From left to right, HHS Secretary Xavier Becerra, CMS Administrator nominee Chiquita Brooks-LaSure, and HHS Deputy Secretary nominee Andrea Palm will all be on Capitol Hill on Thursday.

340B Could Come Up During Congressional Hearings Thursday

The U.S. Senate Finance Committee is scheduled to hold a hearing Thursday morning on President Biden’s nominations of Chiquita Brooks-LaSure to run the U.S. Centers for Medicare & Medicaid Services, and Andrea Palm to be U.S. Health and Human Services (HHS) Secretary Xavier Becerra’s deputy.

Becerra, meanwhile, will be on the other side of Capitol Hill at the same time, testifying before a U.S. House Appropriations health subcommittee about the Biden administration’s request for $131.7 billion in discretionary funds for HHS in fiscal year 2022, a $25 billion or 23.5% increase from this year’s level.

Although the 340B program won’t be central to either hearing, lawmakers might ask Becerra, Brooks-LaSure, and Palm about it.

Brooks-LaSure, Biden’s nominee to be CMS administrator, is a managing director at the consulting firm Manatt Health, where she focuses on regulatory and legislative policies regarding private insurance, Medicaid, and Medicare. The firm has a large 340B practice. She previously held senior policy positions at both CMS and HHS during the Obama administration, served on the Democratic staff of the House Ways and Means Committee, and began her career as a program examiner and lead Medicaid analyst for the White House Office of Management and Budget. She would be the first Black woman to head CMS.

Palm, Biden’s pick to be HHS deputy secretary, previously has served as a legislative assistant to Rep. Bob Matsui (D-Calif.); as health care policy adviser to then-Sen. Hillary Clinton (D-N.Y.); as Deputy Assistant HHS Secretary for Legislation during the Obama administration; as policy advisor to the Obama White House Domestic Policy Council; and as advisor to the assistant HHS secretary and HHS chief of staff, also under Obama. Palm was often the lead official that 340B stakeholders met with to make their case with the Obama administration.

No significant opposition has been voiced to either Brooks-LaSure or Palm’s nomination.

While neither Brooks-LaSure nor Palm would exercise hands-on control over the 340B program, both would influence 340B policy greatly if confirmed. As HHS deputy secretary, Palm would oversee development and approval of all HHS regulations and guidance. One of the first big 340B-related decisions Brooks-LaSure and Palm would have sway over is whether the administration should continue, modify, or end the nearly 30 percent cut in Medicare Part B reimbursement for hospitals’ 340B-purchased physician administered drugs that has been in place since 2018. The CMS administrator also plays a key role in determining policies that impact the intersection of Medicaid and 340B programs. This includes pharmacy reimbursement and issues surrounding duplicate discounts.

Recently, a federal district judge enjoined the federal government from enforcing 340B administrative dispute resolution regulations against drug manufacturer Eli Lilly, and said she expected the government would withdraw and reissue the regulations in compliance with the Administrative Procedure Act. If the Biden administration withdraws the rule, Palm would have a big say about its replacement.

During Thursday’s House Appropriations health subcommittee hearing, Becerra might be asked about what HHS is doing regarding several drugmakers’ decisions to stop providing 340B discounts on drugs dispensed by contract pharmacies, or to make covered entities give them their contract pharmacy claims data in order to keep getting 340B discounts.

Becerra and Palm will soon need to pick a new administrator for the Health Resources and Services Administration (HRSA), and decide how much funding to seek for HRSA’s Office of Pharmacy Affairs (OPA), which oversees the 340B program. The last big bump in funding for OPA was in fiscal year 2014, when Congress more than doubled its appropriation from the prior year, from $4.1 million to $10.2 million. OPA’s funding has remained stuck at that level ever since.

For 10 straight years, Congress rejected the Obama and Trump administrations’ requests to approve a 0.1% user fee on 340B program sales to boost OPA’s funding. HRSA reported last year that 340B sales in 2018 were about $24 billion. Had the user fee been in place, it would have boosted OPA’s funding by $24 million. The Biden administration hasn’t said yet whether it, too, wants a 340B user fee.  340B provider groups have largely opposed the user fee and have quietly lobbied to kill the idea, expressing concern over additional costs for covered entities.

The House and Senate Appropriations committees often use the reports that accompany HHS spending bills to express the majority party’s positions on and expectations for the 340B program.

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