This month, a new lawsuit is filed by several high-powered healthcare organizations, a letter from Congress encourages HRSA to exercise the authority it already has over the 340B program, a bill sponsored by an indicted lawmaker gets pushback, AHA refiles its lawsuit against CMS and reports confirm that further proposed reimbursement cuts would negatively affect hospitals.
New lawsuit filed
On September 12, it was announced that four national healthcare organizations – the American Hospital Association, America’s Essential Hospitals, 340B Health and the Association of American Medical Colleges, as well as several other healthcare organizations – filed a new lawsuit against HHS over its failure to issue a final ruling on implementing ceiling prices in the 340B program. The suit argues that the delay, which has stretched out over nearly two years, is a violation of the Administrative Procedures Act, which governs how administrative agencies of the federal government can propose and establish regulations. The lawsuit also states that the repeated delays have caused harm not only to the plaintiffs and other 340B covered entities, but also by extension, their vulnerable patient populations.
Congress responds to HRSA’s request for more 340B authority
On August 27, Congress issued a letter to Captain Krista Pedley, the director of the Office of Pharmacy Affairs within HRSA, stating that “HRSA has repeatedly delayed issuing rules and guidance” regarding “important issues” relating to the 340B program. The letter was signed by the chairmen of both the House of Representatives Committee on Energy and Commerce and the Senate Committee on Health, Education, Labor, and Pensions (HELP), two government committees that have held several meetings on the future of the 340B program in the past year.
The letter from Congress comes after a June 19 Senate HELP Committee meeting in which Captain Pedley said that in order to make changes to the 340B program — regarding either the pricing transparency hospitals have requested or the stricter oversight of the 340B program that Pharma companies are calling for – HRSA would need more legal authority over the program. Pedley told those at the June meeting that “legislation is the only way her agency can obtain the authority it needs,” Healthcare Dive reported at the time.
“While we appreciate that HRSA has requested these additional authorities, we remain concerned that the agency is not using its existing authorities,” the congressional letter states. “As such, we request that HRSA take action to address these issues and issue regulations required by law for the 340B Program.”
In part, the delays and lack of action Congress is referring to include the Ceiling Price and Manufacturer Civil Monetary Penalties Regulation, which would penalize drug manufacturers for intentionally overcharging participating safety net hospitals for 340B drugs. Though HRSA has the regulatory power to enforce this ruling, it has requested a total of five delays, dating as far back as January 2017.
For 340B covered entities, the letter from Congress is good news in the sense that it means no further program changes or oversight will be made into law, at least for the remainder of this fiscal year; the multitude of bills from both House and Senate under consideration are therefore stalled for the moment. The letter also means, however, that hospitals should expect to see HRSA start using the regulatory power it does have, as Congress indicated. This could come in the form of new guidance or proposed regulations, which, much like the most recent proposed rule to expand the CMS reimbursement cuts, could put further strain on hospitals’ bottom lines and their ability to serve vulnerable populations.
Additionally, “Energy and Commerce Committee leaders sent a letter to the Medicare Payment Advisory Commission (MedPAC) requesting they conduct additional research looking at questions pertaining to hospital consolidation and the financial impact it has on Medicare patients and the program,” according to the Committee website. The letter asks MedPAC to examine whether 340B discounts give hospitals an incentive to choose more expensive products and, if so, what the impact would be on Medicare beneficiaries’ cost-sharing obligations.
Pressing pause on the PAUSE Act
As mentioned in our previous post, Rep. Chris Collins (NY-R) lost his seat on the Committee on Energy and Commerce after he was indicted for insider trading at the pharma company on whose board he sat, on August 11.
Collins was a co-sponsor, along with Rep Scott Peters (D-CA), of the proposed House Bill H.R. 4710, known as the 340B PAUSE Act, which aimed to put a moratorium on allowing new hospitals to join the 340B program. Collins supported additional bills that proposed restricting the 340B program; part of the aim of these bills was to remove infusion drugs from the list of medications covered under the 340B program. It has come to light, following Collins’ indictment, that the pharmacy company he held more than 2 million shares in was developing drugs that could eventually become infusion drugs that would fall under 340B, and so his support of the PAUSE Act and other bills regulating 340B served his personal financial interests.
Given this news, the AIDS Healthcare Foundation (AHF) has called for PAUSE Act co-sponsor Peters to retract his support of the bill. “The indictment of Rep. Collins on drug company insider trading charges merely confirms what AHF has long argued—that efforts to ‘reform’ the 340B program are really just pharma-backed efforts to kneecap and ultimately destroy this worthy program in order to help protect pharma’s outsized profits,” said Michael Weinstein, President of AHF in a release.
Moody’s confirms impact of further proposed reimbursement cuts
On July 25, CMS 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. Many comments made on the proposal so far have not been in favor of it.
In a report issued August 13, Moody’s Investor Service noted that the proposed 340B changes, in conjunction with additional CMS proposed changes, would “generally be credit negative and hurt hospital margins,” reports Healthcare Finance. The change “would represent another headwind and could be a challenge for certain hospitals,” Moody’s said.
The American Hospital Association and other groups, which have continued to maintain that the cuts would be detrimental to safety-net hospitals, re-filed their previously denied lawsuit against HHS on September 5. “We look forward to receiving a prompt resolution on the merits of our case. For over 25 years 340B program drug discounts have played a critical role in helping hospitals expand access to care for vulnerable patients and communities at no cost to the federal government,” the groups said in a collective statement.
Copycat comments on CMS ruling
The Washington Post reported on September 9 that many of the 1,400 comments that came in late last year in response to CMS’ initial proposed 340B reimbursement cuts were duplicates and copycats. Many of the responses that seemed to support the idea of more regulation and oversight on the program had duplicate language, including the same grammatical errors, the Post said. “Of the 1,406 comments that specifically mentioned 340B — part of several thousand comments submitted on a broad proposal to revise medical payment systems — about half included the same or similar wording and were submitted anonymously, an analysis by Kaiser Health News found. Those comments lamented ‘abuse’ of the drug discounts, faulted hospitals for being ‘greedy’ and used phrasing such as ‘quality, affordable, and accessible.’”
The language has been traced back to a nonprofit trade group, the Community Oncology Alliance (COA), which receives funding from pharmaceutical companies. Kaiser Health News contacted many patients whose names appeared on the comments and found that most had no recollection of submitting such comments and no idea what the 340B program was at all. “All were patients, former patients or caregivers seen at private practices connected to the Community Oncology Alliance,” reports the Post. It seems that many of the COA-associated practices had petitions on-site for patients to sign at check-in.
As the Post reports, “Susannah Rose, Scientific Director of Research in the Cleveland Clinic’s patient experience office, said there is ‘always a worry about coercion’ when doctors make a request of patients, but more so when oncologists do the asking. ‘Cancer patients often feel very much in the hands of their oncologists, and they are often suffering from significant distress,’ said Rose, who serves on the ethics committee of the American Society of Clinical Oncology.”
Looking to the future
Amidst all these changes, hospitals continued to work with HRSA to complete the required annual recertification process that closed September 12, using HRSA’s more robust and improved information system, and Sentry collaborated with 340B Health on a webinar addressing the 340B program challenges.
Sentry continues to support its 340B customers with services and solutions that help them make the most of their 340B savings. The industry is in a holding pattern, waiting to see movement on several proposed bills, results from the congressional letters to nine contract pharmacies, how mid-term elections may shake up leadership and affect reform efforts and how the re-filing of the AHA lawsuit will shake out. In the meantime, we urge our covered entity customers to reach out to us with any questions or concerns and remind you that you can expect more with Sentry.