Centers, seeking to compel HHS to force a reversal of the recent manufacturer actions. At least two more lawsuits are in various stages of development.
In summary, despite growing strong bipartisan support in Congress, increasing state interest, the requests of more than a dozen national organizations and the launching of litigation, it is very possible this issue will continue into 2021.
Congressional and administration movement and 340B
E&C Ranking Member Walden (R-OR) and HELP Chair Alexander (R-TN) issued a request for stakeholder feedback by the end of October on 340B “modernization” approaches. Both members are retiring from Congress this year, so there is little likelihood that the feedback they receive will have an immediate effect on 340B in the near term. In the long run, however, we believe there will be continued congressional interest in 340B and a potential for renewed interest in regulatory oversight.
With respect to COVID legislation, H.R. 7838: Matsui (D-CA) and Stewart (R-UT), has 12 bipartisan cosponsors and is a bill that would ensure that CEs could maintain 340B eligibility during the COVID pandemic; the bill also waives the GPO prohibition. Note that HHS has recently officially extended the state of emergency for the COVID pandemic until at least January 23, 2021.
Additionally, on September 21, 2020, HHS Office of General Counsel sent a letter to Lilly regarding contract pharmacy. This was the first official HHS response to date on any drug company actions, and it offered a strong rebuke and the threat of potential FCA liability, but no determinative action or immediate implications for Lilly or other manufacturers. The letter also notes that HRSA is still reviewing the issue.
Comments on the OPPS CY 2021 rule ended on October 5: A final rule is expected in early November. Over 1,300 public comments were received, which is typical for a rule of this size and scope. As expected, the 340B community weighed in strongly opposing CMS’ plans to increase the Part B Medicare cuts, as well as the flawed CMS Spring 2020 survey on drug costs. We note that the appeals court sided with HHS, and the last resort for hospitals is whether the Supreme Court will hear the case. Hospital plaintiffs have a limited time to file a petition.
Proposed rule on insulin: Following up on a July White House E.O. that would require FQHCs to provide insulin and EPI-pens at 340B costs to certain low-income patients, HHS issued a proposed rule to implement the E.O. on September 28, with a comment period deadline of October 28. The proposal defines ‘low income’ at 350% of poverty, and also would apply only to future FQHC grantees. As with other pronouncements put in place in the waning days of any administration, final implementation of this proposed rule will likely hinge on the outcome of the November elections.
The view from the top: Supreme Court
Repealing the entire ACA – Possible, but unlikely. The law of the land for 10+ years now, the ACA insures 20 million Americans who would lose their health insurance coverage should the ACA be repealed. Many of these individuals have pre-existing conditions and would be unable to secure health insurance coverage in the near future, if at all.
It’s also important to remember that legal challenges to the ACA stem from a single decision by one federal judge in Texas, and are predicated on legal merits that even conservative legal scholars find thin. In addition, Chief Justice John Roberts, who cast the deciding vote in a 5-4 decision for the ACA in 2012 remains on the Supreme Court today. The addition of a conservative justice to replace a liberal one doesn’t guarantee the ACA will be repealed, in spite of threats by some politicians to the contrary.
Permanently repealing the individual mandate – Possible, and more likely. Gone since the 2017 tax bill, the invalidation of the individual mandate has not resulted in the broader parts of the ACA being dismantled, namely Medicare expansion and individual insurance subsidies. Arguments by opponents to link these elements together have not been successful to date, nor are there compelling reasons to believe they will be. The Supreme Court will likely address whether the individual mandate is severable from the remaining ACA statute during this term.
Other features of the ACA – Likely to be retained. These include pre-existing conditions and children remaining on their parents’ insurance until age 26. In addition to Medicaid expansion, these two aspects of the ACA are widely embraced and less likely to be altered by politicians. President Trump has already signed an executive order stating his commitment to protecting individuals with pre-existing conditions and has also expressed his support for adult children staying on their parents’ insurance policies until age 26.
340B Program – The 340B program is not going to go away. The 340B program provides crucial access to life-saving health care services across our country and provides access to reduced price prescription drugs to tens of thousands of individual health care facilities and sites certified by HHS as covered entities. These clinics, centers and hospitals, in turn, serve more than 100 million people in all 50 states, plus commonwealths and territories.
Community hospitals, critical access hospitals and rural referral centers are particularly vulnerable in a scenario in which the ACA is eliminated, having gained access and the ability to participate in the 340B program through the ACA. We don’t believe there is any appetite for politicians abandoning America’s rural hospitals, nor for cutting off discount prescription drugs to those most in need in the midst of a pandemic.
Rutledge v. Pharmaceutical Care Management Association – Supreme Court ruling expected in early June. On October 6, the Supreme Court heard oral arguments in a case concerning federal versus state regulation of pharmacy benefit managers (PBMs) and drug costs. The case originates from Arkansas and seeks to clarify whether states can regulate PBMs. The case included charges of PBMs prioritizing profits and stockholders by inflating drug prices for patients.
The implications of this case for 340B covered entities are significant. A number of states have already passed legislation that would prohibit discriminatory pricing contracts for 340B programs and require PBMs to charge a covered entity or contract pharmacy the same price they would charge anyone else. Many PBMs have ignored these statutes choosing instead to turn to the court system for relief. We expect the Supreme Court will adjudicate this case in early June.
As we round up October, we are planning for the coming months ahead, as change will be inevitable. Covered entities are encouraged by the response of federal and state officials to keep verbalizing their concerns. In the meantime, we at Sentry Data Systems will have our ears to the ground and will continue to communicate to our loyal customers how the winds of change may impact their operations. In our November issue, we will discuss the election results, the impact of a Lame Duck session and other breaking news and updates.