By Maureen Testoni
December 22, 2020– We are coming to the end of a year like no other in our memories. A worldwide pandemic has caused the deaths of more than 300,000 of our fellow Americans. An economic recession has forced businesses to close and millions of hard-working people to lose their jobs and their income – and for many their health insurance. An election polarized us to an extent that few have before.
For hospitals participating in the 340B drug pricing program, the pandemic brought tremendous challenges. Many of these safety-net providers had to halt all elective surgery and care, cope with shortages of life-saving drugs and personal protective equipment and treat patients with a disease they had never seen before. I am enormously proud – but not surprised – that 340B hospitals and the women and men who work in them rallied to the challenges and provided skillful and loving care to patients who often were cut off from their loved ones. All of us have felt our hearts swell as health care workers have been cheered by their communities for standing on the front lines.
The response to the pandemic drained many hospitals of needed revenue. The government has responded with financial assistance to many facilities and some flexibility in the rules that govern 340B. Hospitals have been able to invest in telehealth to treat patients who were unable to come to the facilities. They have been able to open temporary sites for care and have them qualify for 340B discounts. And those hospitals that have faced drug shortages have been able to use group purchasing organizations (GPOs) to obtain needed medications. For all of this, we are grateful to the Health Resources & Services Administration’s Office of Pharmacy Affairs and its leader, Admiral Krista Pedley.
In Washington, following a year of multiple congressional hearings focused on 340B, things were somewhat quieter. There were no 340B-specific hearings in 2020, and, because of hospitals’ advocacy work, no legislation was enacted in 2020 that would have a negative impact on 340B.
Intensified Manufacturer Attacks
Having failed to convince Congress to shrink 340B, drug companies took matters into their own hands and unilaterally began cutting off access to 340B pricing for hospitals, health centers, and clinics that partner with community-based pharmacies to serve their patients. In early July, Eli Lilly announced it would stop paying for drugs destined for these pharmacies for Cialis. We and others warned that the company was likely to expand that list, and it later did to all its products, with a narrow exception for insulin. Following Lilly’s lead, more companies joined the effort. To date, six major manufacturers – Lilly, AstraZeneca, Sanofi, Novartis, United Therapeutics, and Novo Nordisk – have limited access to 340B pricing or announced plans to do so.
Simply put, these actions are unlawful, and they are unconscionable during the COVID-19 pandemic. We, along with numerous national organizations representing hospitals, health centers, and clinics, have sent regular communications to Health and Human Services Secretary Alex Azar urging him to use his authority to stop these actions. Similar letters have come more than 1,100 hospitals participating in 340B and from more than half the members of the Congress. And 29 state attorneys general – including HHS Secretary-designate Xavier Becerra – wrote to Azar calling for him to protect 340B providers and their patients.
Recently, we took this issue to court. 340B Health joined five other national organizations and three 340B hospitals to file a lawsuit in federal court asking it to order HHS to use its authority to stop these drug company actions, refund the money providers have lost, and refer the case to the HHS Office of Inspector General. The OIG’s job is to assess whether these companies are subject to penalties for “knowingly and intentionally” overcharging safety-net providers for covered drugs.
Expanding 340B Knowledge
One of the best tools to advocate for 340B is solid research that demonstrates how safety net hospitals use program savings to care for patients in need. Earlier this year, 340B Health released a report concluding that 340B hospitals provide 75% of all inpatient hospital care to patients enrolled in Medicaid. Because we know Medicaid generally underpays for care, that heavy caseload reduces the margins for these hospitals. If not for 340B savings, many more hospitals would be operating in the red.
Research published in the esteemed Journal of the American Medical Association (JAMA) debunked the canard promulgated by drug industry lobbyists that 340B discounts somehow lead to higher drug prices. Researcher Sean Dickson from West Health Policy Center looked at the impact of 340B’s inflationary penalty on manufacturers’ pricing behavior. These penalties are imposed when a drug company raises its price on an existing product by more than the rate of inflation, resulting in higher 340B discounts. What Dickson found wasn’t surprising to those of us who work on 340B issues. These inflation penalties serve as a curb on manufacturers’ pricing decisions for drugs, even those outside of the 340B program. In fact, lower price increases tied to inflation penalties were estimated to reduce Medicare Part D pharmacy expenditures by more than $7 billion between 2013 and 2017.
The Medicare Payment Advisory Commission (MedPAC), which advises Congress on how much Medicare should pay for various services, released a study looking at the use of oncology drugs in 340B hospitals versus non-340B hospitals and private physician offices. MedPAC found no consistent pattern of higher or lower drug spending. For three forms of cancer – breast, colorectal, and leukemia/lymphoma – researchers found no statistical difference in spending. In two other forms of cancer – lung and prostate – the difference was about $300 a month. The report also went further than earlier research about cancer drug spending at 340B hospitals, noting that some higher spending could be due to these hospitals treating patients with costlier cancer treatment needs.
A Continuation of the Medicare Rate Fight
340B hospitals suffered some setbacks in the ongoing conflict over how much Medicare should pay 340B hospitals for Part B drugs. Beginning in 2018, the Centers for Medicare & Medicaid Services (CMS) has been paying most 340B hospitals nearly 30% less than it pays other hospitals for these drugs. Several national hospital associations took CMS to court seeking to overturn those cuts. While the plaintiffs won two important victories in lower courts, in 2020 the government was successful in its appeal of those decisions. As a result, the cuts remain in place and will extend into 2021.
To bolster its case, CMS conducted a hurried survey of 340B hospitals in a flawed attempt to determine their drug acquisition costs. The survey was launched in the middle of the first wave of COVID-19 cases in the U.S., and many hospitals chose not to provide the detailed information CMS was seeking. Later in the year, the agency finalized the same pay reductions to 340B hospitals for 2021 that they received in 2020. But CMS warned that it might revisit the acquisition cost-based rates that would have resulted in even deeper pay reductions had they gone through.
New Year, New Leadership
At year’s end, Americans were confronting a new wave of COVID-19 cases that were filling intensive care units in many hospitals across the country. But the emergency approval of promising vaccines gave us all hope that this dark chapter could come to an end in 2021.
November’s elections resulted in a change at the top. Congressional elections resulted in even tighter divisions in both the House and Senate. We will know how tight after the Jan. 5 runoff elections in Georgia’s two Senate seats. But we do know that however those runoffs turn out, there will be new leadership on key committees with jurisdiction over 340B issues. On the House Energy and Commerce Committee, Rep. Cathy McMorris Rodgers (R-Wash.) will replace retiring Rep. Greg Walden (R-Ore.) as the senior Republican on the panel. In addition, Senate Health, Education, Labor, and Pensions (HELP) Committee Chairman Lamar Alexander (R-Tenn.) is retiring, and his replacement won’t be known until January.
With a new president and new leaders in key legislative posts, it will be incumbent on 340B professionals to continue their wonderful work advocating for the program and educating policymakers all the good that 340B savings accomplish without asking for taxpayer support. I am confident that together we again will make it clear how vital a role 340B plays in caring for those most in need.
I wish you and yours joy, happiness, and most of all good health in the new year.
Maureen Testoni is the president and CEO of 340B Health