BREAKING: Bipartisan Group of 217 U.S. Representatives Ask HHS to Stop 340B Rebate Model and Look Into Third Party Vendors

Your 340B Report for Friday Nov. 13, 2020

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A screen capture from a Kalderos video about its 340B Pay software platform that enables drug manufacturers to pay 340B ceiling prices as rebates instead of as discounts.

Bipartisan Group of 217 U.S. Representatives Ask HHS to Stop 340B Rebate Model and Look Into Third Party Vendors

Two hundred seventeen U.S. representatives—173 Democrats and 44 Republicans—this morning asked U.S. Health and Human Services (HHS) Secretary Alex Azar to take immediate action to stop drug companies and a vendor from changing the 340B program from a discount to a rebate model.

Lawmakers told Azar in a Nov. 13 letter that pharma information technology company Kalderos’ 340B Pay software unilaterally forces 340B participants to buy drugs at list price and then request rebates, giving drug manufacturers “tremendous leverage over covered entities.”

“This platform could make participation in 340B more difficult for covered entities, effectively reshaping the 340B program in a way that only serves manufacturers’ and these third-party vendors’ financial interests,” the lawmakers said. “These tactics open the door for significant compliance issues, threatening to put manufacturers in violation of their statutory obligation to provide 340B pricing.”

The House members asked Azar “to make clear that manufacturers may not implement a 340B rebate model without approval from [the U.S. Health Resources and Services Administration] HRSA.” They said HRSA should not approve the use of a rebate model “without first soliciting feedback and publishing guidance through the notice-and-comment process.”

The lawmakers asked Azar to answer by Nov. 30

  • Has Kalderos, any other third-party vendor, or any drug company sought input from HHS regarding the use of a rebate model covered entities?

  • What guidance has HHS provided to Kalderos, any other third-party vendors, or drug companies regarding the use of a rebate model for covered entities?

  • What oversight, if any, would HRSA have into the operations of 340B Pay or similar third-party platforms that provide manufacturers with significantly more authority over the 340B program and jeopardize their compliance with 340B statutory requirements?

  • What steps would be taken to ensure that drug companies not deny 340B pricing to covered entities and that covered entities would be able to access 340B pricing in a timely manner and without facing unnecessary administrative or financial burden?

“We are deeply concerned that the use of a rebate model could threaten the ability of covered entities to access 340B savings and provide accessible, affordable prescription drugs and critical health care services to millions of low-income Americans the 340B program is intended to serve,” the letter said.

A bipartisan group of six lawmakers—Reps. Abigail D. Spanberger (D-Va.), Cindy Axne (D-Iowa), David McKinley (R-W.Va.), Dusty Johnson (R-S.D.), John Katko (R-N.Y.), and Doris Matsui (D-Calif.)—were the letter’s driving force.

In September, Axne got 103 other House Democrats to sign a letter to Azar and high ranking HRSA officials asking them “to rescind or not implement” President Trump’s executive order requiring community health centers to pass along all 340B savings on insulin and injectable epinephrine to patients. The Biden administration is likely to rescind the executive order. The National Association of Community Health Centers strongly objected to the order, saying it is unnecessary and would decrease some patients’ access to affordable drugs.

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