HHS Inundated with Concerns About Pharma’s and Administration’s 340B Actions

Your 340B Report for Thursday Sept. 17, 2020

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Clockwise from top left, U.S. Sens. John Thune (R-S.D.), Tammy Baldwin (D-Wis.), Rob Portman (R-Ohio), Ben Cardin (D-Md.), Shelley Moore Capito (R-W.Va.), and Debbie Stabenow (D-Mich.) were the driving forces behind today’s bipartisan Senate letter to HHS Secretary Alex Azar on 340B | Source: C-SPAN

Bipartisan Group of 28 U.S. Senators Ask Azar to Halt Recent Pharma 340B Actions Immediately

Twenty eight U.S. senators—15 Democrats, 12 Republicans, and an independent—wrote to U.S. Health and Human Services (HHS) Secretary Alex Azar today to urge the U.S. Health Resources and Services Administration (HRSA) “to take immediate and appropriate enforcement action” to halt “recent actions from pharmaceutical manufacturers that threaten to undermine the role of contract pharmacies in the 340B drug pricing program.”

Senate Majority Whip John Thune (R-S.D.), the Senate’s second-highest ranking Republican, and five other senators—Debbie Stabenow (D-Mich.), Rob Portman (R-Ohio), Tammy Baldwin (D-Wis.), Shelley Moore Capito (R-W.V.), and Ben Cardin (D-Md.)—led the effort. In July, the same six senators jointly sponsored bipartisan legislation to protect hospitals from losing 340B eligibility during the COVID-19 pandemic due to changes in patient mix.

Conservative Democratic Sen. Joe Manchin (D-W.Va.) wrote separately to Azar on Sept. 15 asking him to direct HRSA to “notify these companies that their actions are counter to the guidance governing the program and they must cease and reverse these policies.”

The two new Senate letters follow Tuesday's letter from 22 Democratic senators to Pharmaceutical Research and Manufacturers of America (PhRMA) saying manufacturers’ refusals to provide 340B pricing for use in contract pharmacies likely violates the law, and that manufacturers’ moves to make covered entities give them contract pharmacy claims data or else lose 340B pricing for those pharmacies are not tied to 340B compliance obligations. The senators asked PhRMA to tell them by Sept. 29 what the drug industry is doing to cease these actions.

A number of lawmakers have privately reached out to the administration to express concern about these drug industry moves or to demand action, 340B Report has learned.

On Monday, 243 U.S. House members—174 Democrats and 69 Republicans—wrote to Azar demanding “immediate action to stop [drug] companies from either denying or limiting access to 340B pricing to hospitals, health centers, and clinics participating in 340B.”

Bipartisan Letter from 28 Senators

The 28 senators told Azar they are concerned about drug manufacturers’ recent actions “that threaten to undermine the role of contract pharmacies” in 340B. These actions, they said, “run counter to the statute and create a dangerous and negative precedent for the 340B program and the providers and patients it serves.”

“While we understand that the Health Resources and Services Administration (HRSA) is further investigating these actions, we urge HRSA to take immediate and appropriate enforcement action to halt these tactics and ensure safety-net providers are able to continue providing life-saving medications to patients across the country,” the senators wrote.

Manchin Letter

Manchin made similar points in his Sept. 15 letter to Azar.

“The aggressive actions of the manufacturers will limit 340B arrangements with contract pharmacies within the 340B Drug Pricing Program,” he said. “I ask that, under your direction, the Health Resources and Services Administration (HRSA) notify these companies that their actions are counter to the guidance governing the program and they must cease and reverse these policies.”

“It has been reported that HRSA is undertaking an investigation into these issues, as these policies are counter to the intention of the 340B Program as well as the governing policies of the program. I request that you notify the manufacturers of the possible violations and instruct them to reverse the stated policies as the investigation moves forward,” Manchin wrote.

“Recently, a growing number of drug companies have taken steps to deny access to discounted drugs for 340B covered entities that use contract pharmacies, likely in violation of the 340B statute,” Manchin’s office said in a news release about the letter to Azar. “These actions are restricting access to medications, which have already been more difficult to purchase during the ongoing COVID-19 pandemic. These changes are also negatively affecting West Virginia health centers and healthcare providers who rely on this program to provide vulnerable West Virginians with quality, affordable care.”

Manchin’s daughter Heather Bresch is the CEO of Mylan Pharmaceuticals.


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100+ U.S. House Democrats Ask Azar To Rescind or Not Implement Trump’s 340B Executive Order

One hundred and four Democratic members of the U.S. House asked U.S. Health and Human Services (HHS) Secretary Alex Azar and deputies who oversee the federal community health center program in a letter Tuesday “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. 

An interim final rule to implement the order, which would not require notice and comment to take effect, is awaiting White House Office of Management and Budget approval for publication in the Federal Register.

“The Executive Order may be well-intentioned, but it is not the solution to our country’s high drug prices,” the Democratic lawmakers wrote. “We need long-term, sustainable solutions that build on programs that work—like the 340B Drug Pricing Program—and go further. [Community health centers] CHCs have consistently supported efforts to reduce drug prices, have demonstrated ability to help their patients access affordable prescription drugs, and are committed to being part of the solutions that reach our shared goal of lower drug prices.”

The representatives said CHCs already providing access to insulin and epinephrine “at significantly discounted costs to the underserved, uninsured, and underinsured populations they serve.”

“Targeting CHCs’ use of the 340B Program is ill-suited to achieving the goal of providing prescription drugs at lower costs; in fact, it damages this goal by potentially limiting CHCs’ ability to participate in both existing programs and innovative new approaches to providing prescription drugs at affordable prices,” they wrote. “Even as CHCs continue to provide affordable prescription drugs, every program has costs associated with administering and dispensing prescription drugs. The 340B Program is no exception. Mandating CHCs provide prescription drugs at cost would risk participants having to withdraw from the program, thereby limiting access to affordable prescription drugs for medically underserved patients and further exacerbating the issue of unaffordable prescription drugs for all Americans.”

Rep. Cindy Axne (D-Iowa) led the drive to get House colleagues to sign the letter.

In a related development, health center representatives are in the middle of holding more than a dozen meetings with HHS and the U.S. Health Resources and Services Administration to express concerns about the administration’s executive order.


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Health Centers Might Sue HHS as Soon as Early Next Month

The National Association of Community Health Centers (NACHC) board of directors has unanimously authorized a lawsuit to compel the U.S. Department of Health and Human Services (HHS) to enforce the 340B statute against manufacturers that fail to provide 340B prices on covered outpatient drugs, NACHC said during a media briefing today. NACHC said it would consider filing suit soon after Oct. 1 if HHS on its own has not taken action against manufacturers by that date.

NACHC said state attorneys general have inquired about manufacturers’ recent 340B actions, and that it will reach out to allies in the National Governors Association. It said, for now, Capitol Hill is its immediate focus for advocacy. NACHC said it expects legislation to be introduced soon addressing drug manufacturer restrictions on 340B contract pharmacy, provision of 340B pricing as rebates instead of as discounts, and “pickpocketing”—which it described as large, for-profit organizations taking for themselves the benefit of 340B savings from health centers.

Steve Carey, NACHC Chief Strategy Officer, called the recent salvo of congressional letters decrying drug manufacturers’ 340B actions “a nonpartisan effort and a bipartisan push back against big pharma’s attack on community health centers….Committee staff on both sides of the aisle and in both chambers [of Congress] are not happy with big pharma’s attacks.”

Jason Reddish, Partner at Feldesman Tucker law firm, which represents NACHC, said health centers are unique among 340B covered entities in that they are required to provide primary care services to patients either directly or via contract, “and one of those is pharmacy services.”

“Our grant statute says we must deliver these services, and that we may deliver them by contract,” Reddish said. “The 340B statute tells manufacturers they must sell outpatient drugs to us at a price that does not exceed the ceiling price. And we have manufacturers refusing to do that right now.”

340B covered entities cannot sue drug manufacturers directly to enforce the 340B statute, Reddish said, due to federal court decisions. The Affordable Care Act directed HHS to set up a mandatory and binding 340B dispute resolution system to let entities bring 340B overcharging claims against manufacturers, but HHS still has not issued regulations to create and implement the system, he said. “The absence of that system is why we can’t take action ourselves. We want HHS to enforce the 340B statute.” The department can impose civil monetary penalties of up to $5,000 for each instance of overcharging, Reddish noted. “This is that situation. We want HHS to use that mechanism.” He added that HHS could remove manufacturers from Medicaid and Medicare if they do not comply with 340B requirements. “We think that would be a last resort.”

“As the backbone of the nation’s primary care safety net, the 340B program is the only thing  bridging the gap standing between our patients and unaffordable insulin and other life-saving  prescription drugs,” said Lathran Woodard, NACHC board chair and CEO of the South Carolina Primary Health Care Association. “Our patients—including 400,000 veterans—are people who have lost their jobs and health insurance in the economic decline as well as the working poor who may not have had prescription drug coverage in the first place. They also include essential  workers who test positive for COVID-19. The cost of badly needed medicines can easily push them further into poverty, disease, even death.”

Gina Moore, a patient with diabetes at PrimaryOne Health Center in central Ohio whose insulin is affected by its manufacturer’s decision to stop offering 340B pricing to PrimaryOne contract pharmacies, spoke during the briefing. PrimaryOne pharmacist Jangus Whitner, who also spoke, explained that the type of insulin Moore takes “is very concentrated and cannot be simply interchanged with an alternative from another company.”

Moore said, once before, she had to switch to a different insulin “and I became very sick.”

“This [340B] program needs to remain so that people can live,” she said. “Insulin and my other medications are a necessity, not a choice, and the 340B program is in every sense of the word my lifeline. I could not afford my medications any other way, because I do not qualify for other programs. Having an illness is not something that anyone chooses.”


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Hospital Groups Ask Full U.S. Appeals Court to Rehear 340B Lawsuit

Associations representing hospitals enrolled in the 340B program, plus three health systems with enrolled hospitals, asked the full federal appeals court in Washington, D.C., on Monday to reconsider a three-judge appellate panel’s July 31 decision upholding the Trump administration’s nearly 30 percent cut since 2018 in 340B hospitals’ drug reimbursement under the hospital outpatient prospective payment system (OPPS).

The odds that the court will grant the petition for review by all of the judges on the appeals bench are not good. According to a September 2017 article in the Yale Journal on Regulation, between 2010 and 2017, the U.S. Court of Appeals for the District of Columbia Circuit reheard only eight cases en banc during the entire period. “It seems that the D.C. circuit has concluded that rehearing en banc should be rare,” the author wrote.

An attorney who represents 340B stakeholders pointed out that the D.C. circuit court majority opinion was written by Chief Judge Sri Srinivasan. Other judges on the bench might be reluctant to vote to review a decision written by the chief judge, the lawyer said, lowering the odds of a rehearing even more.

The American Hospital Association, the Association of American Medical Colleges, America’s Essential Hospitals, and three health systems argue in their petition that review is warranted, first, because the July ruling in their case “is a clear departure from settled precedent” in the D.C. Circuit.

They argue, second, that review is necessary because the three-judge panel that decided the case “erred on a question of exceptional importance.”

“For decades, 340B hospitals relied on savings from high-priced prescription drugs to serve the low-income communities that depend on them,” the associations and health systems argue. “[The U.S. Health and Human Services Department’s] rate cut, if upheld, would deprive these financially vulnerable hospitals of about $1.6 billion per year—threatening their ability to care for patients who need it most. It is critical that this Court enforce the limits that Congress placed on HHS’s authority—limits that prevent HHS from singling out 340B hospitals for abrupt, disfavored treatment.”

The Centers for Medicare & Medicaid Services (CMS) signaled in August that it might set Medicare Part B reimbursement to hospitals for 340B-purchased drugs next year and in subsequent years at average sales price minus 28.7 percent, 6.2 percent below the current rate. Comments on CMS’s proposal, contained in its hospital Outpatient Prospective Payment System (OPPS) proposed rule for calendar year 2021, are due Oct. 5.

Novo Nordisk Providing Refunds for 340B Overcharges

Novo Nordisk is providing refunds for 340B overcharges on two package sizes of its Tresiba Flextouch long-acting insulin and two sizes of Victoza non-insulin diabetes medicine, for the period from Q4 2017 through Q2 2018. The company posted a notice about the refunds yesterday on the U.S. Health Resources and Services Administration website.

Drug manufacturer Blueprint Medicines recent posted a limited distribution notice for certain NDCs of its oral oncology drugs Ayvakit and Gavreto.

Genentech recently published a limited distribution notice for its spinal muscular atrophy drug Evrysdi.