Last Chance to Influence 340B Drug Pricing Statutory Contours

Alexis Boaz

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Constance A. Wilkinson

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Last Call for Comments on the Bipartisan Discussion Draft of the SUSTAIN Act: Shaping 340B for the Future

by: Alexis Boaz, Constance A. Wilkinson of Epstein Becker & Green, P.C. - Health Law Advisor

Tuesday, March 26, 2024

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Only a few days remain for stakeholders—which includes drug manufacturers, patients, health care providers, pharmacies and others— to take advantage of a rare opportunity to influence the statutory contours of the 340B Drug Pricing Program (the “340B Program” or the “Program”). Specifically, industry stakeholders have until April 1^st to submit comments to legislators regarding the Discussion Draft Explanatory Statement and Supplemental RFI (the “RFI”) of the “Supporting Underserved and Strengthening Transparency, Accountability, and Integrity Now and for the Future of 340B Act” (the “Sustain 340B Act”). This bipartisan legislative discussion draft was released by the Senate 340B Working Group (the “Working Group”) earlier this year, to update the 340B Program.

Following significant and polarizing stakeholder disagreements over fundamental but statutorily ambiguous aspects of the 340B Program in recent years, the bipartisan Senate 340B Working Group issued the Sustain 340B Act legislative discussion draft and the RFI to “provid[e] clarity in statute about Congress’s intent for the 340B program”—as Congress’ intent had “previously only [been] expressed in report language.” As such, the Sustain 340B Act legislative discussion draft and RFI address notable aspects of the 340B Program, including the scope of the term “patient”, the acceptable parameters for the use of contract pharmacies, and the ownership and integration of so-called “child sites” into covered entities. More broadly, the legislators solicit specific comments to a wide range of questions from stakeholders across the industry.

The Growing Need to Improve Ambiguity, Oversight, and Transparency in the 340B Program

The 340B Program requires drug manufacturers whose drugs are reimbursed under Medicaid to provide a discount on outpatient drugs to certain categories of health care providers, including, but not limited to, certain types of hospitals and federal grantee clinics. Since its creation through Section 340(b) of the Public Health Service Act in 1992, the 340B Program has continued to evolve organically with few, limited amendments to the statute. Stakeholder concerns have grown over the years. In 2023, the Working Group—comprised of Senators John Thune (R-S.D.), Debbie Stabenow (D-Mich.), Shelley Moore Capito (R-W.Va.), Tammy Baldwin (D-Wis.), Jerry Moran (R-Kan.), and Ben Cardin (D-Md.)— sought input on policies to provide stability and appropriate oversight, with Sen. Moran (R-Kan), in particular, opining that “[t]he 340B Drug Pricing Program is not working as effectively as it should.”

As of 2024, top stakeholder concerns regarding the Program include ambiguity, oversight, and accountability. With statutory ambiguity surrounding the treatment of drugs dispensed through contract pharmacies—defined in the discussion draft as pharmacies “with which a covered entity has contracted to dispense covered outpatient drugs”—a number of drug manufacturers have placed restrictions on the availability of their drugs at 340B discounted drugs at these pharmacies. Upon the release of the Sustain 340B Act legislative discussion draft in February 2024, the Working Group reiterated its call for legislation that would provide transparency and accountability within the 340B Program.

Key Provisions and Areas for Comment in the Sustain 340B Act and RFI

The following summarizes key points from the 51-page Sustain 340B Act legislative discussion draft and the RFI:

Sense of Congress	Codifies that the purpose of the 340B Program is to stretch scarce resources and help safety net providers maintain, improve, and expand patient access to health care services by requiring drug manufacturers—as a condition of participation in Medicaid and Medicare—to provide discounts and rebates to covered entities that serve a disproportionate share of low-income and underserved patients
Contract Pharmacy	Clarifies that contract pharmacies can in fact be used by covered entities, in accordance with the Health Resources and Services Administration’s (HRSA’s) 2010 guidance Adds a new statutory section on contract pharmacies that requires manufacturers to: Offer covered entities the 340B price for an outpatient drug regardless of whether the drug is dispensed through a pharmacy under contract with a covered entity or directly by the covered entity; Deliver or allow the delivery of covered outpatient drugs purchased by a covered entity and their associated sites (at or below the applicable ceiling price) to pharmacy locations, as requested by the covered entity, in accordance with the covered entity’s contract pharmacy agreements; Not place conditions on the ability of a covered entity to purchase drugs at the 340B price, including a drug that is dispensed at a contract pharmacy location (restricting distribution options, etc.) Requires covered entities to: Annually register their contract pharmacy sites with the U.S. Department of Health and Human Services (“HHS”); Submit all contract pharmacy arrangements in a timely manner; Register each contract pharmacy arrangement specifying the parent, child, or associated sites prior to implementing the contract pharmacy arrangement, and Attest to each contract pharmacy arrangement’s compliance with the requirements under this section FEEDBACK SOUGHT: The Working Group seeks comment on: The definition of a “patient,” and how the definition should reflect the evolution of the 340B program; the factors that should inform whether the covered entity has a meaningful relationship with a patient; the elements that should be considered for determining discounts for patients served by multiple entities; among other elements How to achieve the correct balance of patient access accountability and program integrity in contract pharmacy arrangements Additional limitations on the use of contract pharmacies—supported with data-based suggestions and reasoning – including the consideration of differences in how urban and rural hospitals utilize contract pharmacy arrangements Structuring geographic or other restrictions on contract pharmacies to ensure that patients in rural and underserved areas maintain access to drugs Structuring limitations on contract pharmacies to ensure patients have access to specialty medications Policies to allow covered entities to contract with pharmacies to ensure patients have access to 340B drugs, without additional requirements or limitations Policies to limit the influence of pharmacy benefit managers (PBMs) in the Program while ensuring that Program financial benefits remain with covered entities and eligible patients
Child Sites	Amends the statute to include a section on child sites and specifies that child sites must be wholly owned by and financially integrated into the covered entity Enumerates a number of requirements relating to registration, financial and other operations, reporting, procedures, and recordkeeping FEEDBACK SOUGHT: The Working Group seeks additional feedback on how to appropriately ensure that child sites are aligned with the intent of the 340B program (including appropriate guidelines, additional requirements, level of oversight, specific policies, program integrity measures, special considerations in geographic areas).
Transparency	Requires covered entities to report detailed information regarding policies, patient and prescription information—which would be publicly available—as well as certain specific data (including the use of savings in the 340B program, the number of individuals given drugs at the 340B price, the total number of prescriptions filled with covered outpatient drugs, the financial demographics of patients, and the covered entity’s list of contract pharmacies)
Enhancing Program Integrity	Authorizes the Secretary of HHS (the “Secretary”) to perform audits on covered entities, child sites, contract pharmacies, and manufacturers under the statute Requires covered entities to only contract with vendors who agree to submit data to the Secretary and independent outside auditors, among others Imposes additional sanctions for violations of the statute
Preventing Duplicate Discounts	Creates a national, third-party drug discount program data clearinghouse to prevent duplicate discounts between 340B and Medicaid
Ensuring Equitable Treatment of Covered Entities and Participating Pharmacies	Imposes new requirements, exclusions, reimbursement terms, and prohibits a number of specific actions to ensure group health plans, health insurance issuers, or PBMs do not discriminate against covered entities, their contract pharmacies, or their participants, beneficiaries, or enrollees
User Fee Program	Adopts a user fee program to equip HRSA with the appropriate resources to oversee and administer the 340B Program
Studies and Reports	Requires the Medicaid and CHIP Payment and Access Commission (MACPAC) to submit a report to Congress on the efforts of state Medicaid agencies to prevent duplicate discounts Requires HHS to conduct a study on dispensing fees
Additional Resources for Oversight	Authorizes an additional $3,000,000 for HHS to conduct 340B Program audits, investigations, oversight, and enforcement activities
Definitions	Defines key terms throughout the text

Covered Entities, contract pharmacies, manufacturers, 340B third party administrators and other interested parties should submit comments to Bipartisan340BRFI@email.senate.gov by April 1^st to take advantage of the opportunity to inform the re-shaping of the 340B Program.

Ann W. Parks contributed to the preparation of this post.