BREAKING: Connecticut Attorney General Demands Five Manufacturers Cease 340B Actions

Your 340B Report for Tuesday Oct. 6, 2020

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A message from 340B Report Publisher and CEO Ted Slafsky: We are pleased to have a sponsored content piece today from Powers Law, based in Washington, D.C. We will have more information about 340B Report sponsorship packages for 2021 in a few weeks. In the meantime, if you have questions, feel free to reach me at ted.slafsky@340breport.com.

“Denying outpatient access to appropriate 340B drug pricing is a clear violation of federal law,” Connecticut Attorney General William Tong warned five drug manufacturers today about their restrictions on 340B pricing on drugs dispensed by contract pharmacies.

Connecticut Attorney General Demands Five Manufacturers Cease 340B Actions

Connecticut Attorney General William Tong (D) today sent letters to Eli Lilly and Co., AstraZeneca, Sanofi, Novartis, and Merck demanding they cease recent unilateral actions restricting access to 340B pricing for drugs dispensed by contract pharmacies, or cease unreasonable demands for contract pharmacy claims data.

“My office will not stand by while Eli Lilly and other drug companies prioritize profits over access to affordable prescription medications and other critical services for vulnerable communities,” Tong wrote in his letter to the Indiana-based drug manufacturer. The other letters included virtually identical sentences. “Therefore, I urge Eli Lilly to abandon its unilateral and unlawful actions.”

Tong said in all the letters that the manufacturers’ actions “would directly undermine” the 340B program, “obstruct patient access to critical prescription medications, and devastate the financial stability of healthcare centers and hospitals serving vulnerable communities.”

Tong told each manufacturer there was “no legal basis” for its actions. “Denying outpatient access to appropriate 340B drug pricing is a clear violation of federal law. Nothing in the [Public Health Service] Act allows [Eli Lilly, Astra Zeneca, Merck, Sanofi, and Novartis] to impose conditions or restrictions on covered entities’ access to 340B drug pricing, including discontinuing the longstanding practice of shipping drugs to contract pharmacies,” he wrote.

Tong told the manufacturers their actions were “outrageous.”

“By refusing to honor contract pharmacy orders, [the drug manufacturers] would disrupt an essential mode used by many covered entities for dispensing 340B drugs to underserved and vulnerable patient populations who rely on these pharmacies in their communities to fill their prescriptions,” he said.

Community Health Center Association of Connecticut (CHCACT) met three times with Tong’s office in recent weeks about drug makers’ moves to stop providing 340B discounts on drugs dispensed by contract pharmacies or make covered entities turn over their contract pharmacy claims data to keep getting the discounts, CHCACT said.

“The 340B program is extremely important to health centers and the people that they serve. We are concerned that the move by pharmaceutical companies will threaten access to care,” CHCACT said. “We are currently pursuing the matter with the Attorney General’s office in Connecticut.”

Health centers in other states reportedly are urging their state attorneys general to consider initiating joint legal action with Connecticut against the manufacturers in federal court. Since 2017, Connecticut Attorney General Tong and his predecessor, George Jepsen (D), have led large coalitions of states in federal lawsuits alleging rampant price fixing in the generic drug industry. Forty-six states are involved in the first suit filed in 2016, 44 states in the second filed last year, and 51 states and territories in the third filed in June.


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Resources to Help You During the Contract Pharmacy Crisis

Powers Law’s Washington, D.C. offices are located within walking distance of the White House and the Macpherson Square, Farragut North, and Farragut West Metro stations.

On behalf of our covered entities clients participating in the 340B program, Powers Law has been actively engaged in fighting against threats to the 340B program for over two decades. We were there when the 340B program started, have fought battles in regulatory and legislative arenas at the federal and state levels, and now are facing what we believe to be one of the most serious threats to the 340B program—recent manufacturer actions regarding contract pharmacies. It seems that nearly every day, there is a new action, reaction, or response to these unilateral policies being established by certain drug manufacturers. And, we are here, as always, fighting against threats to the 340B program to protect our clients and your communities.

We bring your attention to these important resources that may assist you in these fights.

  • Our contract pharmacy response tracker that keeps you informed of the various letters and communications from 340B stakeholders, policymakers, and drug manufacturers, hosted on the home page of our client Ryan White Clinics for 340B Access (RWC-340B). This resource is updated regularly.

  • Powers attorneys drafted template letters for covered entities to send to Eli Lilly, Astra Zeneca, Sanofi, Novartis, and Merck to object to their recent actions. Please contact Andrea Jeria at Andrea.Jeria@PowersLaw.com or a member of the Powers 340B Team for additional information about obtaining these letters.

  • Powers 340B Team is here to help you address legal/compliance concerns arising from the manufacturers' actions and to help you engage in advocacy to fight against these threats.

We are also frequent panelists on webinars focused on these issues. Stay tuned as we are planning more webinars on these issues.

  • In particular, we are planning a webinar sponsored by RWC-340B and Community Voices for 340B (CV-340B), a grassroots organization that is working to engage community voices to help us in these fights.

  • We are also planning an RWC-340B webinar specifically focused on litigation in this area.

Thank you for what you all are doing in response to these serious threats. We appreciate your passion, insight, and commitment to protecting the program and stand ready to assist those who require our assistance.

Please click here to learn more about our drug pricing practice.


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GAO to Report on HRSA’s 340B Enforcement Capabilities by Dec. 31

The investigative arm of Congress plans to issue a report before the end of 2020 on the U.S. Health Resources and Services Administration’s (HRSA) mechanisms to ensure compliance with 340B program requirements.

Debra Draper, Director of the U.S. Government Accountability Office’s (GAO) Health Care Team, told 340B Report, “Our upcoming 340B report is being done at the request of [the U.S. House] Energy and Commerce [Committee] and it focuses on audits, as well as other of HRSA’s oversight mechanisms.” She said it was sought by U.S. Senate Health, Education, Labor, and Pensions Chairman Lamar Alexander (R-Tenn.), House Energy and Commerce Committee ranking Republican Greg Walden (R-Ore.), E&C Health Subcommittee ranking Republican Michael Burgess (R-Texas), and E&C Oversight and Investigations Subcommittee ranking Republican Brett Guthrie (R-Ky.).

Draper said she could not comment on whether GAO will make recommendations in the report. She did not answer whether the report will address HRSA’s recent public statements that guidance does not give it appropriate enforcement power, and that HRSA cannot develop enforceable 340B policies without comprehensive regulatory authority.

Rumors about a forthcoming GAO report on HRSA’s 340B program compliance audits have been circulating for months. Now, the report is due to land amid anticipated lawsuits pitting 340B covered entities against HRSA over the agency’s lack of enforcement of 340B program requirements for drug manufacturers. The first suit might be filed very soon, sources say.

Drug manufacturers Eli Lilly and Co. and AstraZeneca are limiting 340B pricing to just one contract pharmacy per covered entity. Merck, Sanofi, and Novartis are conditioning or have threatened to condition 340B pricing for drugs dispensed by contract pharmacies on entities provision of a broad scope of contract pharmacy claims data. For now, only Sanofi is enforcing its requirement.

The U.S. Health and Human Services Department (HHS) last month sent Lilly a tough letter criticizing the company’s 340B actions but it has done nothing yet to punish Lilly or block the company’s actions. Early last month, HRSA told 340B Report it was considering whether Lilly and other manufacturers’ 340B policies “violate the 340B statute and whether sanctions may apply.” It also said, however, that, “Without comprehensive regulatory authority, HRSA has only limited ability to issue enforceable regulations to ensure clarity in program requirements across all the interdependent aspects of the 340B program.”

HRSA has asked Congress since the Obama administration to give it broad regulatory authority over the 340B program, without success. In July, in turning down HRSA’s latest request, the Democratic-led U.S. House Appropriations Committee said HRSA isn’t using its existing authority and should audit more drug manufacturers for program compliance.


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Two Republican Congressmen Grill Novartis Executive About Steps to Limit 340B Discounts

Two Republican U.S. congressmen last week questioned the head of drug manufacturer Novartis’ U.S. operations about the company’s plan to put conditions on 340B discounts on its products, during a hearing about Novartis’ and other companies’ “unsustainable drug prices.”

“340B drug discounts are crucial for my constituents, and we should be thoughtful about how any changes to the program would affect us going forward,” Rep. Fred Keller (R-Pa.) told Novartis U.S. Country President Tom Kendris Oct. 1 about Novartis’ recent 340B actions during the second day of a two-day hearing before the House Oversight and Reform Committee. Kendris and current and former top executives from Amgen, Bristol Myers Squibb, Celgene, Mallinckrodt, and Teva were called to testify.

“We need to ensure that changes to the [340B] program are manageable and in the best interest of health providers and the patients they serve,” Keller said.

“Are you willing to give us assurances today that Novartis will be a good steward of the 340B program moving forward and will not do what Eli Lilly has done?” Rep. Glenn Grothman (R-Wis.), asked Kendris later during the hearing. 

“Our intent, Congressman, is to be a good steward of the program,” Kendris said. “We've asked [for] … data from the hospitals that will help us to avoid paying multiple duplicate discounts. So we support the program, and allowing hospitals to use our discounts to provide the patient care that was originally intended by 340B. But what we don't support is allowing intermediaries, middlemen to profit from the program.”

Kendris testified on the day of Novartis’ deadline for 340B covered entities to start providing contract pharmacy claims data biweekly to the company’s vendor 340B ESP, so 340B ESP can scrub the data for duplicate 340B discounts and Medicaid, Medicare Part D, and commercial rebates. Covered entities have legal and operational objections to the demand for their data. Novartis said in August that, starting Oct. 1, it would stop providing 340B pricing to entities on drugs dispensed by contract pharmacies if the entities declined to share their data. It backed off from that position last week, a few days before Kendris’ testimony before Congress.

On October 1, AstraZeneca limited 340B discounts on its products to just one contract pharmacy per entity, for those without an outpatient retail pharmacy. Manufacturer Sanofi did so as well, but only for entities that decline to upload their contract pharmacy claims data to 340B ESP.

Keller told Kendris he was concerned about how Novartis’ intention to cut off 340B pricing would affect Pennsylvania hospitals’ ability to offer home infusion and telemedicine services and expand outpatient care. He asked if Novartis shared its concerns about 340B duplicate discounts with hospitals before it acted in August.

Kendris said he thought Novartis staff members were in contact with hospitals. He said Novartis supports 340B, but “we also believe over many years there have been some abuses that have grown into the system and we are trying to resolve those. We have raised the problem many times over the years with HRSA. The current state of the program is somewhat distorted from its original intent.”

Keller asked why Novartis planned to stop providing 340B discounts to hospitals on Oct. 1 if it was consulting with them.

“We had asked for the data by October 1st,” Kendris said. “We are still evaluating the responses, we have not heard from all the hospitals, and we are evaluating the data we have received and we are going to continue to evaluate that data. And as we move forward it’s going to be based on what we see in the data we receive.”

“So if a hospital hasn’t [supplied] that data by Oct. 1, are they still going to be able to participate in the discounts?” Keller asked.

“Yes, we still intend to honor valid, legitimate 340B discounts,” Kendris said. “And what we’ll do is see the responses, we’ll look at the data, and we’ll talk to the hospitals and move on from there.”

Keller also wanted to know if the platform that entities were being asked to upload data to was secure, if uploading the data would be burdensome, and if third-party intermediaries could upload the data on hospitals’ behalf. Kendris said he believed that the platform was secure, that uploads “should take about five minutes every two weeks,” and that “I think we have to ask the hospital” for the data.

Independent Pharmacies Stake Out Middle Ground on 340B

Independent retail pharmacies have asked U.S. Health and Human Services (HHS) Secretary Alex Azar and U.S. Health Resources and Services Administration (HRSA) Office of Pharmacy Affairs (OPA) Director Adm. Krista Pedley to require drug manufacturers “to honor…340B pricing for contract pharmacies.”

In a Sept. 29 letter to Azar and Pedley, the National Community Pharmacists Association (NCPA) said it “is concerned about the additional data gathering requests and the imposition of further regulatory mandates by a non-governmental entity.”

NCPA also said it “strongly” wants HRSA to go back to requiring 340B covered entities and contract pharmacies to be located within a limited range of one another, and it said HRSA should clarify ambiguities in how it defines the terms patient and covered entity for 340B purposes.

NCPA joins health care providers and members of Congress in asking HHS and HRSA to do something about drug manufacturers that have either cut off 340B discounts on drugs dispensed by contract pharmacies or tied strings to the discounts. About 30 percent of 340B contract pharmacies are independent pharmacies, NCPA said. Before HRSA let 340B covered entities contract with multiple pharmacies in 2010, “the bulk of the pharmacies” with one-to-one contractual relationships with entities “were independent, community pharmacies within a ten-mile radius of the covered entity,” it said.

NCPA said drug manufacturer actions to limit delivery of 340B priced drugs to contract pharmacies and require data collection from contract pharmacies could reduce independent pharmacy participation in 340B, potentially undermining the 340B program and harming patients who use independent pharmacies.

In the letter, NCPA also raised concerns about the 340B program that manufacturers share. For example, NCPA said HRSA should issue guidance “clarifying any ambiguous language in the definitions of covered entities and patients.” NCPA also “strongly” encouraged HRSA “to return to a model where covered entities and their contract pharmacies are all located within a limited mileage radius of the covered entity.”

“This limited mileage radius provision would better ensure that resources generated by local pharmacies dispensing 340B prescriptions benefit the health and welfare of the patients living in those communities,” it said.

CSRxP and PhRMA Weigh in on 340B

A coalition of health care providers and practitioners, insurers, health plans, and pharmacy benefit managers that pushes for lower drug prices last week blasted drug manufacturer AstraZeneca for joining Eli Lilly and Co. in unilaterally halting nearly all 340B pricing on the companies’ drugs dispensed by contract pharmacies.

The drug industry’s biggest trade group, meanwhile, pointed to studies yesterday that it says add “to a mounting body of evidence indicating the program has veered off course while ballooning in size.”

In a statement issued Oct. 1, the Campaign for Sustainable Rx Pricing said, “AstraZeneca’s brazen attack on the 340B program comes just one month after Eli Lilly made a similar announcement and just weeks after the company hiked prices on 18 prescription drugs in its portfolio, demonstrating a pattern of egregious disregard for Americans’ access to affordable medicines during the pandemic.”

“Big Pharma’s assault on health care providers who serve many of America’s most vulnerable is unacceptable and violates both the intent and letter of the law which established the 340B program,” CSRxP said. U.S. Health and Human Services (HHS) Secretary Alex Azar and the Trump administration, it said, “must act to hold Big Pharma accountable for its assault on this critical program.”

Drug industry trade group Pharmaceutical Research and Manufacturers of America (PhRMA) yesterday said in its blog that the 340B program “is essentially a black box with lax reporting requirements and weak oversight—which means there is little to no clear evidence that patients consistently benefit from the massive discounts on medicines provided to 340B covered entities.”

“Skyrocketing 340B growth continues as 340B hospitals and their contract pharmacies work to siphon more and more money out of the program and away from patients,” PhRMA said. The COVID-19 pandemic makes it urgent “to ensure that hospitals use 340B discounts to benefit vulnerable patients who now face increased health risks and challenges. Policymakers must push for meaningful reform to increase transparency and accountability in the 340B program and ensure it benefits patients as it was intended.”

Group Says People Living with HIV/AIDS Will Suffer if Clinics Lose 340B Saving

Reductions in 340B savings could compel Ryan White clinics to eliminate services, resulting in “a heightened risk for severe illness” in people living with HIV/AIDS, the national association of Ryan White clinics that participate in the 340B program said yesterday.

Ryan White Clinics for 340B Access (RWC-340B) yesterday released a literature review, white paper, and fact sheet on “potential adverse impact of policies reducing resources to Ryan White clinics.” The white paper notes that a 2016 Centers for Medicare & Medicaid Services final rule requires state Medicaid fee-for-service (FFS) programs to reimburse 340B-purchased drugs at actual acquisition cost (AAC) plus a dispensing fee, taking away 340B covered entities’ ability “to generate and use savings from the 340B program for their FFS Medicaid drugs to fund their other services.”

Stalled drug pricing bills in the U.S. House and Senate would require AAC reimbursement in Medicaid managed care.

The RWC-340B paper also notes that five states (Missouri, North Dakota, Tennessee, Wisconsin, and West Virginia) recently have consolidated their Medicaid prescription drug benefits under Medicaid FFS, and that California in on track to do so on Jan. 1 and New York State on April 1.

The paper says providers in California that serve people living with HIV/AIDS predict they will need to cut “patient engagement activities such as case management and dietician services, clinic infrastructure including quality improvement, and raising the standard of care provided, including administering vaccines and services for substance use disorders.”

Hospital Groups, GPO Slam CMS’s Plan to Deepen 340B Drug Reimbursement Cuts

Hospital associations suing the Trump administration over its nearly 30 percent reduction in Medicare Part B reimbursement for drugs that hospitals buy through the 340B program blasted the administration yesterday for proposing to cut 340B hospitals’ drug reimbursement even deeper next year.

In written comments to the U.S. Centers for Medicare & Medicaid Services (CMS), the American Hospital Association (AHA) said CMS’s Part B drug reimbursement cuts since 2018 have cost hospitals about $1.6 billion annually. CMS’s calendar year 2021 hospital outpatient prospective payment system (OPPS) proposed rule calls for a further reduction, from the current average sales price (ASP) minus 22.5 percent to ASP minus 28.7 percent. The original payment rate was ASP plus 6 percent. “This proposal is estimated to take an additional $427 million from 340B hospitals and builds on flawed policy that has already resulted in devastating losses to 340B hospitals and their patients,” AHA said.

“The AHA continues its steadfast opposition to any payment cuts made to 340B hospitals,” the group said. “We do not believe HHS [the U.S. Health and Human Services Department] has the legal authority to punitively target 340B hospitals in this manner.”

AHA is suing CMS over the Part B cuts with the Association of American Medical Colleges (AAMC), America’s Essential Hospitals, and three health systems with individual hospitals enrolled in 340B. Last month, they asked the full federal appeals court in Washington, D.C., to reconsider a three-judge appellate panel’s 2-1 decision in late July upholding the Trump administration’s nearly 30 percent cut since 2018 in 340B hospitals’ drug reimbursement under OPPS.

In its comments, AAMC said it “continues to oppose reimbursement cuts for 340B-acquired drugs and believes that CMS does not have the legal authority to makes these cuts. Further reductions to the reimbursement for 340B-acquired drugs will negatively impact safety net hospitals’ ability to serve their vulnerable communities, as was intended” when 340B was established.

America’s Essential Hospitals’ comments on the OPPS rule were not available as we went to press. Nor were Pharmaceutical Research and Manufacturers of America’s comments.  340B Report wrote about 340B Health’s comments in our last issue.

Health care group purchasing organization Premier said in its comments it “continues to strongly object to these cuts as threating access to care for the patients who benefit from the much needed 340B program. These cuts continue to punish hospitals for a policy that is designed to assist safety-net hospitals serving vulnerable patients, including those in rural areas….We strongly urge CMS to drop these cuts.”

Has Pharma Yanked 340B Pricing on a Drug? There’s a Free List for That.

A 340B drug pricing and drug utilization consulting firm is offering 340B covered entities free access to its running list of drugs withdrawn from 340B pricing at contract pharmacies due to recent drug manufacturer actions.

Torey Lam, Publisher of 340B Price Guide, said “all covered entity staff may create a free account and view medications withdrawn from the 340B program.” They must use a business, not personal, email address to register.

340B Price Guide is a proprietary, subscription based service geared toward community health centers, disproportionate share hospitals, Indian Health Service grantees, and other 340B covered entities. Customized to each subscriber, it combines a 340B price list (compiled from clients’ own wholesaler list) in a dashboard with advice about “how those prices not only impact the entity financially but patient care as well,” Lam explains.

Lam said he created the withdrawn medications list because “I am getting non-stop calls from clinical staff complaining when some patients go to the pharmacy, they are being told by the pharmacy that their prescription is no longer covered. Staff are asking what products are no longer available and what are their options.”

Entity staff who sign up for the free service can access the list on the 340B Price Guide website’s Frequently Searched Products page. “For some key products, therapeutic alternative recommendations have been provided,” Lam said. “These have been added to the notes section. We are working hard to provide therapeutic recommendations on all products as those come out.”