Iowa’s U.S. Senators Meet With HHS Top Brass About Pharma’s 340B Moves

Your 340B Report for Tuesday Oct. 27, 2020

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Iowa’s U.S. senators—Chuck Grassley and Joni Ernst, both Republicans—met with top HHS officials yesterday to relay Iowa hospitals’ concerns about pharmaceutical manufacturers’ recent denials of 340B pricing on drugs shipped to contract pharmacies. | Source: C-SPAN

Iowa’s U.S. Senators Meet With HHS Top Brass About Pharma’s 340B Moves

Both of Iowa’s U.S. senators met yesterday with “top officials” at the U.S. Health and Human Services Department (HHS) to share Iowa hospitals’ concerns about drug manufacturers unilaterally ending or imposing conditions on 340B pricing for their products.

Senate Finance Chair Chuck Grassley (R) tweeted late yesterday afternoon about his and Sen. Joni Ernst’s (R) meeting with HHS brass. We have asked both senator’s offices whom at HHS they met with, what HHS said it might do about manufacturers’ denials of 340B pricing, and whether HHS made any commitments to act.

Writing in Twitter shorthand, Grassley said, “Rural providers rely on these drug discounts & there’s concern abt drug companies cutting back discounts esp during pandemic Iowa Hospitals r very concerned bc they use $$ 2serve low income ppl.”

Health centers last week sued HHS Secretary Alex Azar to force him to implement a long-delayed 340B program mandatory and binding administrative dispute resolution (ADR) process, saying they need the process to “act against drug companies that are violating the 340B statute and have abruptly stopped shipping discounted drugs to health centers’ contracted pharmacies.”

HIV/AIDS clinics sued HHS on Oct. 9. They too want a federal court to order Azar to implement the 340B ADR system. They also want a declaration that they “are entitled to purchase and dispense covered outpatient drugs through contract pharmacies at 340B discounts”; an order directing Azar to enforce such rights; refunds for overpayments; imposition of civil monetary penalties against manufacturers; and revocation of manufacturers’ government reimbursements for their products until they comply with the 340B statute.

Hospitals groups also might sue Azar. They reportedly are waiting to see if HHS acts against the manufacturers of its own accord.

In early September, the U.S. Health Resources and Services Administration told 340B Report it was considering whether drug manufacturer policies to restrict access to 340B pricing at contract pharmacies violates the 340B statue and whether sanctions may apply. Later that month, HHS’ top lawyer told Eli Lilly and Co. it should not have treated the absence of an objection from HRSA as tantamount to a definitive agreement that Lilly would not incur sanctions if it limited 340B pricing.

However, neither HHS nor HRSA has done anything yet to stop or penalize any manufacturers for denying 340B pricing on their products, or imposing conditions on 340B pricing.

Senator Grassley has a long record of 340B program oversight, focused mainly on covered entities. For example, he introduced legislation in 2018 that would have required hospitals to report how much they pay for drugs bought through 340B, and how much they receive for those drugs from third party payers. In 2013, he and five other Republican members of Congress panned the U.S. Health Resources and Services Administration (HRSA) for what they believed was insufficient oversight of 340B covered entities. A year earlier, Grassley and three other lawmakers asked 340B Health, Apexus, PhRMA, and BIO about their stewardship of 340B. In 2012, Grassley also sent letters to North Carolina hospitals and health systems about their use of 340B discounts. Grassley’s investigation was widely perceived by 340B providers and Democrats as too friendly to the interests of the pharmaceutical industry. He also received pushback from some Republicans for the inquiry.

Grassley sometimes has questioned drug manufacturers, once for example about reports from Iowa hospitals that they were not providing 340B pricing on drugs. In 2013, he questioned Walgreens about its role as a 340B contract pharmacy.


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Deadlines Tomorrow and Friday for Two Sets of 340B Comments

340B stakeholders and the public at large have until the end of the day tomorrow to comment on President Trump’s executive order stripping health centers of all 340B drug discount program savings on insulin and epinephrine autoinjectors dispensed to low-income patients.

Meanwhile, the end of the day Friday is the deadline to submit ideas about how to improve 340B to the top Republicans on the U.S. House and Senate committees with jurisdiction over the program.

Trump signed the health center 340B insulin and epinephrine order in late July, along with three others on drug pricing. At the signing ceremony, he said centers “should not be receiving discounts for themselves while charging their poorest patients massive full prices.” U.S. Health and Human Services (HHS) Alex Azar said Trump was “taking on the federal health centers,” who he said were “getting radical discounts on insulin and EpiPens.” Trump touted the executive order in both of his debates with Democratic presidential candidate Joe Biden.

Health centers have strongly challenged Trump and Azar’s suggestions that they profit from 340B at poor patients’ expense. They say the executive order is unnecessary and could threaten patient access to affordable prescription drugs. Last month, 104 U.S. House Democrats sent a letter to Azar asking him to rescind or not implement the order.

The Trump administration originally planned to implement the order via what’s known as an interim final rule, a type of regulation usually reserved for emergencies that takes effect without a public comment period. However, it ultimately published the implementing regulation as a proposed rule with a 30-day comment period. Oct. 28 is the deadline for comments.

A final rule might never be published and never take effect. If Biden defeats Trump in the Nov. 3 election, his administration probably will withdraw the regulation.

The other request for public comments on 340B, these about how to improve the program, came from U.S. Senate Health, Education, Labor, and Pensions (HELP) Chair Lamar Alexander (R-Tenn.) and U.S. House Energy and Commerce (E&C) ranking Republican Greg Walden (Ore.) on Oct. 9. Both lawmakers are retiring when their current terms end on Jan. 3.

In a news release, Alexander and Walden said, “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.” There is “significant confusion about the program’s requirements and lack of data necessary for effective oversight,” they said.

“For too long, 340B has been governed by guidance and other sub-regulatory actions that do not carry the weight of law,” they said. 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.”

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 it will issue the report before the end of this year.

Neither House E&C Chairman Frank Pallone (D-N.J.) nor Senate HELP ranking Democrat Patty Murray (D-Wash.) responded to requests for comment on Alexander and Walden’s invitation to 340B stakeholders.

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


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Trump Order Could Strip Some Career OPA Employees’ Job Protections

President Trump last week signed an executive order that potentially could strip federal government employees who make policy decisions about the 340B program of their collective bargaining rights and other federal civil service job protections.

Trump’s order affects all “competitive service” federal workers in all agencies “who discharge significant duties and exercise significant discretion in formulating and implementing executive branch policy and programs.” Generally speaking, this is the category of competitively hired career civil servants who are not political appointees, members of the military and other U.S. uniformed services, members of the federal Senior Executive Service (SES), or those in other so-called “excepted” positions.

For example, in the U.S. Health Resources and Services Administration (HRSA) Healthcare Systems Bureau (HSB), the new executive order would not affect HRSA Associate Administrator Cheryl R. Dammons (an SES member) or Office of Pharmacy Affairs Director Krista Pedley (a rear admiral in the U.S. Public Health Service). It could, however, affect some senior career OPA staff members who serve under Pedley and help her formulate and administer 340B program policy.

The order gave the heads of all executive agencies seven months to identify current competitive service employees in “positions of a confidential, policy-determining, policy-making, or policy-advocating character not normally subject to change as a result of a Presidential transition,” and then move them into a new excepted service category called Schedule F.

The administration said the order’s purpose is to let agency leaders fire “career employees in policy-relevant positions” who “cannot or will not meet required performance standards.”

The American Federation of Government Employees (AFGE), the largest federal employee union, called the order “the most profound undermining of the civil service in our lifetimes….This executive order strips due process rights and protections from perhaps hundreds of thousands of federal employees and will enable political appointees and other officials to hire and fire these workers at will.”

A Florida university administrator Trump appointed in 2018 to lead a federal advisory council on federal compensation on Monday resigned in protest over the executive order. Ronald Sanders, who quit the Federal Salary Council, called the order “nothing more than a smokescreen for what is clearly an attempt to require the political loyalty of those who advise the president, or failing that, to enable their removal with little if any due process….No president should be able to remove career civil servants whose only sin is they may speak such a truth to him.” Sanders also served in a senior capacity under President George W. Bush.

In addition to government workers who set 340B policy, the order would affect senior career federal employees who fashion and enforce policy for the six types of hospitals and 10 types of centers and clinics eligible to participate in 340B.

Democratic presidential candidate Joe Biden, who has AFGE’s endorsement, probably would rescind the order if he wins next week’s election.


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FDA Approves Veklury (remdesivir) for COVID-19. Outpatient Version Under Study.

The U.S. Food and Drug Administration (FDA) last week approved pharmaceutical manufacturer Gilead’s antiviral drug Veklury (remdesivir) as the first treatment for COVID-19. Hospitals have been using it since May under an FDA emergency use authorization (EUA).

FDA approved Veklury “for use in adult and pediatric patients 12 years of age and older and weighing at least 40 kilograms (about 88 pounds) for the treatment of COVID-19 requiring hospitalization.” In June, Gilead set the price at $390 per vial for government payers and $520 per vial for private insurance companies.

In a frequently asked questions document, in response to the question, “Can Veklury be used outside the hospital (i.e., for non-hospitalized patients)?”, FDA answered: “Veklury should only be administered in a hospital or in a healthcare setting capable of providing acute care comparable to inpatient hospital care.”

Last week, in an open letter posted on Gilead’s website, Gilead Chief Medical Officer Merdad Parsey said, “we continue to study Veklury…in the outpatient setting, and we anticipate sharing data from these trials in the first half of next year. In addition, we continue to study different methods of delivering Veklury, including in alternative care settings outside of hospitals and with an investigational inhaled solution of Veklury being studied in patients with earlier stages of disease.”

Veklury presumably would qualify for 340B pricing when used on an outpatient basis.

The drug’s approval comes amid signs that the pandemic in the U.S. has entered a third wave, with hospitalizations due to COVID-19 increasing since late September and projected to continue rising through mid-November, at which point the U.S. Centers for Disease Control and Prevention (CDC) estimates there will be between “2,600 to 6,200 new COVID-19 hospitalizations per day.”

340B Contract Pharmacy a “Black Box” Within “Opaque” 340B, Pharma-led Group Says

A drug industry-led 340B advocacy group recently released a white paper on “the negative impact that continued growth” in contract pharmacy is having on the 340B program.

“Contract pharmacies are a black box inside the already opaque 340B program and researchers and watchdog agencies are only beginning to scratch the surface of the profit-driven financial incentives at play,” AIR 340B said in the paper.

“Contract pharmacy growth on its own isn’t inherently a problem,” it said. Growth “would be a positive thing” if it meant that covered entities without their own in-house pharmacies were being served, and 340B discounts were being used for low-income and vulnerable patients.

“But growth of that magnitude raises questions for policymakers to consider especially when there is growing evidence that program integrity problems persist and patients are not always benefiting.”

Eli Lilly and Co. (an AIR 340B member) and AstraZeneca have stopped providing 340B pricing on their products shipped to contract pharmacies, except for one contract pharmacy per entity for those lacking an in-house pharmacy. Sanofi is denying 340B pricing on drugs shipped to contract pharmacies for entities that do not give it their contract pharmacy claims data. Novartis is similarly requiring 340B contract pharmacy claims data, but has decided for now not to cut off 340B pricing for entities that don’t supply their data.

Judge Lets Texas County Sue Drug Companies and PBMs Over Insulin Prices

A federal district judge has ruled that Harris County, Texas, may proceed with a lawsuit accusing three insulin manufacturers and four pharmaceutical benefit managers of engaging in a price-fixing conspiracy to raise the price of insulin and other diabetic treatments, health care news service STAT+ reported recently.

Two of the insulin manufacturers, Eli Lilly and Co. and Sanofi, are among five drug manufacturers separately under fire for declining to provide 340B pricing on their products shipped to contract pharmacies and/or conditioning 340B pricing on getting covered entities contract pharmacy claims data so it can be scrubbed for overlapping 340B discounts and Medicaid, Medicare Part D, and commercial rebates on the same products. Only duplicate 340B discounts and Medicaid rebates are forbidden by law, and covered entities say they are obliged by law to prevent duplicate discounts only with respect to Medicaid fee for service.

The Texas lawsuit does not raise claims related to the 340B program. Harris Health, the county public health provider, is a separate legal entity and is not included in the suit, the Houston Chronicle reported in November 2019 when the suit was filed.