Welcome to the interregnum – an arcane Latin expression for “between reigns.” In U.S. politics, it is the interval between the end of one president’s time as leader and the coming to power of the next president. We are currently there and, depending on the participants and your political persuasion, it can sometimes seem interminably long. Officially, there remains only a joint session of Congress that will meet to finalize the vote count and certify results on January 6, and the inauguration of the new president and vice president at noon on January 20. Unofficially, there is an enormous amount of background activity the incoming administration is conducting in preparation for assuming presidential power, and many of these decisions will carry substantial implications for our healthcare system and its 340B programs.
As President-elect Joe Biden assumes office, turns the page, and begins governing, what can we expect to see in the first 100 days of a Biden presidency? Against the backdrop of a worsening COVID-19 pandemic, what are the prospects for 340B programs and the ACA? How will the leaders Biden’s chosen (and will choose) promote and defend his healthcare policies or alter his predecessor’s? With the recent arrival of two COVID-19 vaccines, and the promise of an economic stimulus package and an omnibus appropriations bill, it’s an exciting start to 2021, so buckle-up!
Breaking news — Most Favored Nation pricing model delayed
On December 23, a Maryland U.S. District Court judge granted a 14-day restraining order delaying the start of the Most Favored Nation (MFN) Model, due to take effect on January 1, 2021. The MFN Model seeks to align U.S. drug prices with those available in foreign countries and would lower reimbursement to Medicare Part B providers and suppliers for the top 50 Part B drugs and biologicals.
The judge in the case is also reviewing a request for a preliminary injunction, which would further delay the case and perhaps scuttle the demo – a clear win for providers and drug manufacturers. Three other lawsuits seeking preliminary injunctions have also been filed.
It’s all over but the shouting
Assuming that nothing goes sideways on either January 6 or January 20, Joe Biden will be our 46th U.S. president. So, what can kinds of actions on healthcare and 340B do we expect to see early on in a Biden administration?
President-elect Joe Biden named California Attorney General Xavier Bacerra to be his Secretary of Health and Human Services, pending Senate confirmation. A surprise nomination, Bacerra’s name was not one that was publicly circulated for the position. A 12-term congressman from California, Bacerra helped pass the ACA and led the defense of it before the Supreme Court as California Attorney General. He previously endorsed a government-run “Medicare for all” healthcare system, which has raised red flags with Republican senators. A Stanford-educated attorney with decades of experience as a legislator, Bacerra is seen as a savvy attorney and politician who can assist Biden in navigating the complexities of the legislative process and help him achieve key healthcare policy goals. While five Republican Senators quickly objected to his nomination, it is uncertain whether this level of opposition will grow to threaten his confirmation.
Alphabet soup – HHS, HRSA & CMS
Letters and lawsuits continued to fly in December as a result of ongoing conflicts between drug manufacturers, regulators, states and covered entities enrolled in 340B programs. The absence of meaningful action by HHS Secretary Alex Azar and his department in enforcing 340B pricing, limiting or stopping distribution, and the burdensome data demands manufacturers are making, is a consistent theme in the letters and lawsuits, as hospitals struggle to serve high volumes of patients living with low incomes in their rural and urban communities. A few of the higher-profile examples include:
Upon careful inspection, it appears there are three significant changes to the rule since we last saw it. First, the structure of the panel that hears claims will remain as six people on two, three-person panels. The HRSA Office of Pharmacy Affairs (OPA) individual will be assigned as the fourth person on the panel, and will only serve in an advisory capacity – they cannot vote. There will be no OPA person on each three-person panel, which many individuals commenting on the rule had requested. Second, there will be specific regulations to follow regarding deadlines, namely those specified in the Federal Administrative Regulations. These fairly arcane rules may require lawyers for interpretation. Finally, there will now be a threshold for claims to reach the ADR – and that number is $25,000. Smaller claims can be bundled together to reach this threshold. The efficacy of the ADR will rest with how frequently drug manufacturers elect to appeal negative outcomes through legal channels, which will drag out the adjudication process even further.
HRSA responds to 340B Health letter
HRSA has publicly responded in writing to at least two complaint letters about the 340B program. In their response to 340B Health President and CEO Maureen Testoni, HRSA shared these thoughts, which are instrumental in understanding HRSA’s mindset:
CMS releases 2021 OPPS and ASC Payment System Final Rule/Insights
In spite of legal challenges coming from its 2018 adjustment of the 340B drug payment rate, CMS has maintained the program’s rate reductions. An appeal to the adjustment was unsuccessful in court.
The final 2021 OPPS and ASC Payment System Final Rule will maintain the reimbursement rate of the average sales price (ASP) minus 22.5 percent on January 1, 2021, instead of the proposed additional decrease in reimbursement. The rule does not apply to drugs with pass-through payment status or to vaccines.
In January, we’ll look back over the previous year’s events and comment on the highs, the lows and the truly significant. We’ll also catch-up on the presidential transition, review any new appointments and look for some first moves by the Biden administration to launch his policy initiatives.
We are grateful this coming new year to serve the safety net and their communities through these difficult times. As always, whatever challenges the industry faces, Sentry will be here along the way as a voice for covered entities and to support you in your effort to optimize the 340B program and serve its vulnerable patients. Let’s all make 2021 a better year for everyone!