BREAKING: Congressional GOP Committee Leaders Seek 340B Reform Ideas by Oct. 30

Your 340B Report for Friday Oct. 9, 2020

340B program changes “are needed and long overdue,” U.S. Rep. Greg Walden (R-Ore.), left, and U.S. Sen. Lamar Alexander (R-Tenn.) said today. The two veteran Republican lawmakers, both retiring after this term, invited 340B stakeholders to submit ideas on how to improve 340B by the end of the month. | Source: C-SPAN

Congressional GOP Committee Leaders Seek 340B Reform Ideas by Oct. 30

The Republican chairman of the U.S. Senate Health, Education, Labor, and Pensions (HELP) Committee and the ranking Republican on the U.S. House Energy and Commerce Committee (E&C) today invited 340B stakeholders “to submit ideas” by Oct. 30 “on how we can improve the 340B program.”

“Congress, as well as those that participate in the program, must be open to updating 340B so that it best serves our seniors and most vulnerable patients, while also protecting the valuable services offered by health care providers, hospitals, and clinics,” Sen. Lamar Alexander (R-Tenn.) and Rep. Greg Walden (R-Ore.) said in an Oct. 9 statement. “Program changes are needed and long overdue, and allowing program participants to continue playing by their own rules leaves the most important 340B stakeholder on the sideline – the patient.”

Alexander and Walden said there is “significant confusion about the program’s requirements and lack of data necessary for effective oversight.” The Senate HELP and House E&C committees have direct jurisdiction over the 340B program and any legislative changes to the program will be reviewed by the respective committees. Both Alexander and Walden are retiring at the end of this term. 

“For too long, 340B has been governed by guidance and other sub-regulatory actions that do not carry the weight of law,” they said. “Last year, the Government Accountability Office (GAO) found that HRSA [the U.S. Health Resources and Services Administration] should be doing more to maintain 340B integrity, and historically minimal oversight of the program has impeded a full examination of the extent to which the 340B program is appropriately serving patients.”

Alexander and Walden cited perceived shortcomings in HRSA’s oversight of hospitals in the program. They also observed that “participating drug manufacturers altered certain business practices to limit contract pharmacy involvement in the program.”

“Contract pharmacies serve an important role in improving access to prescription drugs; however, it is clear that such pharmacies are not referenced in law,” they said. “We have been following this activity closely and believe contract pharmacies are an important part of the continued discussion around 340B modernization.”

Neither Alexander nor Walden signed publicly-released letters from members of Congress to U.S. Health and Human Services Secretary Alex Azar and the drug industry raising concerns about recent manufacturer actions cutting off or threatening to cut off 340B pricing to contract pharmacies. Drug manufacturers are likely to be pleased that the two lawmakers state that the contract pharmacy program is not mentioned in the 340B law. 

On the other hand, the Democratic leaders of E&C have demanded that Azar block the manufacturers’ 340B actions.

We have reached out to E&C Chairman Frank Pallone (D-N.J.) and Senate HELP ranking Democrat Patty Murray (D-Wash.) for comment on Alexander and Walden’s invitation to 340B stakeholders. 

Alexander and Walden have separately requested a GAO report on the U.S. Health Resources and Services Administration’s (HRSA) mechanisms to ensure compliance with 340B program requirements. The GAO told 340B Report this week that it will issue that report on 340B before the end of this year.

Providers are expected to sue U.S. Health and Human Services (HHS) Secretary Alex Azar soon to force HRSA to impose sanctions against the manufacturers.

On Sept. 21, the HHS general counsel sent a letter to one of the five manufacturers, Eli Lilly and Co., telling the company it was wrong to treat “absence of any questions from the government” about Lilly’s decision to dramatically scale back 340B pricing on its products “as somehow endorsing Lilly’s policy.”

340B Report yesterday sent a Freedom of Information Act request to HRSA for written or electronic correspondence from HRSA to the three manufacturers that have begun denying 340B pricing on their products—Lilly, AstraZeneca, and Sanofi—about results of HRSA’s consideration of whether the companies’ 340B policies violate the 340B statute and whether sanctions may apply.

Alexander and Walden asked 340B stakeholders to send their comments and recommendations to 340B@help.senate.gov and 340B@mail.house.gov.

This is the complete text of their news release:

Walden and Alexander Ask for Input on Modernizing 340B Drug Pricing Program - Energy and Commerce Committee

Washington, D.C. – House Energy and Commerce Committee Republican Leader Greg Walden (R-OR) and Senate Health, Education, Labor and Pensions (HELP) Committee Chairman Lamar Alexander (R-TN) released the following statement calling for input on how to improve the 340B Drug Pricing Program (340B).

“Strong bipartisan support for 340B has spanned the almost three decades since the program was created, but it is clear changes are long overdue. While we hear reports of the program benefiting low-income patients, there remains significant confusion about the program’s requirements and lack of data necessary for effective oversight to maintain the integrity of the program.

“The 340B program has evolved and grown exponentially over the past 15 years, underscoring the need for clarity. For too long, 340B has been governed by guidance and other sub regulatory actions that do not carry the weight of law. Ultimately, the Health Resources and Services Administration’s (HRSA) ability to hold all participants accountable, while ensuring adequate oversight and program administration, is limited. At the same time, HRSA must use its existing authorities to the fullest extent to make certain that the 340B program is serving health care providers and patients with integrity. Last year, the Government Accountability Office (GAO) found that HRSA should be doing more to maintain 340B integrity, and historically minimal oversight of the program has impeded a full examination of the extent to which the 340B program is appropriately serving patients.

“For example, when verifying the contract that makes some hospitals eligible for 340B, GAO found that HRSA primarily relies on hospitals’ self-attestations on the existence of the required contracts with state and local governments. Furthermore, HRSA reviewed contract documentation for less than 10 percent of nongovernmental hospitals per year in 2017 and 2018. In addition, these limited reviews did not always include assessments of whether contracts are consistent with the statutory requirement to provide health care services to the 340B-specified low-income population.

“Recently, participating drug manufacturers altered certain business practices to limit contract pharmacy involvement in the program. Contract pharmacies serve an important role in improving access to prescription drugs; however, it is clear that such pharmacies are not referenced in law. We have been following this activity closely and believe contract pharmacies are an important part of the continued discussion around 340B modernization.

“We are calling on all stakeholders to submit ideas on how we can improve the 340B program. Congress, as well as those that participate in the program, must be open to updating 340B so that it best serves our seniors and most vulnerable patients, while also protecting the valuable services offered by health care providers, hospitals, and clinics. Program changes are needed and long overdue, and allowing program participants to continue playing by their own rules leaves the most important 340B stakeholder on the sideline – the patient,” said Walden and Alexander.

Background

The 340B Drug Pricing Program (340B) was created by Congress in 1992 to “permit covered entities to stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.” The program requires drug manufacturers that participate in Medicaid to provide discounts on certain prescription drugs or treatments, including treatments for cancer, diabetes, or HIV – for such qualifying entities.

340B program participation has grown substantially since the program’s inception. For example, since 2005, the number of active hospitals and associated sites participating in 340B has increased by nearly 3,000 percent. In 2005, there were approximately 432 active hospitals and 594 associated sites; in 2020, there are now roughly 2,541 active hospitals and 26,641 associated sites.

From 1996 to 2010, 340B-participating hospitals and clinics that did not have an in-house pharmacy were allowed to contract with one outside pharmacy to make certain patients could access discounted 340B prescriptions. In 2010, the Obama Administration, through guidance, removed this cap and allowed such entities to contract with an unlimited number of outside pharmacies. Since that time, the number of contract pharmacies has spiked from 1,300 at the beginning of 2010 to over 25,000 in 2020.

Reports from the Department of Health and Human Services Office of the Inspector General, the GAOthe National Academies, and the House Energy and Commerce Committee highlight that more program clarity is needed despite the important role 340B plays in our nation’s health care safety-net.

Ranking Member Walden and Chairman Alexander are asking for comments and recommendations to be submitted by October 30th to the following email addresses: 340B@help.senate.gov and 340B@mail.house.gov.