Biden Names Ex-HRSA Leader Wakefield to His HHS Transition Team

Your 340B Report for Thursday Nov. 12, 2020

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It isn’t known if the U.S. Health Resources and Services Administration (HRSA) falls under former HRSA Administrator Mary Wakefield as part of her duties on President-elect Biden’s transition team.

Biden Names Ex-HRSA Leader Wakefield to His HHS Transition Team

President-elect Biden on Tuesday tapped Mary Wakefield, who ran the U.S. Health Resources and Services Administration (HRSA) during most of the Obama administration, to serve on his transition team for the U.S. Health and Human Services Department (HHS).

Yesterday, Biden announced he has picked Ron Klain to be White House chief of staff. Klain ran Biden’s staff from 2009 to 2011 when Biden was vice president, and coordinated the White House response to the Ebola outbreak in West Africa from 2014 to 2015.

President Obama named Wakefield, a registered nurse, HRSA administrator in February 2009. She left in March 2015 to become acting HHS deputy secretary, the department’s second-highest post. Wakefield currently is Visiting Distinguished Professor in the Practice of Health Care at Georgetown University and Visiting Professor and Distinguished Fellow at the University of Texas at Austin. She is serving on the Biden transition team as a volunteer.

It is not known if HRSA and its Office of Pharmacy Affairs (OPA), which runs the 340B program, are part of Wakefield’s transition portfolio. We’ve reached out to Wakefield and the Biden-Harris transition for comment.

Incoming presidential administrations normally send teams into federal departments and agencies before the inauguration to help ensure an orderly transfer of power. Because the Trump administration still contests the election, it is not releasing federal presidential transition funds to Biden authorized under a law dating back to the Kennedy administration. This means Biden’s staff cannot access federal office space, lease office equipment and services, create government email accounts, and begin background checks and paperwork for incoming White House and executive branch staff. Also, Biden transition team members, for now, are unable to work directly with staff in federal agencies. Team members are spending their time instead meeting with former agency officials, think tanks, trade associations, labor unions, and experts outside of government.

During her tenure at HRSA, Wakefield managed the 340B program’s growth under the Affordable Care Act, both in terms of expanded eligibility and program integrity enhancements. Under Wakefield, HRSA published 340B program final guidance in 2010 clarifying that covered entities could contract with an unlimited number of pharmacies to dispense 340B purchased drugs, and also initiated covered entity and drug manufacturer compliance audits. Drug manufacturers have complained about the growth of 340B contract pharmacy, and three drug companies have recently stopped or threatened to curtail access to 340B pricing on drugs dispensed under contract pharmacy arrangements. Ryan White Clinics for 340B Access and the National Association of Community Health Centers have filed separate lawsuits in federal court in the District of Columbia to force the federal government to respond to the manufacturers’ moves.

In January 2014, with Wakefield in charge, HRSA announced it would publish an omnibus regulation covering most aspects of 340B, including an expected narrowing of patient eligibility to receive 340B drugs. HRSA decided not to publish its 340B “mega-reg” in the wake of a federal court ruling, in May 2014, that Congress gave HRSA authority to issue 340B program regulations in just three areas: calculation of ceiling prices, manufacturer civil monetary penalties, and creation of a mandatory and binding dispute resolution system. The court reached that conclusion in a drug industry lawsuit over a 2013 HRSA final rule that would have let rural hospitals access 340B pricing on orphan drugs under some conditions. The court ruled that HRSA, then under Wakefield, lacked congressional authority to issue the orphan drug rule.

In 2015, also during Wakefield’s tenure, HRSA published proposed 340B program “mega-guidance” that would have narrowed the 340B patient definition. It also would have ended 340B discounts on discharge prescriptions, infusions in hospital outpatient departments, on outpatient drugs furnished to patients ultimately admitted, on many drugs paid by Medicaid. Provider groups aggressively opposed the restrictions, and a revised version that was more in line with the interests of the covered entity community was reportedly drafted. Nonetheless, 340B provider groups continued to worry about its contents and successfully lobbied the Obama administration to shelve the plan. The Trump administration withdrew the mega-guidance, along with a number of other HHS initiatives, when it came to office.

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340B STD Clinic Sued by Gilead Says It Didn’t Commit Fraud

The vice president of a Florida 340B sexually transmitted disease clinic that a biopharmaceutical company alleges fraudulently purchased its drugs at reduced 340B prices, bought them back from low-income and homeless patients at a fraction of the price paid, and resold them, told 340B Report yesterday, “We have not committed fraud.”

“It’s Goliath versus David,” Khadijan Carbon, Vice President of Doctors United Group, said of Gilead Science’s federal lawsuit in Miami brought against Doctors United, five related STD clinics, their 340B contract pharmacy, and a second group of six SDT clinics and their 340B contract pharmacy. Carbon is listed as Doctors United’s primary contact in the 340B program database, 340B OPAIS.

“They are slumping us in with all the others and saying things that are not true,” Carbon said. “Yes, there are some bad apples in Miami, but we are not one of them. They are slumping those of us who are trying to help in the community in with everyone else.”

Gilead alleges that the STD clinics recruited low-income and vulnerable individuals for sham wellness checks; prescribed them unnecessary pre-exposure prophylaxis (PrEP) drugs; at some clinics bought PrEP at wholesale acquisition cost through Gilead’s medication assistance program, and at clinics enrolled in 340B at even lower 340B prices; bought PrEP back from homeless and impoverished individuals “for as little as $10”; then re-dispensed the drugs to others for additional reimbursement, or sold them on the black market. Gilead claims the defendants “have made at least $43 million in profits from their schemes” in about two and a half years. The company is seeking actual and punitive damages and other relief from the court.

Gilead said in its legal complaint that the relationship between the 340B clinic defendants and their 340B contract pharmacies “is the linchpin underlying defendants’ schemes to profit from improper enrollments, prescriptions, and redemptions.”

We asked Gilead if it has shared its allegations against the 340B clinics with the U.S. Health Resources and Services Administration, which runs the 340B program.

“The lawsuit that Gilead recently filed against two healthcare networks raises issues of widespread fraud on our free drug Medication Assistance Program (MAP),” a Gilead spokesperson said yesterday. “Putting a stop to this fraudulent scheme requires a civil litigation effort, in addition to any efforts on the part of law enforcement. This lawsuit is not about 340B compliance.”

“Although HRSA has responsibility for addressing 340B diversion, HRSA is not equipped statutorily or from a resource-perspective to stop this type of fraudulent activity,” Gilead said.

HRSA said it had no comment about the lawsuit.

The National Coalition of STD Directors (NCSD), which represents state health department STD directors and others who work in the sexual and reproductive health fields, said it had no comment on the lawsuit.

NCSD Policy and Government Relations Director Stephanie Arnold Pang said, “It is both very common and very appropriate for STD clinics” and others awarded STD prevention grants under Section 318 of the Public Health Service Act “to prescribe PrEP medication.”

“HIV prevention is not only part of a larger suite of sexual health services but is fully within the scope of the STD grant,” Arnold Pang said. “If implemented using [U.S. Centers for Disease Control] CDC guidelines, PrEP leads to more STD testing, and research has shown that over time, this increased STD testing could lead to lowered STD rates. And more broadly, once a patient meets the 340B patient definition they can be prescribed any medication that is clinician-indicated for them. This has been supported not only by HRSA FAQs but through audits as well.”

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Ohio 340B Providers Make Final Push for Bills on PBM Reimbursement

Ohio 340B covered entities this week urged state lawmakers, before this year’s session ends in late December, to pass bills to end discriminatory reimbursement against them by pharmacy benefit managers (PBMs).

The Ohio House Health Committee and Senate Finance Committee held their second readings of companion bills H.B. 482 and S.B. 263 on Nov. 10. The first readings were in February, before the COVID-19 pandemic’s first wave. 

The bipartisan legislation would stop health plans, Medicaid MCOs, and their PBMs from imposing extra fees on or reducing drug reimbursement for 340B entities. Reimbursement could not be lower than National Average Drug Acquisition Cost (or wholesale acquisition cost if NADAC is unavailable), and payers could not impose fees on 340B entities that are not imposed on other providers or that are higher than those imposed on others.

The House is now scheduled to wrap up for the year on Dec. 9 and the Senate on Dec. 17.

“We will continue to advocate and do all we can to ensure this 340B protection lands on Governor DeWine’s desk by Dec. 31, 2020,” Julie DiRossi-King, Chief Operating Officer of the Ohio Association of Community Health Centers (OACHC), told 340B Report. She said the legislation “protects the intent of the 340B program by ensuring these savings are directed to our most vulnerable and not PBMs.”

“On many prescriptions, I am seeing many of these PBMs reimburse me at 3 percent of what others are receiving,” R. Logan Yoho, Pharmacy Director at Hopewell Health Centers in Logan, Ohio, told both committees in written testimony. “Often, the pharmacy is not even reimbursed the cost of the drug. One of the PBMs hired by a Medicaid managed care organization forced me to switch all of their patients to an expensive brand of insulin last year, even though there was a less expensive option available. The PBM paid the clinic pharmacy $100 less than the cost of the drug for each of these prescriptions for several months. Every time a Hopewell pharmacist administers a shingles vaccine for another PBM, the clinic pharmacy takes a $45 loss.”

“If these trends in PBM contracting continue and 340B savings are diverted from their intended purpose, the results will be worse health outcomes for already vulnerable populations,” Dr. Sherrie Dixon Williams, Pharmacy and Therapeutics Committee Chair of MetroHealth System in Cleveland, told the House committee.

“PBMs and insurers ‘pickpocket’ 340B savings because they currently can,” attorney Jason Reddish, who represents OACHC, said in his prepared testimony before the House committee. “A pharmacy must participate in the major PBM networks in order to have a viable business. PBMs know that pharmacies have lower acquisition costs for 340B drugs and reduce reimbursement to essentially shift those savings from the covered entity’s account to their own.”

The companion bills “prevent pickpocketing” by requiring PBMs and payers to pay at least NADAC for 340B drugs, Reddish said. “NADAC does not represent a windfall for covered entities, but rather ensures that they realize the value of the 340B discount.” The bills also prohibit 340B-specific fees and “other discriminatory contracting tools,” he added.

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Senate Appropriators: $10.2M for OPA, No to User Fee, Silence on Regulatory Authority

The U.S. Senate Appropriations Committee on Tuesday released its fiscal year 2021 spending bill for federal health programs, proposing $10.2 million for the U.S. Office of Pharmacy Affairs (OPA), the unit within the Health Resources and Services Administration (HRSA) that run the 340B program. It’s the same amount OPA got during the last fiscal year.

The committee also denied the Trump administration’s request for a 0.1 percent user fee on 340B drug purchases, paid by covered entities, estimated to generate $24 million more for OPA. The committee’s explanatory statement about its bill does not address the administration’s request for language in the bill giving HRSA broad regulatory authority over 340B.

In July, in the report accompanying its FY 2021 health appropriations bill, the House Appropriations Committee said no to the administration’s request, saying that was not fully using its existing regulatory authority over 340B “to pursue balanced oversight of both providers and drug manufacturers.”

The House panel, like the Senate’s, would give OPA $10.2 million in FY 2021 and deny it a 340B user fee.

Fiscal 2021 began Oct. 1. Federal departments and agencies are being funded at last year’s levels under stopgap legislation that expires Dec. 11.

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