Lilly’s 340B Contract Pharmacy Ban Has Crept Into In-House Pharmacies
Your 340B Report for Friday Sept. 11, 2020
Note from the Publisher and CEO Ted Slafsky: I want to acknowledge this date, Sept. 11, and its solemn importance to our country. We honor those who were lost 19 years ago today and continue to cherish the great work of our first responders.
We’re pleased to include in today’s issue sponsored content from 340B Report sponsor SPARx, a division of Comprehensive Pharmacy Services. I encourage you check out the video below featuring SPARx Senior Vice President Michael Heinrichs, describing recent activity surrounding specialty medications.
We will publish next week on our regular schedule of Tuesday and Thursday as well as breaking news stories as they happen. If you have story ideas or tips, please e-mail tom.mirga@340Breport.com or firstname.lastname@example.org.
Sue Veer, President and CEO of Carolina Health Centers, said it learned yesterday that the 340B price on three Lilly NDCs for CHS’s in-house pharmacies “increased by hundreds of dollars….If this massive 340B price increase for our in-house pharmacy is permitted to stand, it is not a game changer. It is game over.”
Lilly’s 340B Contract Pharmacy Ban Has Crept Into In-House Pharmacies
Drug wholesalers’ implementation of drug manufacturer Eli Lilly’s ban on 340B pricing at contract pharmacies has created issues with pricing on and access to Lilly products in some covered entities’ in-house pharmacies, 340B Report has learned.
Covered entities are preparing legal action over Lilly and other drug manufacturers’ recent restrictions or threatened restrictions on the provision of 340B pricing in contract pharmacy.
National drug distributor Cardinal Health said yesterday it learned of Lilly’s ban on Sept. 1—the day it took effect—and had to work quickly to enact Lilly’s requested changes. “This is a highly complex process involving cross-reference of thousands of purchasing accounts against tens of thousands of records,” the wholesaler said. Cardinal Health said it is working to correct errors “as soon as they are identified.”
Lilly and drug wholesalers AmerisourceBergen and McKesson were asked to comment but did not.
The U.S. Health Resources and Services Administration (HRSA) said covered entities that think they are being overcharged or that cannot obtain the 340B price should contact HRSA, which will investigate.
Sue Veer, President and CEO of Carolina Health Centers (CHS), a South Carolina health center organization, said its drug wholesaler informed it yesterday that the 340B price on three Lilly NDCs for CHS’s in-house pharmacies “increased by hundreds of dollars and, in fact, has exceeded the price charged on our retail account.”
Veer said CHS has cross-checked the new Lilly prices against the prices listed in the U.S. Office of Pharmacy Affairs Information System (OPAIS) 340B ceiling price database. “We are giving the wholesaler an opportunity to correct any error that may have occurred on their part before assuming this is an intentional overcharge for a 340B eligible NDC,” she said.
“If this massive 340B price increase for our in-house pharmacy is permitted to stand, it is not a game changer. It is game over,” Veer said.
Pharmacy executives at two large health systems with hospitals and outpatient clinics enrolled in 340B yesterday reported no issues with access to or pricing on Lilly NDCs at their in-house pharmacies—just anticipated blockages on 340B pricing for contract pharmacies. A number of covered entities report that, since Lilly’s ban on 340B pricing at contract pharmacies took effect on Sept. 1, replenishment of Lilly NDCs at 340B pricing at those pharmacies has been blocked. While this is an unwelcome development for covered entities, it is consistent with Lilly’s new limited distribution plan and was expected.
Two pharmacy consultants who work with 340B covered entities said some clients experienced blockages at the wholesale level at their in-house pharmacies last week, soon after Lilly’s contract pharmacy ban took effect. The blockages are separate from those on Lilly NDCs that some 340B third party administrators have implemented in recent days. The entities were able to resolve the issues at their in-house pharmacies with their wholesalers in a few days, the consultants said. One expressed surprise that similar problems were still occurring elsewhere.
As reported first in 340B Report on Sept. 1, effective that day Lilly limited distribution of all 340B ceiling priced product directly and exclusively to covered entities and their child sites. “Covered entities will not be eligible to purchase Eli Lilly and Company products at the 340B ceiling price for shipment to a contract pharmacy,” the company said. It made an exception for its insulin products, with strict limits on what patients can be charged, a ban on billing insurers or other payers, and no mark-ups or dispensing fees. HRSA has not agreed to publish Lilly’s limited distribution notice, nonetheless, Lilly has moved forward on its restrictions.
340B pharmacy experts said problems covered entities are experiencing with pricing on and access to 340B-eligble Lilly products at in-house pharmacies could stem from wholesalers’ platforms difficulty distinguishing between in-house and contract pharmacies. Experts speculated that wholesalers implemented Lilly’s ban based on pharmacy identification data that Lilly supplied.
Drug manufacturer AstraZeneca on Oct. 1 is scheduled to implement a ban on 340B pricing for contract pharmacies similar to Lilly’s ban.
Exploring the SPARx Specialty & Ambulatory Solution
The specialty pharmacy sector presents a rapidly growing opportunity for hospitals and health systems. As medications become more specialized and the factors influencing their distribution become more complex, managing the patient journey and controlling associated revenues becomes increasingly more important. Hospitals can retain escaping revenues and improve the patient experience by expanding their existing specialty pharmacy capability—or establishing a new operation. This allows providers to maintain visibility to the patient journey by ensuring the patient is always under their supervision.
SPARx invites you to watch this new video where Michael Heinrichs, Senior Vice President, describes recent activity surrounding specialty medications while presenting the SPARx solution—a powerful service offering designed to support healthcare leaders in getting the most value from specialty and ambulatory pharmacy operations.
Health Center Group and Trump Administration Meet to Discuss 340B Executive Order
The National Association of Community Health Centers (NACHC) met with Trump administration officials on Sept. 9 to express concerns about the administration’s forthcoming interim final rule requiring community health centers to pass along all 340B savings on insulin and injectable epinephrine to patients.
The rule would immediately implement, without notice and comment, President Trump’s July 24 executive order requiring the U.S. Health and Human Services (HHS) Secretary to condition health centers’ future federal grants on making insulin and injectable epinephrine available at the 340B discounted price to a yet to be defined group of low-income individuals that have a high cost sharing requirement, a high unmet deductible, or no health care insurance.
A NACHC spokeswoman told 340B Report:
NACHC staff met with administration officials to convey their concerns about the recent EO. Our position is that the EO displays a fundamental misunderstanding about what health centers do—which is to make life-saving medicines and services affordable and accessible to our patients. Health centers don’t need an EO or Interim Final Rule to carry out a mission that’s been in place since they were created in 1965. Again, we are the solution, not the problem.
We also underscored that requiring health centers to charge their low-income uninsured and underinsured patients the full 340B price for any prescription will cause more harm than good. Depending on the type of insulin a person needs, and how dramatically manufacturers are raising sticker prices, a person could end up paying hundreds of dollars for something that a health center would normally only charge $5 or $10 for.
Lastly, federal statute requires health centers to charge all patients using a sliding fee scale based on income. This EO directly violates the statute by dictating specific prices without regard to patients’ ability to pay.
1,100+ Hospitals Sign Letter to Azar Protesting Drug Manufacturers’ 340B Actions
More than 1,100 hospitals and health systems told U.S. Health and Human Services (HHS) Secretary Alex Azar in a letter yesterday that recent actions by drug manufacturers “to deny access to 340B pricing are clear violations of the 340B statute that will set a dangerous precedent.”
“The statute requires manufacturers to provide the 340B discounts to entities that meet 340B’s strict eligibility requirements and does not grant them the ability to condition the discounts or otherwise create barriers to covered entities’ ability to access the discounts,” the hospitals and systems said. “If the administration permits pharmaceutical companies to continue these practices, 340B hospitals will face increased difficulties serving high volumes of patients living with low incomes in our rural and urban communities. Preserving access to 340B pricing is even more critical now, as safety-net hospitals across the country are on the front lines treating COVID-19 patients.”
“We are witnessing a unified show of support not only for the patients in need who rely on 340B hospitals, but also for the enforcement of the 340B statute that ensures hospitals can offer them the comprehensive care they need,” said 340B Health President and CEO Maureen Testoni, whose group was behind the letter. “We call on Secretary Azar to use his authority to demonstrate the administration’s commitment to health care safety net patients by stopping drug companies from flouting their obligations under federal law.”
340B Hospitals Provide More than $64 Billion in Community Benefits, AHA Says
Hospitals enrolled in the 340B drug discount program provided more than $64.3 billion in total benefits to their communities in 2017, the most recent year for which comprehensive data is available, the American Hospital Association said in a new analysis released yesterday.
“This is an increase from the more than $56 billion in total benefits that 340B tax-exempt hospitals provided to their communities in 2016,” AHA said in a news release. “The analysis also showed that 340B tax-exempt hospitals’ total community benefits were 13.8 percent of their total expenses in 2017.”
“Hospitals and health systems of all kinds, sizes and forms of ownership deliver a wide variety of benefits designed to meet the unique needs of their communities,” said AHA President and CEO Rick Pollack. “This new report once again confirms the immense value of the 340B drug savings program, which allows those eligible hospitals in particular to provide a unique range of important programs and services to their patients and communities, many of which would otherwise be unavailable.”
According to the analysis, 340B hospitals spent $31.3 billion in 2017 on financial assistance, unreimbursed Medicaid, and unreimbursed costs from means-tested government programs; $20.4 billion on other benefits, including health professions education, medical research, cash and in-kind contributions to community groups; and $12.3 billion on community building activities, Medicare shortfall, and bad debt attributable to financial assistance.