by Maureen Testoni
December 20, 2019– As 2019 draws to a close, I find myself looking back on a historic year of vigorous discussion about drug costs. While no major actions – legislative or regulatory – were finalized this year, the table has been set for the years ahead. As always we will be watching closely to see where the 340B drug pricing program fits into the debate. The challenge for policymakers is whether they can agree to any bipartisan actions that can lower costs for patients while protecting the vital health care safety net.
- Related — 340B Highlights for 2019
For 340B, 2019 was another year under the microscope. Far fewer pieces of 340B legislation landed on the congressional table compared with the record total set in 2018. Still, the conversation about 340B continued in congressional hearing rooms as lawmakers raised questions about how the program is operating. It was particularly heartening to see several members of our bipartisan group of 340B champions passionately defending the program in these hearings. As a result of their vocal support, several potentially damaging 340B amendments to drug pricing bills were rejected or withdrawn.
2019 saw major steps forward in making drug pricing more transparent. The year started with implementation of a 2010 law authorizing civil monetary penalties on drug manufacturers that “knowingly and intentionally” overcharge 340B covered entities. The law stemmed from a series of federal reports documenting a pattern of overcharges. But regulations implementing the law were delayed by both the Obama and Trump administrations. 340B Health joined with our fellow hospital associations to take the government to court over the delays, and soon thereafter the final rules were published.
As important as the rules are, the most vital element of this new policy is the creation of a secure website listing the 340B ceiling prices for all covered products. Since it was launched on April 1, I have heard directly from many hospitals that it is a powerful tool to help them understand what they should be paying for drugs. I also have heard that the mere fact that drug makers now must report this information to the government has improved understanding of, and adherence to, pricing rules. Drug companies that are looking more closely at what they charge and how they distribute 340B drugs posted a record number of notices to the 340B site maintained by the Health Resources & Services Administration (HRSA), which oversees the program. This kind of sunshine is a benefit to all those involved with 340B.
Medicare Fight Continues
Regulatory challenges to 340B continued in 2019, with the Centers for Medicare & Medicaid Services (CMS) continuing its wrongheaded efforts to underpay many 340B hospitals in the Medicare Part B program. A nearly 30 percent reduction in payments that started in 2018 was continued into 2019, and CMS will do so again in 2020. These harmful cuts persist despite two rulings by a U.S. District Court judge that CMS exceeded its legal authority in making the reductions and clear evidence of damage to safety-net providers. Instead of complying with the judge’s request for a plan to remedy the situation, the government has appealed the decisions and kept the cuts in place. Final arguments in that appeal were heard on Nov. 8, so a decision could be imminent.
CMS has signaled, however, that if it loses the court case, it plans to continue the financial pressure on 340B hospitals. The agency floated a trial balloon, stating the cuts might be made less drastic but still place payments to 340B hospitals lower than those made to other facilities. And CMS later announced plans to collect survey data from 340B hospitals about their drug acquisition costs with the eventual goal of reducing payments based on these data. 340B Health, along with other major national hospital associations, joined with hospitals and systems across the country to protest the proposal. A decision is pending on whether the government will go through with its plans despite the wide opposition.
Keeping an Eye on States
Finally, it’s worth noting that action on 340B at the state level – once a rarity – has begun to step up. In 2019, several states acted on legislation and regulations that affect 340B providers. Some of those changes have been positive developments, but others could have some negative unintended consequences.
Historically, most state-level policy developments related to the 340B program have been limited to state Medicaid agencies establishing rules governing billing, reimbursement, and duplicate discount prevention. In 2019, however, states have shown an increased and broader interest in 340B.
Several states have passed laws prohibiting discriminatory reimbursement of 340B drugs, which we encourage all states to adopt. Others are debating proposals requiring hospitals to report information about their 340B participation, sometimes in ways that conflict with federal law and best practices.
On the issue of duplicate discount prevention, a successful state model already exists. Oregon’s use of a retrospective claims review system minimizes the reporting burden to covered entities while ensuring that manufacturers don’t pay a 340B discount and a Medicaid rebate on the same drug.
State interest in 340B changes is likely to continue in 2020.
If 2019 was a table-setter year, what will be on the menu for 2020?
The House recently passed Speaker Nancy Pelosi’s (D-Calif.) drug pricing package (H.R. 3) that would make dramatic changes in how prices are set. While observers say the bill is dead on arrival in the Republican-led Senate, it lays out how one party intends to proceed on this key issue. In the upper chamber, Sens. Chuck Grassley (R-Iowa) and Ron Wyden (D-Ore.) have cosponsored bipartisan legislation that would tighten what Medicare pays for drugs, especially when prices are hiked faster than inflation.
As they prepared to leave town, lawmakers already were talking about plans to continue the debate over drug prices in the new year. If there is to be any action, however, the House and Senate along with the White House will have to find some middle ground on which all can agree. The House-passed bill can’t pass the Senate, but some provisions in the sweeping package are similar to some parts of the Grassley-Wyden bill. In an ordinary year, legislators would look for common ground so that they can move forward on a voter priority. The looming election could prevent that from happening, but these bills almost certainly will shape the debates to come.
President Trump has made clear throughout his time in office that drug prices are a priority. Just this week, the administration unveiled proposed rules to allow states to import some prescription drugs, which could have some impact on 340B. 2020 could bring new efforts. For example, the administration also could move forward with its plan to link Medicare Part B payment for certain drugs to an international pricing index (IPI). An advance notice of proposed rulemaking was issued in October of 2018 and public comments were submitted to the government. A proposed IPI rule was sent to the White House Office of Management & Budget in June but has not been cleared for publication.
While 340B is not the focus of much of this debate, there could be unintended consequences to some of the decisions policymakers make. For 340B leaders it will be vital to find ways to lower drug prices while protecting the safety net. 340B advocates need to continue to tell their stories about how the savings from the program enable them to care for more patients and offer more comprehensive services. Remember, it is those real-life stories that cut through the well-funded drug industry efforts to paint 340B in a bad light.
When we stand up together for 340B, the results are remarkable. Let’s keep that dedication going into next year and beyond. Happy new year!
Maureen Testoni is the President and Chief Executive Officer of 340B Health