us capitol

What the November midterm election could mean for the 340B program

By now, you’re painfully aware there’s a fiercely contested midterm election taking place Nov. 8, with control of the U.S. House and Senate in the balance. And while 340B may not get much airtime on the campaign trail, the stakes are high for the discount drug program.

The midterms come at a critical time for 340B. Eighteen drug manufacturers have restricted 340B pricing at contract pharmacies, leading to a series of enforcement letters from the government, including some referrals to the Office of Inspector General (OIG) to investigate possible imposition of Civil Monetary Penalties (CMPs). It’s also led to a flurry of ongoing court battles.

The restrictions have created more financial hardships for safety net healthcare providers already reeling from the pandemic and the Medicare Part B reimbursement cuts that were the subject of a recent Supreme Court decision. Covered entities have also been subjected to lower payments and administrative hassles from pharmacy benefit managers, leading a growing number of states — at least 21 at last count — to enact legislation prohibiting discrimination against 340B entities.

Since 2020, when the contract pharmacy restrictions started, over half of the U.S. House and Senate members have expressed support for 340B in some way, including by requesting more active engagement of the Biden administration or conducting a special “340B hour” on the floor of the House.

Support for 340B has, in some cases, involved strange political bedfellows, such as the recent letter from Sens. Joe Manchin (D-W.Va.) and Mike Braun (R-Ind.) urging Health and Human Services to act against the drugmakers.

We will need to maintain and enhance the level of support for 340B shown in the last two years in the 118th Congress, starting in January 2023.

A Democratic trifecta

For the past two years, Democrats have held the White House and narrow majorities in Congress. The party controls the House 220-212, with three vacancies, while the Senate is split 50-50, giving Vice President Kamala Harris the tie-breaking vote in cases where the chamber is deadlocked.

Compared to the previous four years, when Republicans appointed a former pharmaceutical executive to lead HHS and slashed Part B reimbursements, Democrats have generally been more supportive of 340B. There’s an ally leading HHS in Xavier Becerra.

At the same time, the Biden administration has agreed with its predecessor that the Health Resources and Services Administration (HRSA) should have extensive regulatory and enforcement power over 340B. It’s a position that troubles covered entities as there is considerable uncertainty over what unfettered regulatory control could mean for the program.

However, the party in power typically cedes ground in midterm elections, and this year may be no different.

The website FiveThirtyEight gives the GOP a three-in-four chance of winning the House but says the Dems have a slight likelihood of keeping the Senate. “I would say the Senate right now is too close to call,” says Deborah Outlaw, a veteran 340B and healthcare policy lobbyist who works in Washington D.C.

Outlaw, who has worked for years with Sentry, now The Craneware Group, said she’s watching close Senate races in Georgia, Pennsylvania, Nevada, Wisconsin and Ohio for clues. The mood has shifted in the last few months from one favoring the Democrats to a sense of renewed enthusiasm by Republicans.

What’s at stake

It is commonly believed within the 340B community many Republicans are eager to push for increased 340B oversight if they regain control of the House and/or Senate. And a GOP takeover of either chamber could position some previously 340B-unfriendly legislators in positions of power.

But support for 340B doesn’t line up neatly with party affiliation. Of the 181 lawmakers who signed a letter to Becerra in support of fines against manufacturers who restrict 340B contract pharmacy access, 37 are Republicans. The GOP accounts for 31 of the 113 cosponsors of the Protect 340B Act, placing 340B in limited company of programs that enjoy some bipartisan support.

On the other side of the aisle, Rep. Donald McEachin, a Virginia Democrat, has expressed interest in pursuing “federal oversight and legislative action” in response to an extremely unfavorable New York Times story about how a Richmond-based health system used its 340B benefits over time.

“The issue of greater transparency in the 340B program has been brewing for years,” Outlaw said. “There’s growing interest, and it’s just not going to go away. While we all recognize the critical benefits 340B brings to covered entities and the communities they serve, more policymakers think the hospital community needs to do a better job of explaining where the money — i.e. the 340B savings — goes.”

Regardless of how the election results shake out, there will be change on Capitol Hill, Outlaw says.

“Unfortunately, we already know before any of the midterm races are decided that we will lose some true 340B champions who will not be returning in January 2023 for the 118th Congress, either through retirement, or in the case of Rep. David McKinley, because they lost in the primary,” she said.

McKinley, a Republican from West Virginia, introduced the Protect 340B Act with Rep. Abigail Spanberger, a Virginia Democrat caught in a tough re-election battle of her own. Other 340B allies who chose not to run for re-election include Sen. Rob Portman (R-Ohio) and Reps. John Katko (R-NY) and Fred Upton (R-Mich.).

Looking ahead

If Republicans win either or both chambers, the next two years of divided government could be a precursor of what’s to come if the GOP manages to take back the White House in 2024. President Biden isn’t likely to sign any explicitly anti-340B legislation into law, but that doesn’t mean there won’t be attempts along the way to undermine 340B.

It also means that any legislation that may emerge in the coming months to address contract pharmacy restrictions is more likely to contain some tradeoffs, likely in the form of greater transparency.

On the flip side, with new faces come new opportunities. Rather than wait to see what Congress does, hospital groups should come to the table with their own proposals.

Covered entities should also do their homework on the incoming freshmen lawmakers who will represent them. Start your educational outreach efforts to them as soon as possible because  the pharmaceutical industry and its allies won’t hesitate to begin influencing their votes.

Want to learn more about telling your story, using our products and services to help build transparency, or how The Craneware Group is advocating for the safety net? Connect with us at the ASHP Midyear conference and join us for a VIP session and hear from our leaders. Or contact our industry relations senior vice president, Lisa Scholz, and let’s talk and take action together.

Want to learn more?