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September 340Buzz: High stakes and political hijinks

With the change in the equinox comes plenty of signs that this could be a busy fall for the 340B program. Congress is ground zero, with 340B just one of many high-stakes healthcare provisions — adding dental benefits to Medicare, anyone? — included in the Biden administration’s massive $3.5 trillion Build Back Better package. More immediately, we’re down to the wire on yet another debt ceiling showdown over an annual budget that includes funding for HRSA and 340B.

Law of unintended consequences?

• Lawmakers have lumped the proposal to let Medicare negotiate for lower drug prices with manufacturers in with Build Back Better. So far, there have been multiple problematic proposals for 340B, some perhaps less intentional than others, though none has made it out of committee:

• Negotiating drug prices lower may also lower 340B prices

• Establishing monetary sanctions for duplicate discount non-compliance audit findings

• A requirement for disproportionate share hospitals to provide insulin and Epi-Pens at 340B pricing to patients as a requirement of participating in the program

• A similar proposal that would tie 340B-priced insulin and Epi-Pens to retaining DSH eligibility status for hospitals that have seen their payer mix skewed by COVID-19 patients

• An extension of duplicate discounts to Medicaid managed care in states that have expanded Medicaid under the ACA

Clearly, the devil’s in the details, and there is much left to hash out and negotiate — and more problematic proposals like these could yet emerge. Drug price negotiations are still alive, after passing out of the House Ways and Means Committee, but Democrats have very little cushion in an evenly divided Senate, with Republicans expected to vote unanimously against any final version of Build Back Better and deny Biden a big win. As of last week, Sen. Mike Braun, R-Ind., introduced a bill to amend the 340B statute to allow HHS to audit covered entities to review how they use their “net income” from the program and make this part of their requirements for participation in 340B.

There is much urgency. We recommend that covered entities contact their congressional representatives and senators and urge them to support the various “pro-340B” bills that have been introduced and need more co-sponsors:

H.R. 4390 “PROTECT 340B” — As discussed in last month’s Buzz, this bill would prohibit commercial insurers and PBMs from 340B price discrimination (McKinley, R-W.Va., Spanberger, D-Va.)

S. 773 — Allow 340B hospitals to retain eligibility despite pandemic-related case mix fluctuations (Thune, R-S.D.)

H.R. 3203 — Similar to S. 773 (Matsui, D-Calif.)

H.R. 853 — Limit orphan drug exclusion under 340B (Welch, D-Vt., McKinley, R-W.Va.)

Debt ceiling drag

As mentioned, Congress is once again locked in a bitter dispute over raising the debt ceiling, a procedural move to keep the federal government funded and avoid defaulting on the nation’s debt. The deadline is Oct. 1, the start of the new fiscal year, and Democrats will likely pass a continuing resolution keeping the government open until Dec. 3 — meaning we could get a repeat battle later this year. Expect plenty of political hijinks.


Meanwhile, big news from the U.S. Supreme Court, which announced it will hear the lawsuit from the American Hospital Association against HHS over reductions in Medicare Part B reimbursements starting Nov. 30. As a refresher, the AHA is challenging the nearly 30% cut in Medicare outpatient prospective payment system drug payments for 340B hospitals that began under the previous administration in 2018 and could have dire consequences for vulnerable patients. With a timeline now established, we expect a decision on this important case sometime in spring 2022.

Turning up the heat on the ‘Egregious Eight’

Last week, HRSA notified six drug manufacturers — AstraZeneca, Eli Lilly, Novartis, Novo Nordisk, Sanofi and United Therapeutics — that it has referred them to the HHS Office of the Inspector General over their “continued refusal” to extend 340B pricing at contract pharmacies.

The terse, two-paragraph letters, from the HRSA Office of Pharmacy Affairs’ new acting Director Michelle Herzog, follow letters HRSA sent to the drug makers in May notifying them that they were in violation of the 340B statute and ordering them to resume selling 340B drugs without restrictions or face civil monetary penalties. The drug makers have each sued to prevent enforcement of the order, with those cases pending. The HHS OIG now has the option of investigating the companies’ practices; if it concludes they violated the 340B statute, there could be big fines levied — and no doubt more lawsuits from the drug makers.

Still no word, however, on the other two scofflaw manufacturers — Boehringer Ingelheim and Merck — that joined the 340B contract pharmacy pile-on this summer. Can they look forward to similar letters from Herzog in their mailboxes soon?

The effects of the restrictions

In related news, a new report from 340B Health looks at how the restrictions on contract pharmacies are harming patients with Type 2 diabetes. Specifically, it finds that Eli Lilly, AstraZeneca and Sanofi control more than 90% of the market for diabetes drugs, including insulin, and that withholding 340B pricing on these drugs is harming patient care and even causing some covered entities to lay off staff and even close departments.

It’s a reminder that these unilateral actions by drug manufacturers, some of which have acknowledged seeing higher profits as a result, have real consequences for the patients we are committed to serving.

Insulin rule closer to being scrapped

Speaking of insulin, HRSA earlier this month asked the White House Office of Management and Budget for the OK to scrap the Trump administration rule requiring 340B health centers to pass all of their 340B savings on insulin and injectable epinephrine to indigent patients. It’s expected to take at least a month for OMB to formally rescind the rule, which was introduced in late 2020 and has been delayed several times by the Biden administration.

ADR cases split into two

The National Association of Community Health Centers (NACHC) has refiled its 340B administrative dispute resolution petition against three drug manufacturers over the contract pharmacy restrictions. The organization split its ADR petition into two — one against Eli Lilly, the other against AstraZeneca and Sanofi — to allow the latter to move forward.

Lilly in March won a preliminary injunction halting HHS from initiating ADR proceedings, so the move by NACHC effectively separates that case from the other two companies so that proceedings can hopefully begin sooner and bring a positive resolution. There is no date for when any proceedings will begin.

Onsite audits return

In a surprise move, last week HRSA said it will resume conducting at least some of its audits onsite starting in October, telling 340B Report that “HRSA is planning to conduct both on-site and remote audits” when the new fiscal year begins Oct. 1.

There are no details about how many audits HRSA plans to conduct onsite versus remotely, as the agency has been doing since the start of the pandemic in March 2020, or the methodology they will use to decide which route to go. Recall, too, that Biden’s FY 2022 budget calls for increasing the number of 340B audits to 225 from 200.

The news is concerning at a time when the delta variant is fueling another rise in COVID-19 cases, prompting several states to take extreme measures as COVID-19 patients overwhelm the capacity of hospitals to care for them, and with many more hospitals continuing to restrict access for visitors and vendors.

For now, HRSA is instructing covered entities that have been notified they are to be audited to contact the Bizzell Group with questions or concerns by emailing We’ll be sure to keep you posted with more information as we learn more.

In the meantime, let’s keep up the pressure on our elected officials and assure that 340B is protected for the good of all those we serve!

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