On December 29, 2017, the U.S. District Court for the District of Columbia granted the government’s motion to dismiss the lawsuit filed by the American Hospital Association and other hospital groups, which had sought to prevent the 340B program reimbursement cuts from taking effect.
On the same day as the judge’s ruling, the hospital groups announced they would appeal the decision; they filed for that appeal January 9. Darrell G. Kirch, MD, president and CEO of the Association of American Medical Colleges, part of the group of plaintiffs in the suit, told HealthExec, “The court’s decision, while not ruling on the merits, still permits CMS to make drastic cuts to safety net hospitals that participate in the 340B program, which allows teaching hospitals to strengthen care for low-income, rural, and other underserved patients. As a result, institutions will have greater difficulty maintaining critical services that vulnerable patients often cannot access elsewhere.” The appeal may not be heard until May.
House Energy and Commerce Committee weighs in
On January 10, The House Energy and Commerce (E&C) Committee released an 80-page report outlining issues and recommendations to improve the 340B drug pricing program. The highlights address program growth, intent, regulatory authority, audit, eligibility and transparency. The report raises concerns that the 340B program serves as a financial incentive for hospitals to prescribe more expensive drugs to Medicare Part B beneficiaries so that the hospitals can reap the savings from the program, and claims that because the program does not require covered entities to report the level of charity care provided, there is no way to know whether the savings are truly being spent on those who need it.
Among the recommendations in the report are the following: “HRSA should soon finalize and begin enforcing regulations in each of the three areas in which it currently has regulatory authority, including the 340B Alternative Dispute Resolution process, the imposition of civil monetary penalties against manufacturers that knowingly and intentionally overcharge a covered entity for a 340B drug, and the calculation of ceiling prices,” The report also calls for Congress to clarify the intent of the program and to give HRSA sufficient regulatory authority to administer and oversee the program, reports the Regulatory Affairs Professionals Society.
But not everyone is taking this report at face value. The AIDS Healthcare Foundation (AHF) had strong opinions on the issue—not surprising, considering that patients with AIDS are among the vulnerable who often need the resources of safety net hospitals and the 340B program. “This biased report was bought and paid for by big drug companies whose only interest is further increasing their profits at the expense of safety net providers who care for countless patients across the country,” said Michael Weinstein, President of the AHF. “The Republican leaders of the Committee didn’t even bother to show a draft of the report to their Democrat colleagues before releasing it to the public. This shows that it’s a partisan political work and not a true unbiased evaluation of the program,” added Tom Myers, AHF General Counsel and Chief of Public Affairs.
Sentry shares these concerns, and also has noticed that while the report emphasizes the 30 percent increase in 340B program spend in recent years, implying that hospitals are over-using and abusing the program in order to increase profit, the report does not take into account the sharp rise in the cost of prescription medications—the increased cost and use of specialty drugs in particular—which accounts for a large portion of the rise of 340B spend. The fact is that the industry is spending more money now on high-cost drugs that simply didn’t exist before.
Congressional bills makes progress
There are currently two House bills relating to 340B in the works; one that supports the 340B program and one that supports the pharmaceutical industry and further program oversight:
H.R. 4392: Rep. David McKinley (R-W.Va.) and Mike Thompson (D-Calif.) introduced a bill, H.R. 4392, that “essentially asks HHS to leave 340B rates as they’re currently set rather than implement the changes outlined in a finalized rule,” reports Modern Healthcare. The bill currently has 174 cosponsors across party lines. This bill was provided to both the Energy and Commerce and Ways and Means committees.
H.R. 4710: Introduced by Republican Rep. Larry Bucshon, H.R. 4710, the “340B Protecting Access for the Underserved and Safety-net Entities Act” (340B PAUSE Act), would implement a two-year moratorium on most new 340B hospital participants, including both hospitals new to 340B and new locations of existing hospital participants.
On his website, Bucshon says this about the bill: “The 340B PAUSE Act temporarily pauses new enrollment of Disproportionate Share Hospitals into the 340B discount drug program and requires basic data reporting – similar to the data reporting required of other 340B participants. I want to ensure the program continues to be viable long-term, and that hospitals are adequately serving low-income and uninsured patients. A temporary pause on further expansion, combined with reporting, will provide additional information to complement work the House Energy and Commerce Committee has already begun.”
Modern Healthcare reports that H.R. 4710 “brought picketers from the AIDS Healthcare Foundation and other AIDS/HIV and anti-PhRMA groups to the San Diego offices of Rep. Scott Peters (D-Calif.) to blast him for co-sponsoring” the bill, which would tighten oversight of the 340B program.
A letter from the Association of Academic Medical Centers (AAMC) to Rep. Bucshon expresses concerns similar to those of the bill’s opponents, and states, “Many of the new reporting requirements in H.R. 4710 are impractical and unnecessarily burdensome, especially since the savings are being used to expand health care services to vulnerable populations and do not come from taxpayer dollars.”
This bill has three co-sponsors on record as of this publication. One of the three co-sponsors, Texas Senator Joe Barton, also serves on the Energy and Commerce Committee, to which the bill has been introduced.
S. 2312: On January 17, Republican Rep. Bill Cassidy introduced a Senate bill, the ‘‘Helping Ensure Low-income Patients have Access to Care and Treatment’’ or HELP Act. Much like the PAUSE Act, supporters of the bill are spinning it as a win for patients and a way to increase transparency in the 340B program, but because the Act would place a two-year moratorium on new, non-rural participants in the 340B program, it would actually be keeping patients from access to care and treatment. Additionally, under the bill, hospitals would be required to report revenues derived from drugs bought under the 340B drug discount program and demographics on patients who receive such drugs—a requirement that would be damaging to both hospitals and patients, as it doesn’t take into account the fact that 340B savings are often used to build specialty care centers or support community programs, in addition to aiding patients in affording their prescription medications. Sentry finds this bill particularly troubling not only because it encourages reporting about 340B savings from Medicare Part B, but because it proposes reporting requirements and modifiers for Medicare Part D as well, even further restricting the ways in which 340B savings can be used.
Other possible bills: Modern Healthcare reports that Republican Rep. Chris Collins has “spearheaded legislation that is now getting split up into six or eight different bills all geared toward an overhaul of the 340B program, and supported by his party’s leadership on the key House committee of jurisdiction.” House Energy and Commerce Committee Chair Greg Walden told Modern Healthcare that the E&C Committee would “bring the 340B-related bills up for consideration as soon as February.”
Sentry finds it encouraging that the original bill, H.R. 4392, which aims to cancel out the reimbursement cuts, received bipartisan support so quickly; it is the first pro-340B bill from Congress since 2012, with support from 180 members of the House of Representatives, across party lines. In contrast, the PAUSE act, which opposed the 340B program, only has three co-sponsors. Regardless, as we see more opposition coming in the forms of both House and Senate bills, Sentry recognizes that it may soon be time for participating entities to be prepared, and to start thinking about 340B information that they could report, in ways that would not be overly burdensome, such as sharing how they use their 340B savings. It is now within the realm of possibility that the various bills in development may eventually level out into some compromise in which more stringent reporting may become the new reality. We remain hopeful for the program’s future based on the fact that there is currently vastly more support than opposition on the hill.
Where do we go from here?
While lawmakers and judges continue to make decisions that will affect the future of the 340B program, hospitals and health systems are still in need of programs and solutions to remain compliant, and vulnerable patients are still in need of the safety-net for care. Sentry continues to encourage its customers to engage with their internal government relations teams and provide them with data and information so they may clearly express their concerns to government representatives and convey the true burden that cuts to the 340B reimbursements will cause to both hospitals and patients.
Covered entities will need to make decisions on implementation strategies in the midst of potential legal and regulatory requirements. Organizations will also need the ability to assess potential and actual financial impact quickly in order for hospital administrators to translate that information to patient care services or other services, such as transportation or financial assistance programs.
Despite the fact that there are many decisions to be clarified, Sentry is closely monitoring these critical events and as a result, has developed multiple solutions over time to support covered entities as they implement changes to the 340B program. Most recently, the Medicare Part B requirements prompted Sentry to collaborate with finance and pharmacy personnel to develop a three-pronged approach, depending on the hospitals’ needs. The direct impact of the new billing requirements will be clear in early to mid-February, when hospital billing departments remove holds for payment and apply the new modifiers, and reduced payments are received. Sentry will continue to work with hospitals to build and strengthen their programs.
As a robust inventory management system built on data, we also recognize the importance of reporting and allowing our customers to meet new requirements that may be implemented. Sentry Data Systems remains committed to providing its 340B customers with the tools and information needed to continue the invaluable work these organizations do on the front lines every day.