Supreme Court ACA Overturn Could Cut Rural Hospitals from 340B, Gut HRSA Enforcement

Your 340B Report for Tuesday Sept. 22, 2020

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President Obama signs the Affordable Care Act into law on March 23, 2010. If the U.S. Supreme Court declares the entire ACA unconstitutional, numerous 340B provisions would be wiped out with it.

Supreme Court ACA Overturn Could Cut Rural Hospitals from 340B, Gut HRSA Enforcement

U.S. Associate Justice Ruth Bader Ginsburg’s death Sept. 18, and whether she is promptly replaced on the U.S. Supreme Court, could have a bearing on the 340B program’s future.

On Nov. 10, the court will hear arguments over whether Congress, in scuttling the Affordable Care Act’s (ACA) individual mandate to buy health insurance, rendered the entire health care reform law unconstitutional. The ACA extended 340B eligibility to rural and free-standing cancer hospitals. It also told the U.S. Health and Human Services (HHS) secretary to recertify providers’ 340B eligibility annually, develop guidance on avoiding duplicate 340B discounts and Medicaid rebates, create a 340B ceiling price database, impose fines on drug manufacturers and providers for 340B program violations, develop a formal 340B dispute resolution process, and conduct selective audits of drug manufacturers for 340B program compliance. The ACA also required a Government Accountability Office study of 340B that led to 340B covered entity audits. It also said the newly eligible 340B hospitals could not get 340B pricing on orphan drugs.

All of the health care reform law’s 340B provisions would be wiped out if the Supreme Court strikes down the entire law. Ginsburg’s replacement with a conservative justice by Nov. 10 could increase the odds that the court will declare all of ACA unconstitutional.

According to a 2014 federal court ruling, the U.S. Health Resources and Services Administration (HRSA) has clear regulatory authority from Congress over the 340B program in just three areas: imposition of civil monetary penalties against drug manufacturers for overcharges; development of standards and methods for calculating 340B ceiling prices; and establishing a binding 340B administrative dispute resolution process. All of it emanates from the ACA. If the Supreme Court declares all of the ACA unconstitutional, HRSA will have no remaining regulatory authority over 340B.


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UPDATE: OMB Clears Rule to Implement 340B Insulin Executive Order

The White House Office of Management and Budget (OMB) late yesterday formally completed its review of an interim final rule implementing President Trump’s executive order requiring community health centers to pass along all 340B savings on insulin and injectable epinephrine to patients. OMB’s action clears the way for the rule first to be posted for public inspection and then published in the Federal Register soon thereafter. The contents of the rule, which can take effect without notice and comment, are still unknown.

Health centers say the executive order is unnecessary and could threaten patient access to affordable prescription drugs. Last week, more than 100 Democratic U.S. House members asked HHS Secretary Alex Azar to rescind or not implement the executive order.

As we reported yesterday, OMB cancelled almost a dozen virtual meetings Monday, Tuesday, and Wednesday with health centers concerned about Trump’s order. Guests got email messages from OMB stating, “This rule has concluded and your meeting has been cancelled.”

In a related development, the White House this morning posted for public inspection its “most favored nation” executive order directing the U.S. Health and Human Services (HHS) Department to test models to base Medicare Part B and Part D drug payments on the lowest prices paid in other developed nations. The White House released the text on Sept. 13. The order will take effect tomorrow, Sept. 23.

The White House announced yesterday that President Trump will visit Charlotte, N.C., tomorrow to speak about his health care accomplishments and plans if reelected. He is expected to tout both the 340B insulin and most favored nation executive orders.


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Merck 340B Deadline Came and Went Quietly. Sanofi and Novartis Deadlines Could be Heated.

Aug. 14 was the deadline drug manufacturer Merck set for 340B covered entities to register with its vendor 340B ESP and begin uploading their 340B contract pharmacy claims data every two weeks. Merck said it will use the data to ensure it isn’t paying duplicate Medicaid, Medicare Part D, and commercial rebates.

“Absent significant cooperation from covered entities, Merck may take further action to address 340B Program integrity, which may include seeking 340B Program claims information in a manner that will be substantially more burdensome for covered entities,” Merck said in a June 2020 FAQ.

On Sept. 16, we asked Merck how many of the covered entities it contacted have registered with 340B ESP and begun bi-weekly claims data uploads, how many have not, and whether and what types of “further action” it has taken against entities that do not comply. Merck has not responded to the request for comment.

Attorneys, associations, and contractors who represent 340B covered entities said they were unaware of any covered entities experiencing repercussions from resisting Merck’s request for their claims data.

Drug manufacturers Sanofi and Novartis have given covered entities an Oct. 1 deadline to register with 340B ESP and begin submitting 340B contract pharmacy claims data for the respective companies’ products every two weeks.

Sanofi said in an FAQ that entities that do not register with its vendor and begin uploading their claims data by Oct. 1 “will no longer be eligible to place Bill To / Ship To replenishment orders for Sanofi products through a contract pharmacy.”

Novartis said in an FAQ that, beginning Oct. 1, all entities must register with 340B ESP and provide their contract pharmacy claims data “in order to receive 340B reimbursements from Novartis.”

HHS Will Respond to Spate of Congressional 340B Letters

The U.S. Health and Human Services (HHS) Department will answer recent letters from Congress asking it to halt drug manufacturers’ recent 340B contract pharmacy actions, and to rescind or not implement an executive order requiring community health centers to pass along all 340B savings on insulin and injectable epinephrine to patients, 340B Report has learned. What HHS will say, and when, is unknown.

We reached out to HHS late last week for comment about recent bipartisan letters from members of Congress to HHS Secretary Alex Azar expressing concerns about manufacturers’ recent 340B actions. We also asked about the Sept. 15 letter from 104 U.S. House Democrats asking Azar to cancel or disregard President Trump 340B order on insulin and EpiPens dispensed by health centers.

HHS has received the letters and will respond, we learned.

We asked three 340B legal and government relations professionals for their takes on the significance of HHS saying the lawmakers would get answers to their 340B questions. Two said they weren’t surprised. The third, however, saw significance in HHS’s statement that it will answer lawmakers’ 340B questions. The lobbyist noted that, just last Friday, Azar disregarded the U.S. House Energy & Commerce Committee’s demand for a briefing on alleged politically motivated meddling with government information about COVID-19.

340B Publisher and CEO: HHS and HRSA Need to Step Up to the Plate

The U.S. Health Resources and Services Administration’s (HRSA) statement that it is considering whether drug manufacturers’ policies to restrict access to 340B pricing at contract pharmacies violate the 340B statute and whether sanctions may apply “is an improvement” over its “initial weak reaction” to the policies, 340B Report Publisher and CEO Ted Slafsky says in his latest column for 340B Report sponsor Pharmaceutical Strategies Group. But “talk is not enough.”

HRSA has no choice but to take its lead from political appointees in charge of the U.S. Health and Human Services (HHS) Department, Slafsky says. “And this administration has been particularly hostile to the 340B program. But if there was ever a time for leadership, the time is now for HHS Secretary Alex Azar and HRSA Administrator Thomas Engels to step up to the plate and block this assault on the safety net mission.”

Slafsky says HRSA has taken “a laissez-faire approach to pharmaceutical manufacturer compliance with the 340B program” for too long. Its failure to finalize a directive from Congress in the Affordable Care Act to establish “a formal 340B dispute administrative process” left covered entities defenseless against manufacturers’ recent 340B contract pharmacy actions. When the U.S. Supreme Court heard arguments in the 2011 lawsuit that led to the court’s ruling that entities cannot not sue manufacturers for alleged 340B overcharges, the government’s attorney assured the justices that HRSA would move forward with the 340B administrative dispute resolution system, giving covered entities a remedy for manufacturer wrongdoing.

Slafsky says “while the formal administrative dispute resolution process has not been finalized, it does not preclude the government from enforcing the 340B statute.” He points out that HRSA has a 24-year-long record of interpreting the 340B statute to require manufacturers to honor the contract pharmacy program.