A Closer Look at Democratic VP Choice Harris’s Positions on the 340B Program

Your 340B Report for Thursday August 13, 2020

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Democratic presidential candidate Joe Biden grasps hands with U.S. Sen. Kamala Harris (D-Calif.) during the Aug. 11 event to announce Harris’s selection as Biden’s running mate. | Source: https://twitter.com/joebiden

A Closer Look at Democratic VP Choice Harris’s Positions on the 340B Program

While U.S. Sen. Kamala Harris (D-Calif.) has not been one of the most high profile senators on 340B issues, the Democratic vice presidential candidate has not been shy to express her support for the program and challenge the Trump administration’s policies on 340B. Harris, who began serving in the Senate in January 2017, was one of 11 Democratic senators who signed a letter in late 2017 blasting the administration’s foot dragging on a 340B program final regulation that would increase oversight of pharmaceutical manufacturers. Democratic presidential candidate Joe Biden introduced Harris as his running mate yesterday.

Harris and her Senate colleagues wrote to Eric Hargan, then the U.S. Acting Secretary of Health and Human Services, and George Sigounas, then the head of the U.S. Health Resources and Services Administration, three years ago to express concerns “with the Administration’s multiple decisions to delay the effective date of the HRSA 340B Drug Pricing Program Ceiling Price and Manufacturer Civil Monetary Penalties Regulation rule.”

“We believe this delay contradicts the President’s numerous statements that he would work to bring down the skyrocketing costs of prescription drugs,” the senators wrote. The administration ultimately implemented the rule effective Jan. 1, 2019 after the 340B provider groups sued the administration to force the agency to finalize the rule.

Also in October 2017, Harris was one of 57 senators who signed a bipartisan letter urging then acting HHS Secretary Don Wright and U.S. Centers for Medicare & Medicaid Services Administrator Seema Verma “to carefully consider stakeholder concerns and feedback” before finalizing a CMS proposal to reduce hospital Medicare Part B reimbursement for 340B-purchased drugs by nearly 30 percent. CMS ultimately cut 340B hospitals’ drug reimbursement sharply in 2018, 2019, and this year. A federal appeals court recently upheld CMS’s authority to make the cuts.

Last summer, while campaigning against Biden for the Democratic presidential nomination, Harris issued a “plan to set fair prescription drug prices” with these key points:

  • “Stop pharmaceutical companies from price-gouging patients by giving the Department of Health and Human Services (HHS) the authority to set a fair price for what they can charge for prescription drugs.”

  • “End the pharmaceutical company tax loophole for direct-to-consumer advertising expenses.”

  • “If Congress fails to act, [Harris] will launch an investigation of all major prescription drugs whose pharmaceutical companies are price-gouging patients.”

  • “For companies that are price-gouging, [Harris] will step in and use regulatory authority to intervene and lower the cost of a drug.”

The 2020 Democratic National Convention begins on Monday Aug. 17. Regarding prescription drugs, Biden’s platform plank on health care calls for:

  • “Repealing the outrageous exception allowing drug corporations to avoid negotiating with Medicare over drug prices.”

  • “Limiting launch prices for drugs that face no competition and are being abusively priced by manufacturers.”

  • “Limiting price increases for all brand, biotech, and abusively priced generic drugs to inflation.”

  • “Allowing consumers to buy prescription drugs from other countries.”

  • “Terminating pharmaceutical corporations’ tax break for advertisement spending.”

  • “Improving the supply of quality generics.”

The 2020 Republican National Convention begins Monday Aug. 24. Although President Trump’s campaign website doesn’t include a platform plank on health care, it does have a page on the administration’s health care achievements. It includes:

  • “President Trump signed four executive orders to ensure that Americans are receiving the lowest price possible for their prescription drugs.”

  • “Took executive action to strengthen Medicare and reform the Medicare program to stop hospitals from overcharging seniors on their drugs.”

  • “President Trump Rolled Out a Comprehensive Plan to Lower Drug Prices”

  • “Under urging by the Trump Administration, Pfizer and Novartis have agreed to voluntarily drop their prescription drug prices.”

  • “HHS Released A Tool For Medicare Consumers That Would Allow Them To Participate In Negotiating Lower Prescription Drug Prices.”

  • “HHS Secretary Alex Azar ordered FDA Commissioner Scott Gottlieb to create a work group that would study the effects of importing prescription drugs to the U.S. in order to battle the skyrocketing prices”

  • “Prescription drug prices declined in 2018, the first time in nearly half a century.”


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HRSA and CMS Jointly Explored Sharing 340B Ceiling Prices with States

For the past few years, the U.S. Health Resources and Services Administration (HRSA) and the U.S. Centers for Medicare & Medicaid Services (CMS) explored if it was possible for HRSA to share 340B ceiling prices with states using CMS as an intermediary, because HRSA had concluded it couldn’t legally share the ceiling prices with states directly.

HRSA ultimately concluded it would need legislative authority to share 340B ceiling prices with CMS as well—even though the confidential data HRSA uses to compute the ceiling prices comes from CMS—and the search ended. A HRSA spokesperson confirmed the sequence of events yesterday. The joint inquiry closed sometime during the past 12 months.

News about HRSA and CMS’s previously little-known collaboration aimed at making 340B ceiling prices available to states came out yesterday. It was buried in a U.S. Health and Human Services Department (HHS) annual report on unimplemented recommendations made by the HHS Office of Inspector General (OIG).

OIG noted that, in reports about the 340B program it issued in 2011 and 2016, it said CMS and HRSA “should ensure that states can pay correctly for 340B-purchased drugs billed to Medicaid, by requiring claim-level methods to identify 340B drugs and sharing the official 340B ceiling prices.”

“State Medicaid agencies need to know 340B ceiling prices and which Medicaid claims are associated with 340B drugs to ensure that they are correctly paying claims,” OIG said in the new 2020 compendium of its recommendations that have not been acted upon.

For the compendium, OIG asked CMS and HRSA for progress reports on its recommendations about requiring claims modifiers for 340B drugs and sharing 340B prices. CMS said it lacked statutory authority to require claim-level methods to identify 340B drugs. It added that, last January, it issued policy guidance to state Medicaid programs in response to OIG’s 2011 and 2016 reports. OIG noted that CMS’s guidance “outlines voluntary methods States can use to identify specific claims for 340B-purchased drugs.”

HRSA told OIG “that it would need new legislative authority to share 340B ceiling prices directly with states,” OIG said in the compendium. “HRSA also stated that it has explored an approach of sharing ceiling prices with CMS, which in turn would share them with states. However, it determined that such an approach would also require new legislative authority.”


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A Bill to Let CHIP Programs Access Medicaid Drug Rebates Could Have 340B Implications

A new bill in the U.S. Senate to help most state Children’s Health Insurance Programs (CHIP) save money on prescription drugs bears watching as a potential source of 340B duplicate discounts.

In an Aug. 6 news release, U.S. Sens. Mark Warner (D-Va.) and Cory Booker (D-N.J.) said their Fair Drug Prices for Kids Act “would give states the option of purchasing prescription drugs for their standalone CHIP through the Medicaid Drug Rebate Program (MDRP). This would generate immediate savings for individual CHIP programs and the federal government, opening the door for states to use those excess dollars to ensure additional families and children have access to essential medical care and prescription drugs.”

According to a Kaiser Family Foundation survey issued in March, 35 states’ CHIP programs are either entirely or partially separate from their state’s Medicaid program. These CHIP programs cannot participate in MDRP. A spokesperson for Warner said the bill “would benefit the large majority of states as they have some separate state CHIP programs and because many are relatively small, they can't negotiate rebates anywhere close to what the Medicaid Drug Rebate Program can generate.”

Warner’s spokesperson said the bill does not address duplication of 340B discounts and Medicaid rebates on the same drugs. “Under this legislation, the same approaches [the U.S. Centers for Medicare & Medicaid Services] CMS is currently taking to address duplicate 340B discounts under the Medicaid Drug Rebate Program would apply to separate state CHIP programs,” she said.

Drug manufacturers have long complained about being subjected to payment of duplicate 340B discounts and Medicaid rebates, which are prohibited by the 340B statute. Covered entities are responsible for preventing duplicate discounts and rebates in Medicaid fee for service. States are responsible for prevention in Medicaid managed care.

Recently, drug manufacturer Merck asked, and manufacturer Sanofi required, covered entities to turn over their 340B contract pharmacy claims data to enable the companies to identify duplicate 340B discounts and Medicaid rebates. The companies also want the data to spot duplicate 340B discounts and Medicare Part D and commercial rebates, which are not forbidden by law. 340B provider groups want the data collection stopped and have requested meetings with company representatives.

According to the U.S. Centers for Medicare & Medicaid Services (CMS), as of April 2020 (the latest month for which data are available), there were 6.7 million individuals enrolled in CHIP in the 50 states and the District of Columbia, compared with 65.6 million individuals enrolled in Medicaid. All told, just over half (50.5 percent, or 35.5 million) of all individuals enrolled in either CHIP or Medicaid are children.


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Another U.S. Appeals Court Strikes Down a State’s PBM Crackdown

A 2017 North Dakota law regulating the fees pharmacy benefit managers (PBMs) and third-party payers can charge pharmacies, limiting the patient co-payments PBMs can charge, and setting other state controls on PBM behavior is preempted by the federal Employee Retirement Income Security Act (ERISA), a federal appeals court ruled last week.

Neither the North Dakota law nor the U.S. Eighth Circuit Court of Appeals’ Aug. 7 decision involve the 340B program. The ruling, however, casts a shadow on laws passed in nine states over the past two years to stop PBM discriminatory reimbursement against 340B entities and their contract pharmacy. Georgia was the latest to do so in late June.

The Eighth Circuit Court is the second federal appeals court to decide that ERISA preempts state laws regulating PBMs. The U.S. Supreme Court will hear arguments in October about the other ruling, which involves a 2015 Arkansas law requiring PBMs to reimburse pharmacies for generic drugs at or above the pharmacies’ wholesale acquisition cost. The law also bars PBMs from paying affiliated pharmacies more than others for the same drugs.