This month, we reflect on the highlights of what has happened in the 340B program from an administrative, congressional, and judicial perspective in the past 12 months, and look towards what’s still to come in the new year.
The administration shakes things up
Part B reimbursement cuts – The 340B program has made news more in the past 12 months than it has during any other time in its 25-year history. The catalyst for all the ‘buzz,’ of course, was the November 2017 announcement that, beginning in January of this year, the reimbursements CMS offered to hospitals for drugs that qualify under the 340B program would be cut from 6 percent above sale price to 22.5 percent below. That announcement has sparked numerous lawsuits, bills in both the House and Senate, Committee meetings, panels and debates at conferences across the country, and more. Industry and patients will still be experiencing the aftershocks well into 2019.
Drug pricing blueprint and RFI – The White House released a blueprint on the drug pricing on May 11 and a subsequent request for information on May 14. Yet many hospitals and hospital associations were (and still are) frustrated that the government seems to continue pointing the finger at 340B while avoiding the elephant in the room—the actual (and ever-rising) cost of brand-name pharmaceuticals.
The May 14 request for information asked “340B stakeholders to weigh in on measures that have been floated in Congress, including a ‘patient definition’ that would specify who qualifies for the drug discount, and increasing 340B regulatory authority of HHS. The agency also wants feedback on whether 340B’s growth has raised list prices in the commercial market and ultimately affected payers, including Part D plans,” Modern Healthcare reported. The three key areas in the 340B section of the RFI focus on program growth, patient eligibility, and duplicate discounts.
Medicare International Pricing Index (IPI) model – On October 25, CMS released an advance notice of proposed rulemaking (ANPRM) to seek feedback on a proposed new drug payment model that, if accepted, would go into effect in a “test” phase from Spring 2020 to Spring 2025.
The proposed IPI model for Medicare Part B drug reimbursement would encourage private-sector vendors (such as specialty pharmacies, co-op groups of hospitals or health systems, or GPOs) to negotiate with pharmaceutical manufacturers for the purchase of Medicare Part B drugs, including specialty drugs, infusion drugs, and biologics. Hospitals would then purchase drugs from whatever private vendor they choose as opposed to buying directly from manufacturers.
CMS believes these negotiations would ultimately drive drug prices down, as manufacturers would seek to make their prices competitive enough for their medications to be selected for purchase by the vendors—in turn resulting in lower reimbursement rates for Medicare. The move is part of an effort to “phase down the Medicare payment amount for selected Part B drugs to more closely align with international prices,” according to CMS.
340B hospitals have voiced concerns that the proposed model could negatively impact the discounts they receive under the drug pricing program. Because CMS is accepting comments on the proposed ruling until December 31, we won’t see where this lands until well into Spring of 2019.
Civil Monetary Penalties finalized – On November 29, HRSA announced a final rule to implement the civil monetary penalties, effective January 1, 2019con. This announcement, which moved the effective date of the ruling up by six months, is considered a win by covered entity stakeholders. RSA also announced that it would make 340B ceiling prices available online beginning in April 2019 through a secure website. Stakeholders are urged to monitor the HRSA website for details as they are available; HRSA will also offer training and education on the new rule online.
Congress joins the fray
Lawmakers seek to make waves – Numerous bills for and against 340B have been introduced this year in the House and Senate. While none have yet become law, paying close attention to the bills—and from which side of the aisle they came—has helped industry keep a pulse on what the future of the program could look like.
Two of the bills that got the most attention this year were the PAUSE Act from the House and the HELP Act from the Senate.
House Bill H.R. 4710, known as the 340B PAUSE Act, was introduced in December 2017 and co-sponsored by Rep. Chris Collins (NY-R) and Rep Scott Peters (D-CA). The bill aimed to put a moratorium on allowing new hospitals to join the 340B program.
In August of this year, Collins lost his seat on the health subcommittee of the Committee on Energy and Commerce after he was indicted for insider trading. Collins 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.
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 340B. It came 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. There was a call among 340B advocates for co-sponsor Peters to withdraw his support of the bill after this scandal, but as of the time of this publication, he had not done so and the bill has two additional sponsors.
On January 16, Republican Rep. Bill Cassidy introduced S. 2312, the ‘‘Helping Ensure Low-income Patients have Access to Care and Treatment’’ or HELP Act. Much like the PAUSE Act, supporters of the bill tried to spin 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. While the bill has made headlines often throughout the year, as of the time of this publication, it still has no co-sponsors.
Contract pharmacies called to 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.
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.”
The letter reads, in part, “The growth and oversight of contract pharmacies in the 340B program since 2010 has been identified as an issue of concern … 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.”
No further action has been taken on this front since August, and industry will be standing by to hear more in the months to come.
Judicial updates and waiting games
Civil monetary penalties – On September 12, 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 lawsuit stated 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.
The lawsuit led HHS to issue a new proposed rule to move up the date that the Civil Monetary Penalties rule would finally take effect by six months, from July 1 to January 1 of next year. As mentioned above, the rule was finalized November 29.
Moving up the date doesn’t make the AHA lawsuit completely moot, however. Also part of the lawsuit was a call for the government to publish drug pricing information for 340B hospitals online—a requirement that has been part of the original Civil Monetary Penalties ruling since its proposal in June 2015 but has yet to be implemented.
“The next step toward ensuring true 340B drug maker transparency is for the administration to launch its ceiling price website so hospitals, clinics, and health centers can ascertain that they are paying the correct amounts for 340B medications,” Maureen Testoni, interim president and CEO of 340B Health, said in a statement. “We are encouraged that HHS says it will release that pricing reporting system shortly and that the department will communicate additional updates through its website.”
Part B cuts expanded to offsite clinics – On July 25, CMS issued a proposed rule for the Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Centers (ASC) for 2019. The proposed rule would “extend 340B payment cuts to previously exempt off-campus providers,” reported Healthcare Dive.
Unsurprisingly, covered entities and 340B advocates were not in favor of the expansion. “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 in a statement at the time.
340B Health also issued a statement in July, 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.”
With the date of this new rule taking effect January 1, it’s crucial for covered entities to be sure that they are compliant with new requirements to report 340B purchases both at hospitals and, at outpatient clinics and other affiliated sites that were previously exempt—this means applying TB or JG codes to drug purchases at these external sites as part of the 340B program. Sentry worked quickly last 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 this latest ruling.
Lawsuit still looming – The lawsuit that AHA and others had filed against HHS to reverse the 340B reimbursement cuts that went into effect at the beginning of this year—which was originally denied—was refiled on September 5. “In July, an appeals court delayed a ruling on the merits of the case because no claims had been filed when the case was originally brought to prevent the rule from going into effect,” AHA said in a statement in September. “Having filed claims that have progressed through the appeals process, the hospital plaintiffs have now addressed the court’s procedural concern, and with the hospital associations, have refiled the lawsuit asking for expedited relief.” This is another issue we likely won’t see resolved until after the new year.
Many of the topics reviewed here will carry over into 2019, and their effects could be felt well beyond then. In addition, HRSA has repeatedly hinted that a formal guidance regarding 340B is on the way, but we still don’t know details of what or when. Also, yet to be seen is how Democrats taking the House could impact the 340B program in the long-term, once the dust settles and internal committee elections are complete.
Additionally, while 340B has many facets, there are also reasons to look outside of 340B at the potential impact of various mergers and acquisitions in the insurance, pharmacy, and hospital arena that could change payment models and potentially site of care in ways that may affect patient eligibility. For example, discussions are in order regarding the longstanding impact Amazon may have in the healthcare sector, while much of the talk this month has centered on where they’d build their next headquarters. Speculation by some over the true reason for selecting National Landing in Arlington, VA is that the company hopes to become more involved in healthcare and military IT infrastructure.
Rest assured that while there is never a dull moment when it comes to 340B, Sentry will be in your corner in the months and years to come.