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340B past, present, and future in the era of COVID-19 – moving forward after a watershed moment

340B past, present, and future in the era of COVID-19 – moving forward after a watershed moment


There have been many “watershed” events over the past 150 years or so in the US and around the world – moments that forever changed the course of history; moments from which you can only move forward, not back. World War I, the attack on Pearl Harbor, the rise of the internet, 9/11, and the 2008 financial crisis are just a few that come to mind.

Without a doubt, the COVID-19 pandemic has been our watershed moment of the decade, at least as it relates to healthcare. So many aspects of life will be impacted long-term because of this virus, from the way we do business to the way we receive healthcare. The 340B program, of course, is one of the elements of healthcare that has been affected and may undergo permanent change going forward. The good news is for almost 30 years, the 340B program has proven to be dynamic and versatile. It has adapted to the changing healthcare landscape before and will do so again.

340B in pre-pandemic days

Before the pandemic began, some of the big news in the 340B space was that HRSA had finalized its secure pricing website, and GAO studies on both contract pharmacies and Medicaid were finalized. The OIG had released a report on Medicare Part D, while CMS released a proposed rule for a new IPI pricing model and a notice about Medicaid duplicate discounts. Government bodies, in general, were quite focused on 340B, and there was a lot of debate around reporting and transparency.

On the judicial front, Medicare Part B cuts that CMS implemented in 2018, 2019, and 2020 were all tied up in the legal system, with appeals pending. And in terms of legislation, local state bills, as well as House and Senate bills, seemed to spring up every day – some calling for more reporting on the part of covered entities, and others aiming to protect the 340B program or call for more transparency from pharmaceutical manufacturers.

340B during the dark days of COVID-19

For better or worse, much of the flurry and debate around 340B has been put on hold as hospitals, pharma, and government agencies focused on more important matters and figured out how to shift priorities on a dime when faced with the realities of COVID-19.

HRSA began to pivot towards virtual audits and implemented flexibilities, while HHS focused on how to distribute funding appropriately to help hospitals face the expenses associated with COVID-19. CMS quietly released its 340B acquisition cost survey, despite protests from industry groups and hospitals that the timing was not appropriate given the current crisis.

The appeals process for lawsuits against CMS for its unlawful Medicare Part B cuts was put on hold, as was the Supreme Court case regarding Pharmacy Benefit Managers. A few state bills cropped up, including in New York and California, but they were fewer and further between than what we’d come to expect in the days before the pandemic.

Of course, some good arose from the public health crisis, in the sense that covered entities were not forgotten when it came to stimulus packages intended to help healthcare facilities and the economy overall. The Paycheck Protection Program and Health Care Enhancement Act in April provided hospital reimbursements for COVID-19-related testing and treatments for uninsured patients, as well as $10 billion in funding for rural health clinics and hospitals. And in early June, HHS announced that, as part of the CARES Act, it would deliver $25 billion to providers and hospitals that serve the nation’s most vulnerable patients. $15 billion of that was for providers that primarily serve Medicaid and CHIP patients while the other $10 billion was reserved for safety-net hospitals.

What does the future hold?

As states across the country continue to move into phase 2 or phase 3 of their reopening plans, a great deal remains unknown. Will there be a second spike? And if so, when, where, and to what degree? How many more bankruptcies will be filed? Will elective procedures return to pre-pandemic volumes? Will uninsured rates continue to rise? How will verticalization impact healthcare?

At some point, we expect activities that have been put on the back burner to resume, which means seeing momentum on issues such as the IPI pricing model proposal, the lawsuits and appeals about the Medicare Part B cuts, the Supreme Court case on Pharmacy Benefit managers, and more. Debates about drug pricing, reporting and transparency will inevitably pick up again at some point, with manufacturers and hospitals ever struggling to find common ground.

There will also be aspects of our world in healthcare that don’t just go back to the way they were before or pick up right where they left off. For instance, CMS Administrator Seema Verma has said that she “can’t imagine going back” to a healthcare system where telehealth was less prominent, and so the agency is looking for ways to make the expanded access to telehealth that was such a crucial part of care at the height of COVID-19 more permanent.

More questions remain. With insurer-covered lives decreasing due to unemployment, will insurers continue to provide insurer-driven discount drug plans? Will there be additional fallout of small pharmacy benefit managers due to consolidation increasing and ultimately impacting contract pharmacy benefits? With these shifts, we will see more attempted grabs that impact 340B.

It will be up to us collectively – the hospitals, the government agencies, the pharmaceutical companies, and the patients-as-consumers – what we take away from this experience, what we take with us, and what we leave behind. Resilience and adaptation are everything. Can you imagine a world before the internet? A world before Amazon became a household name? A world before 9/11 changed how we travel and how we think about security? The moments that change us forever can be positive or negative, but it’s how we react to them that makes the difference.

Whatever the future holds, I’ve no doubt that covered entities will continue working to serve vulnerable and medically underserved populations, that the 340B program will continue in some form to help you achieve that goal, and that Sentry will be by your side on this journey.  We must protect the 340B program now more than ever to combat healthcare disparities that have become even more clear in this watershed moment. This is our time to leave disparities behind and set a new course forward.

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340B Solutions, 340B Management Systems