Critical access hospitals, rural referral centers, sole community hospitals, and free-standing cancer hospitals will not be getting access to voluntary 340B pricing on Bristol Myers Squibb’s (BMS) expensive myeloma drugs—a development certain to be a disappointment for rural providers.
Earlier this month, BMS announced that hospitals would face significant restrictions on access to 340B discounts in the contract pharmacy setting. At the same time, BMS said it would let covered entities excluded from its limited distribution network for Revlimid, Pomalyst, and Thalomid begin to receive 340B pricing on the drugs.
Although BMS’s initial announcement did not specifically say rural hospitals were excluded from this benefit, a BMS spokesperson confirmed yesterday that 340B pricing on the products will stay out of reach for the four types of hospitals.
The Affordable Care Act of 2010 added these hospital categories to 340B. But it also said that manufacturers are not required to provide 340B pricing to such hospitals on drugs designated for a rare disease or condition, better known as orphan drugs. Revlimid, Pomalyst, and Thalomid all have orphan drug designations for multiple myeloma. Pomalyst also is designated for Kaposi sarcoma, and Thalomid for Crohn’s disease, leprosy, and myelodysplastic syndrome.
BMS acquired Revlimid, Pomalyst, and Thalomid when it acquired drug maker Celgene in 2019. As described in a six-part 340B Report investigation last year, hospitals complained for years about Celgene’s 2015 limited distribution system for the drugs and how it kept them from accessing 340B pricing on the medicines.
Whistleblower’s allegation
In 2018, a company insider alleged in a federal False Claims Act lawsuit against Celgene that the company closed its limited distribution network for the three drugs “to prevent covered entities to which the [340B] orphan drug exception did not apply from obtaining myeloma drugs at the ceiling price.”
“Celgene either does not have entities that are exempt from the orphan drug exception in its [network] or it falsely excludes eligible covered entities from receiving the ceiling price based on the orphan drug exception,” the whistleblower alleged.
The U.S. Justice Department decided in February 2020 against entering the case on the whistleblower’s behalf. It has not disclosed why, explaining that it does not discuss criminal or civil charging decisions. The whistleblower withdrew the lawsuit a month later, a customary response when the government declines to intervene in a case and assume the cost of litigation.
BMS’s new policy
BMS announced on Jan. 14 that, beginning March 1 as a voluntary measure, 340B covered entities that are not already part of the limited distribution network for Revlimid, Pomalyst, and Thalomid will be able to access the drugs at 340B prices by designating one in-network specialty pharmacy as a 340B contract pharmacy. To get the reduced pricing, entities also must provide their 340B contract pharmacy claims data for the three products directly to BMS.
BMS described its new policy on 340B pricing for Revlimid, Pomalyst, and Thalomid in a Jan. 14 email and FAQ to 340B customers and in a one-page fact sheet. None of the documents addressed whether critical access hospitals, rural referral centers, sole community hospitals, and free-standing cancer hospitals would or would not be offered 340B pricing on the drugs as a voluntary measure. However, since the document did not explicitly exclude rural hospitals from the expansion, many assumed they would also benefit from this change.
A BMS spokesperson said yesterday, “There has been no change to BMS’s practice regarding 340B pricing and orphan drugs. Per the 340B statute, designated orphan drugs are not covered outpatient drugs subject to 340B prices for critical access hospitals, rural referral centers, sole community hospitals and free-standing cancer centers.”
Rural hospitals upset
BMS told entities that wished to designate an in-network specialty pharmacy as its 340B contract pharmacy for Revlimid, Pomalyst, and Thalomid purchases to do so on its contractor 340B ESP’s website.
340B consulting firm AuthorityRx said that, acting on behalf of a critical access hospital in late January, it used 340B ESP’s website to designate a contract pharmacy and give BMS the email address of the person at the hospital who would be sending the company the required contract pharmacy claims.
AuthorityRx got an email back from “BMS Support Team” saying more information about data submission would be sent in February. AuthorityRx replied it was urgent for its client to get the information by Feb. 1 “so that we can review, outline, and incorporate the processes you are mandating.”
BMS wrote back on Jan. 27. It said it would not accept the critical access hospital’s contract pharmacy designation. Repeating what it said to 340B Report yesterday, it told AuthorityRx, “There has been no change to BMS’s practice regarding 340B pricing and orphan drugs. Designated orphan drugs are not covered outpatient drugs subject to 340B prices for critical access hospitals, rural referral centers, sole community hospitals and free-standing cancer centers.”
“Obviously, BMS has the right to withhold discounts on orphan drugs to rural patients based on [the Affordable Care Act], but it also has the power to offer them, particularly for Medicare patients,” said Lynn Barr, founder and executive chair of Caravan Health, a business that helps rural and other hospitals and health systems create Medicare accountable care organizations and use value-based contract data to maximize 340B savings.
“Part D patients are not only underinsured but also prohibited from accepting any other manufacturers discounts,” Barr said. “Our rural seniors will have to spend up to $7,050 per year out of pocket, money they just don’t have. Everyone talks about health equity, but here is a great example of having the power to help the underserved and refusing to do so, in spite of record profits.”
Gilead opens up 340B access to rural hospitals
BMS’s statement that, based on the 340B orphan drug exclusion, it will not offer rural and cancer hospitals voluntary 340B pricing on Revlimid, Pomalyst, and Thalomid comes just days after drug manufacturer Gilead made the opposite decision about its COVID-19 drug Veklury, which has an orphan drug designation for Ebola under its generic name remdesivir.
Johnson & Johnson ended voluntary 340B discounts to rural and cancer hospitals on its Janssen brand orphan drugs effective Jan. 1. Amgen ended voluntary 340B pricing on orphan-designated drugs effective Jan. 1, 2021.
U.S. Reps. Peter Welch (D-Vt.) and David McKinley (R-W.Va.) have introduced a bill to give 340B rural and free-standing cancer hospitals access to 340B pricing on orphan drugs when the drugs are prescribed for common diseases or conditions. Welch has been trying to get the bill passed with other GOP lead co-sponsors since 2016.
Hospital group 340B Health said this week said it was “prepared to go in [the] direction” of a legislative solution to the 340B contact pharmacy stalemate. Welch and McKinley’s 340B orphan drug bill conceivably could be folded into a 340B contract pharmacy bill.
