180813 August 340Buzz - The 340Buzz: Administration proposes more changes to 340B program

The 340Buzz: Administration proposes more changes to 340B program

The Greek philosopher Heraclitus once said, “Everything changes and nothing stands still.” That certainly has been the case when it comes to 340B news these past four weeks since our last 340Buzz update. HHS secretary Alex Azar spoke to an audience of covered entities at the 340B Health summer conference, reactions to the administration’s Blueprint to Lower Drug Prices poured in and CMS announced yet another proposed reimbursement cut.

AHA lawsuit appeal denied

As we mentioned briefly in our previous post, the U.S. Court of Appeals for the DC Circuit denied the AHA lawsuit appeal against CMS, originally intended to reverse the reimbursement cuts that took effect January 1 of this year.

“We are deeply disappointed that the courts have once again failed to rule on the merits of our case,” the plaintiffs said in a statement. “For more than 25 years, the 340B program has played a critical role in helping hospitals expand access to care for vulnerable patients and communities, with drug discounts that cost the government nothing.”

AHA and the other groups in the suit said they plan to refile promptly in district court. They had not yet done so as of the time of this publication.

Committee on Energy and Commerce takes action

On July 11, the health subcommittee of the Committee on Energy and Commerce held a meeting to discuss a June Government Accountability Office (GAO) report. The GAO report had recommended ways to improve oversight of providers’ use of 340B contract pharmacies. The committee also introduced 11 additional proposed bills for committee discussion, with the bills’ aims ranging from imposing limits on the existing 340B program to recognizing the need for the program.

Following this meeting, on August 1, Energy and Commerce Committee leaders sent letters to nine contract pharmacies that participate in 340B, “requesting information about their participation in the program.”

An excerpt from those letters reads, “The growth and oversight of contract pharmacies in the 340B program since 2010 has been identified as an issue of concern by the U.S. Department of Health and Human Services Office of Inspector General (HHS OIG) and GAO … HHS OIG found that, among other things, contract pharmacy arrangements complicate efforts to prevent diversion and duplicate discounts—both violations of program requirements—and that most covered entities do not perform all the oversight activities recommended by HRSA for monitoring their contract pharmacy arrangements.” The next meeting of the Committee will be held sometime in September.

In other Energy and Commerce Committee news, Rep. Chris Collins (NY-R) lost his seat on the Committee after he was indicted for insider trading on August 11. Collins, who had previously introduced legislation aimed at increasing oversight and limiting the scope of the 340B drug discount program, was indicted for tipping off family members about the failed clinical trials of a drug from Innate Immunotherapeutics, a pharmaceutical company whose board he sat on and in which he held more than two million shares. As the Daily Beast reports, part of the aim of his proposed bills was to remove infusion drugs from the list of medications covered under the 340B program; the pharma company he and his family are invested in “is developing a cancer treatment that could become an infusion drug.”

Industry reacts to drug pricing blueprint

Public responses to the White House’s Blueprint to Lower Drug Prices were due by July 16. The overall plan elicited more than 3,000 responses, about 280 of which were related to 340B, including comments from hospitals, manufacturers, industry associations and from Sentry Data Systems.

The Blueprint notes, “Some hospitals that receive drug discounts under the 340B program, designed to help safety net facilities, do not provide meaningful levels of charity care to low-income and vulnerable patients, ultimately pushing up drug prices for patients with private health insurance,” and says that the administration “seeks feedback about other potential actions,” including “requiring ‘safety net’ hospitals paid under Medicare Part B to use their 340B drug discounts to provide care to more low-income and vulnerable patients.”

Industry delivered the requested feedback, much as they did when feedback was solicited—and unheeded—regarding the initial proposed reimbursement cuts that took effect at the beginning of this year. Comments on the Blueprint included:

  • “Any effort to scale back this program would not lower drug prices. Rather, a smaller 340B program would increase revenue for drug manufacturers at the expense of vulnerable patients. If the 340B program is curtailed, it will be our patients and the broader community we serve who will pay the price.” – Mick Zdeblick, CEO of Asante Rogue Regional Medical Center
  • “There is no evidence that reducing the level of discounts that manufacturers provide to hospitals would result in manufacturers voluntarily lowering list prices.” – Tiffany Poulette, director of pharmacy at Ozarks Medical Center
  • “As our prices rise and reimbursement falls, rural healthcare delivery becomes impossible without the 340B program.” – Delta County Memorial Hospital
  • “The 340B program is vital to RCH’s community-focused mission of providing healthcare services to low-income, uninsured and underinsured patients. These savings help us provide discharge medications to patients through bedside delivery, which lowers readmission rates. It also supports our Level III NICU, where over 57% of care of our tiniest, most vulnerable patients is unreimbursed.” – Michael Diedrich, vice president of government relations, Rapid City Regional Health

Sentry stands behind these statements and its 340B customers in reaffirming the value of the program. We recognize that drug prices are not increased by the 340B program; the program, in fact, decreases the costs of prescription medications.

HHS and covered entities come face to face

On July 9, HHS Secretary Alex Azar faced a room full of covered entity employees during the 340B Coalition Summer Conference.

Azar’s remarks included comments about transparency and covered entities being able to illustrate how savings from the program are used. “The current nature of 340B is such that it is quite possible for the program’s benefits to be diverted to unintended purposes,” he said.

This specific wording calls up the debate that has been raging on both sides of the aisle for more than a year now, about what exactly the “intended purposes” of the 340B program were at its outset. As Sentry and many hospitals and industry organizations have previously noted, the language was written into law with the purpose of enabling covered entities “to stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.” This includes using the savings for various programs and departments throughout the hospitals, based on each community’s unique needs, rather than solely for passing discounted prescription drug prices to patients, as the pharma industry and lobbyists would have us believe. For those who think big picture, savings from the 340B program can benefit patients and larger communities through the purchase of essential diagnostic equipment, wellness management programs, the development of oncology clinics, transportation programs and much more. Attempts to limit the scope of the program and the definition of who should benefit only limits the number of vulnerable patients hospitals can help.

In addition to echoing the myopic view of the program’s intended purposes, Azar’s comments at the conference seemed to foreshadow impending change. “We believe changes along these lines are essential to the future of the 340B program. Leaving a program as it is, within the rapidly changing context of healthcare, quickly renders it outdated,” he said.

CMS proposes expanding 340B reimbursement cuts

The changes Azar foretold in his talk at the conference came just 16 days later, when CMS on July 25 issued a proposed rule for the Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Centers (ASC) for 2019, with a September 24 deadline for submitting comments. The proposed rule would “extend 340B payment cuts to previously exempt off-campus providers,” reports Healthcare Dive.

“With today’s proposed rule, CMS has once again showed a lack of understanding about the reality in which hospitals and health systems operate daily to serve the needs of their communities,” Tom Nickels, American Hospital Association executive vice president, said of the latest proposed cuts in a statement.

340B Health also issued a statement about the expanded reimbursement reductions, saying, “Today’s proposal would threaten access to care for millions of patients … CMS now plans to make a bad rule worse by extending the cuts to drugs provided in certain off-campus hospital clinics, including facilities providing infusion therapy for cancer patients and other high-cost drug therapies to treat chronic and life-threatening conditions.”

Perhaps unsurprisingly, the comments coming in from covered entities and 340B advocates in response to both the new proposed cuts and the drug pricing blueprint are eerily similar to those made in November of last year, when the original cuts were proposed. At that time, Nickels said, “CMS’s decision in today’s rule to cut Medicare payments to hospitals for drugs covered under the 340B program will dramatically threaten access to health care for many patients, including uninsured and other vulnerable populations. We strongly urge CMS to abandon its misguided 340B rule.” And 340B Health had said the cuts would “harm patients, raise the cost of prescription drugs and other services and undermine the vital safety net providers across the country that serve low-income and other vulnerable populations.” Yet, though the administration called for comment on the proposed ruling then, as now, it appears as though all objections, warnings and predictions of consequences have gone unheeded.

Ever onward

In light of this new information, it’s important for covered entities to be sure that they are compliant with new requirements to report 340B purchases both at hospitals and, come January 1 of next year, at outpatient clinics and other affiliated sites that were previously exempt. Sentry worked quickly in January to ensure that our customers would have the most up-to-date compliance tools needed to adjust to the change seamlessly. Our customers will continue to be able to use these tools to comply with the new proposed ruling when the time comes; however, we emphasize the importance of not applying TB or JG codes to drug purchases at these external sites as part of the 340B program unless and until the new proposed ruling takes effect January 1, 2019, as to do so beforehand will result in unnecessary loss of reimbursement.

Sentry will be hosting a 340B update webinar for its customers September 12, 2018, to set the tone for the landscape of 2018 and discuss how we are preparing for 2019. The guest speaker will be Kathryn DiBitetto, vice president for government relations at 340B Health.

Our customers can rest easy knowing that, with Sentry, when changes come they will be able to achieve compliance while still optimizing 340B savings, even as on Capitol Hill, “Everything changes and nothing stands still.”