Sanofi Reportedly Is Not Providing Some Promised 340B Pricing

Your 340B Report for Tuesday Oct. 13, 2020

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Health care providers enrolled in 340B report being unable to buy Sanofi drugs for their own outpatient pharmacies at 340B prices, despite Sanofi’s assurances that its rollback on 340B pricing for entities’ contract pharmacies wouldn’t affect 340B pricing for entities’ own pharmacies. | Source: Shutterstock

Sanofi Reportedly Is Not Providing Some Promised 340B Pricing

Some 340B covered entities report being unable to buy Sanofi covered outpatient drugs for their own pharmacies at discounted 340B prices in recent days, despite Sanofi’s assurances that its new limits on 340B pricing for drugs dispensed by contract pharmacies would not affect availability of 340B prices at entity-owned pharmacies, 340B Report has learned. We have reached out to Sanofi about the reports.

The U.S. Health Resources and Services Administration (HRSA) said this afternoon, “HRSA continues to review the policies of these manufacturers and has yet to make a final determination as to any potential action.” Sanofi is one of four manufacturers ceasing or restricting 340B pricing.

On Oct. 1, Sanofi informed covered entities by email that, effective that day, they needed to register with the company’s vendor 340B ESP and begin providing 340B contract pharmacy claims data to remain eligible “for 340B Bill To / Ship To replenishment orders for Sanofi products dispensed through a contract pharmacy.”

“Sanofi will continue to offer all of its drugs to all 340B covered entities,” the company’s email said. “At most, if a covered entity refuses to provide the requested data, we will restrict the entity’s use of contract pharmacy arrangements, but these entities will remain eligible to purchase at 340B prices for shipment to their own facilities.”

In an attached FAQ document, Sanofi said, “The 340B statute permits this approach because Sanofi will continue to offer 340B pricing to covered entities outside contract pharmacy arrangements, regardless of whether data is provided.”

“All 340B covered entities will continue to be able to purchase Sanofi products at the 340B price when shipped to an address registered on the 340B covered entity database as a parent or child site,” according to the FAQ.

A covered entity unable to buy Sanofi products at 340B pricing for its own pharmacy told 340B Report yesterday that a drug wholesaler told it Sanofi made an unspecified system change on Oct. 8 to implement its new conditions on provision of 340B pricing for drugs dispensed at contract pharmacies. The change apparently affected the availability of 340B pricing for all covered entities, whether they accepted Sanofi’s terms or not, and even for covered entities with their own pharmacies. The problem wasn’t expected to be resolved until today, Oct. 13.

Late last Friday, the national association of HIV/AIDS clinics that participate in 340B program and two of its members sued U.S. Health and Human Services (HHS) Secretary Alex Azar in federal district court to compel him to protect their rights to buy 340B-discounted drugs from Sanofi and three other drug manufacturers that have refused or threatened to cut off 340B discounts to contract pharmacies.

A second similar lawsuit by 340B covered entities against HHS is expected soon.


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U.S. House Bill to Protect 340B Hospitals During Pandemic Gets More Sponsors

U.S. Reps. Doris Matsui (D-Calif.) and Chris Stewart’s (R-Utah) bipartisan bill to provide temporary 340B program requirement flexibilities to hospitals during the COVID-19 pandemic keeps racking up more co-sponsors.

The bill, H.R. 7838, would protect hospitals from losing their 340B eligibility due to changes in patient mix during the public emergency, and also temporarily waive the 340B statutory prohibition on hospital purchases of covered outpatient drugs through group purchasing organizations (GPOs).

Including Matsui and Stewart, it has 14 sponsors: nine Democrats and five Republicans. Elise Stefanik (R-N.Y.) sponsored it on Oct. 9; Steve Cohen (D-Tenn.), David Trone (D-Md.), Dusty Johnson (R-S.D.), and Brian Fitzpatrick (R-Pa.) on Oct. 2; Peter Visclosky (D-Ind.) and Mark Green (R-Tenn.) on Sept. 30; Grace Meng (D-N.Y.), Michael San Nicolas (D-Guam), and Robin Kelly (D-Ill.) on Sept. 29; and Max Rose (D-N.Y.) and Sean Maloney (D-N.Y.) on Aug. 14.

Similar legislation in the Senate, S. 4160, would only protect hospitals from losing 340B eligibility during the pandemic if changes in their patient loads cause their Medicare disproportionate share adjustment percentage to fall below the level necessary for their hospital type to qualify for 340B (greater than 11.75 percent for disproportionate share and free-standing children’s and cancer hospitals, and greater than or equal to 8 percent for rural referral centers and sole community hospitals). It has 12 sponsors, evenly divided between Republicans and Democrats.


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U.S. House Bill, Like Companion in Senate, Could Become a Source of 340B Duplicate Discounts

New legislation in the U.S. House would let states get Medicaid rebates for drugs paid for by standalone Children’s Health Insurance Programs (CHIP), potentially becoming a new source of duplicate 340B discounts and Medicaid rebates on the same drugs.

Reps. Susan Wild (D-Pa.) and Brian Fitzpatrick (R-Pa.) last week announced the Fair Drug Prices for Kids Act, a companion to U.S. Sens. Mark Warner (D-Va.) and Corey Booker’s (D-N.J.) identical bill, S. 4448. Wild and Fitzpatrick’s bill has 10 co-sponsors, all Democrats: Reps. Matt Cartwright (Pa.), Mary Gay Scanlon (Pa.), Madeleine Dean (Pa.), Dwight Evans (Pa.), Michael San Nicolas (Guam), Filemon Vela (Texas), Jahana Hayes (Conn.), Henry Cuellar (Texas), Bennie Thompson (Miss.), and Raul Grijalva (Ariz.).

According to a Kaiser Family Foundation survey issued in March, 35 states’ CHIP programs are either entirely or partially separate from their state’s Medicaid program, which means they cannot get Medicaid drug rebates. Soon after S. 4448 was introduced in August, Warner’s office told 340B Report the bill does not address duplication of 340B discounts and Medicaid rebates on the same drugs. “Under this legislation, the same approaches [the U.S. Centers for Medicare & Medicaid Services] CMS is currently taking to address duplicate 340B discounts under the Medicaid Drug Rebate Program would apply to separate state CHIP programs,” a spokesperson said.

Drug manufacturer dissatisfaction with 340B discounts and Medicaid, Medicare Part D, and commercial rebates on the same drugs is at the heart of the fight over five manufacturers’ limits on 340B pricing for drugs dispensed by contract pharmacies.


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U.S. House Bill Won’t Affect 340B Penny Pricing on Generics, Industry Group Says

Three U.S. House Energy and Commerce Committee members—two Democrats and a Republican—have introduced a bill to address one of the generic drug industry’s top policy goals: repealing, for generics priced at $1.00 or less, the Medicaid drug rebate penalty on drug price increases above the rate of inflation.

A spokesperson for the Association for Accessible Medicines (AAM), the trade group for generic and biosimilar drug manufacturers, said today that the bill would not exempt generic drugs that cost less than a dollar from the related 340B drug discount inflation penalty that can reduce a drug’s 340B ceiling price to as low as a penny.

The bill’s text has not been released, and a news release from one of its sponsors did not address the bill’s implications for 340B ceiling prices.

In 2015, Congress extended the Medicaid drug rebate (and by extension, the 340B drug discount) inflation penalty on brand-name drugs to generic drugs. Legislation introduced Oct. 6, but not yet published, by Reps. G.K. Butterfield (D-N.C.), Tony Cardenas (D-Calif.), and Billy Long (R-Mo.) “would set a floor at $1, so [generic] drugs that cost less than a dollar would be exempt from the penalty,” Butterfield’s office said in a news release. “This will help ensure that generic drug manufacturers stay in the market, generic drug shortages are avoided, and beneficiaries have access to quality and affordable medications.”

We have reached out to Butterfield’s office for clarification about how the bill might affect 340B pricing on drugs.

AAM President and CEO Dan Leonard praised the bill in a statement. “The Medicaid generics penalty, as imposed today, increases the risk of shortages and threatens the long-term sustainability of the generics market,” he said. “The Protecting Access to Affordable Medicines Act is a common-sense solution to address the unintended consequences of the penalty.”

N.Y. State Health Plans Slam Medicaid Rx Drug Benefit Transfer

New York State’s impending transfer of Medicaid managed care prescription drug coverage to Medicaid fee for service “could lead to the collapse of many safety-net health providers” enrolled in the 340B program “who serve New York’s most vulnerable Medicaid members,” a new report prepared for the state’s commercial and nonprofit health plans warns.

“The overall financial viability of 340B providers is typically fragile, and policymakers need to ensure that these points of access remain available,” the report said. “To that end, policy makers should avoid a savings approach that cuts safety net providers’ revenues.”

Instead of taking away providers’ 340B savings, the report suggested that the state could perhaps save money by “limiting the profit margin being attained by various contract pharmacies.”

New York Health Plan Association (NYHPA) and Coalition of New York State Public Health Plans (CNYSPHP) commissioned the Menges Group, a policy analysis and consulting firm that specializes in Medicaid managed care, to model the likely financial and health care quality effects of the Medicaid pharmacy benefit carve-out from managed care.

Language in the state’s budget for the fiscal year that began April 1 transferred Medicaid managed care pharmacy benefits to Medicaid fee for service effective April 2021. Reimbursement for 340B purchased drugs will be actual acquisition cost plus a dispensing fee. 340B health care providers say the transfer will deprive them of millions of dollars in 340B program savings that they cannot afford to lose. Early this month, more than 100 safety net health care providers and service organizations separately asked Gov. Andrew Cuomo (D) not to implement the carve-out. The Cuomo administration requested the pharmacy benefit change.

In late August, the state Health Department released financial projections showing that the state would achieve $166 million in gross savings in fiscal 2021-22 from the coming change in 340B drug reimbursement. After all offsets are factored in (including $40 million in state “reinvestment” payments in FY 2021-22 to 340B covered entities that would be harmed financially from the switch), the Health Department projects the state will net $87 million. The department said, apart from the 340B-related changes, other savings would come from creation of a single state preferred drug list (which it said would increase the state’s negotiating leverage with drug companies), and from reductions in administrative costs.

The report commissioned by New York health plans said, rather than saving the state money, the Medicaid carve-out will cost it “an estimated $154 million during the first year of implementation and $1.5 billion over five years.” The health department’s forecast, it said, “does not address the key components that will lead to higher costs—including drug mix and premium tax impacts—and overestimates savings such as in administrative costs.”