BREAKING: Presidential Executive Order Targets 340B Health Centers’ Savings on Insulin and EpiPen

Your 340B Report for Friday July 24, 2020

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President Trump signs a July 24 executive order requiring federally qualified health centers to pass along their 340B savings on insulin and EpiPens directly to low-income patients | Source: C-SPAN

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Presidential Executive Order Targets 340B Health Center’ Savings on Insulin and EpiPen

Update, 9:50 p.m. EDT, July 24—National Association of Community Health Centers President and CEO Tom Van Coverden issued the following statement tonight:

The Community Health Center mission is to ensure access to affordable, high-quality care for all people, regardless of ability to pay—and that includes pharmaceuticals. We are proud that Health and Human Services Secretary Alex Azar has in the past noted their longstanding “track record of delivering quality care at a significantly lower cost,” a task made possible by programs such as 340B. 

The 340B program gives small, community-based non-profits like health centers access to discounts that they could not negotiate on their own. By law, regulation, and mission, every penny that health centers save through 340B discounts is used either to make medication affordable for low-income patients, or to support other activities that expand access to care. We cannot underscore enough how vitally important such discounts are as health centers battle COVID-19 on the frontlines of hot zones across America.

Health centers are accountable and transparent in how they apply resources to patient care. Members of Congress from both parties have repeatedly highlighted health centers as excellent stewards of the 340B program, using the savings it generated as Congress intended—“to stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.” 

Health centers are not charging low-income patients “massive, full prices” for pharmaceuticals. Indeed, health center staff are putting their lives on the line every day to protect vulnerable populations from the spread of COVID-19.   

Let’s be clear:  health centers support actions to make drug prices affordable, especially for life-savings medicines such as insulin and Epipens. As safety net providers committed to ensuring affordable access for all, FQHCs are already part of the solution – not the problem.

President Trump signed an executive order late this afternoon that, he said, “will require federal community health centers to pass the giant [340B] discounts they receive from drug companies on insulin and EpiPens directly to their patients.”

“You know, insulin became so expensive that people weren’t able to use it,” Trump said during an event on the White House grounds to announce four executive orders to lower drug prices. “We have it to a level you aren’t going to believe. EpiPens, likewise. You’ve been reading horrible stories about EpiPens for the last six, seven years. Horrible, horrible, horrible increases, where they went from almost nothing to massive amounts of money. We’re changing that right now.”

“These providers should not be receiving discounts for themselves while charging their poorest patients massive full prices,” Trump continued. “Under this order, the price of insulin for affected patients will come down to just pennies a day from numbers you weren’t able to think about. It’s a massive cost savings.”

U.S. Health and Human Services (HHS) Secretary Alex Azar said Trump is “taking on the federal health centers.”

Addressing the president, he said, “You are taking on the issue that they are getting radical discounts on insulin and EpiPens so that low-income Americans get the benefits of those discounts.”

The National Association of Community Health Centers (NACHC) was still preparing its comment in response to the executive order as we went to press. Check the online version of this article for updates.

The executive order says, “Due to the sharp increases in list prices for many insulins and some types of injectable epinephrine in recent years, many of these products may be subject to the ‘penny pricing’ policy when distributed to [federally qualified health centers] FQHCs, meaning FQHCs may purchase the drug at a price of one penny per unit of measure. These steep discounts, however, are not always passed through to low-income Americans at the point of sale. Those with low-incomes can be exposed to high insulin and injectable epinephrine prices, as they often do not benefit from discounts negotiated by insurers or the Federal or State governments.”

The order requires the HHS Secretary to condition health centers’ future federal grants on making insulin and injectable epinephrine available at the 340B discounted price to low-income individuals who have a high cost sharing requirement for those products, have a high unmet deductible, or have no health care insurance.

The administration’s decision to target health centers, which enjoy significant bipartisan support in Congress and in the health care field generally, for reductions in 340B savings surprised and puzzled most 340B stakeholders we contacted for comment. Essentially all declined comment until they had a chance to read the executive orders, which were posted on the White House website just before 6:00 p.m. Eastern.

There were rumors the 340B-related executive order would target hospitals, but that did not happen. It is possible that the administration decided it lacked legal authority to extend the requirement to hospitals because they are not grantees of the U.S. Health Resources and Services Administration (HRSA).

In addition to the order regarding health centers’ 340B drug discounts on insulin and EpiPen, the other three orders, in the president’s words:

  • “Allow states, drug wholesalers, and pharmacies to import prescription drugs from Canada and other countries where the price for the identical drug is incredibly lower.”

  • “Pass billions and billions of dollars a year in discounts” by drug manufacturers to pharmacy benefit managers “directly on to patients, saving Americans with high drug costs thousands of dollars a year.”

  • “End global freeloading on the back of American patients and American seniors” by requiring Medicare “to purchase drugs at the same price as other countries pay.”

Trump said “we might not need to implement” the so-called most-favored-nation executive order depending on the outcome of a White House meeting with major drug companies on Tuesday July 28. “If we don’t do a deal, the order will be implemented…we will hold that until Aug. 24,” he said.

Trump also said his administration “is going to be having a big health care bill we will be putting up very shortly. It’s going to be pretty complete.”

The following is the text of the president’s executive order regarding 340B health centers’ discounts on insulin and EpiPen:

Executive Order on Access to Affordable Life-saving Medications | The White House

By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered as follows:

Section 1.  Purpose.  Insulin is a critical and life-saving medication that approximately 8 million Americans rely on to manage diabetes.  Likewise, injectable epinephrine is a life‑saving medication used to stop severe allergic reactions.

The price of insulin in the United States has risen dramatically over the past decade.  The list price for a single vial of insulin today is often more than $250 and most patients use at least two vials per month.  As for injectable epinephrine, recent increased competition is helping to drive prices down.  Nevertheless, the price for some types of injectable epinephrine remains more than $600 per kit.  While Americans with diabetes and severe allergic reactions may have access to affordable insulin and injectable epinephrine through commercial insurance or Federal programs such as Medicare and Medicaid, many Americans still struggle to purchase these products.

Federally Qualified Health Centers (FQHCs), as defined in section 1905(l)(2)(B)(i) and (ii) of the Social Security Act, as amended, 42 U.S.C. 1396d(l)(2)(B)(i) and (ii), receive discounted prices through the 340B Prescription Drug Program on prescription drugs.  Due to the sharp increases in list prices for many insulins and some types of injectable epinephrine in recent years, many of these products may be subject to the “penny pricing” policy when distributed to FQHCs, meaning FQHCs may purchase the drug at a price of one penny per unit of measure.  These steep discounts, however, are not always passed through to low-income Americans at the point of sale.  Those with low-incomes can be exposed to high insulin and injectable epinephrine prices, as they often do not benefit from discounts negotiated by insurers or the Federal or State governments.

Sec. 2.  Policy.  It is the policy of the United States to enable Americans without access to affordable insulin and injectable epinephrine through commercial insurance or Federal programs, such as Medicare and Medicaid, to purchase these pharmaceuticals from an FQHC at a price that aligns with the cost at which the FQHC acquired the medication.

Sec. 3.  Improving the Availability of Insulin and Injectable Epinephrine for the Uninsured.  To

the extent permitted by law, the Secretary of Health and Human Services shall take action to ensure future grants available under section 330(e) of the Public Health Service Act, as amended, 42 U.S.C. 254b(e), are conditioned upon FQHCs’ having established practices to make insulin and injectable epinephrine available at the discounted price paid by the FQHC grantee or sub-grantee under the 340B Prescription Drug Program (plus a minimal administration fee) to individuals with low incomes, as determined by the Secretary, who:

(a)  have a high cost sharing requirement for either insulin or injectable epinephrine;

(b)  have a high unmet deductible; or

(c)  have no health care insurance.

Sec. 4.  General Provisions.  (a)  Nothing in this order shall be construed to impair or otherwise affect:

(i)   the authority granted by law to an executive department or agency, or the head thereof;

(ii)  the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.

(b)  This order shall be implemented consistent with applicable law and subject to the availability of appropriations.

(c)  This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

DONALD J. TRUMP

THE WHITE HOUSE,
July 24, 2020.


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