Bristol Myers Squibb (BMS) yesterday became the 12th drug manufacturer to impose restrictions on 340B pricing when hospitals and grantee covered entities contract with pharmacies to dispense drugs to patients.
According to late-day email messages from BMS to 340B customers and a one-page fact sheet, beginning March 1 the company will let hospitals buy its covered outpatient drugs—with three exceptions—at the 340B price only through the hospital’s in-house pharmacy or only through just one contract pharmacy.
Grantee entities can keep buying these products at 340B price for shipment to an unlimited number of contract pharmacies. There is no claims data submission requirement for grantees or hospitals for these purchases.
340B groups, particularly hospital organizations, are expected to denounce the change and urge federal regulators to take 340B enforcement action against BMS.
Changes Course on Revlimid, Pomalyst, and Thalomid
The other three BMS products are the oral oncology drugs Revlimid, Pomalyst, and Thalomid. BMS added them to its portfolio in 2019 when it acquired drug manufacturer Celgene.
Celgene, which BMS fully acquired and assumed in 2019 for $74 billion, makes the three medicines. All can cause fetal death or severe birth defects when taken by women who are pregnant or plan to become pregnant. Celgene/BMS says, to prevent such tragedies, it lets only about two dozen specialty pharmacies and fewer than 250 providers buy, prescribe, and dispense Revlimid, Pomalyst, and Thalomid.
As described in a six-part 340B Report investigation in June 2021, hospitals have complained for years about Celgene’s 2015 limited distribution system for the three multiple myeloma drugs and how the system keeps them from accessing 340B pricing on the expensive medicines—on Revlimid in particular, the most widely used of the three. BMS reported $8.2 billion in U.S. revenues on Revlimid and $2.1 billion on Pomalyst in 2020.
Due to Celgene’s history of price increases on Revlimid, its 340B price should be at or near the $0.01 floor set under a 2017 federal regulation. BMS and Celgene before it have told shareholders that there would be an adverse effect on their revenues and profitability if they were ever required to change their sales, pricing, or distribution practices for these drugs under the 340B program, or if they ever were required to pay applicable 340B civil monetary penalties for 340B program violations.
A former Celgene vice president accused the company in 2018 in a federal False Claims Act lawsuit of limiting the three drugs’ distribution to 340B hospitals to increase profits, not to protect patient safety as Celgene said. The whistleblower withdrew the suit in 2020 after the federal government declined to get involved and take over as the main plaintiff. The government has not explained why it took a pass on the case and the possibility of a multi-million or possibly more than $1 billion settlement with Celgene.
New 340B Pricing Policy for Myeloma Drugs
Under the new 340B pricing policy that BMS announced yesterday, starting March 1 hospital and grantee covered entities will be able to designate one of the specialty pharmacies in BMS’s tightly controlled network of pharmacies allowed to handle Revlimid, Pomalyst, and Thalomid as a 340B contract pharmacy for 340B bill to / ship to orders, which will be facilitated exclusively by AmerisourceBergen.
Hospitals and grantees, not the specialty pharmacies, will be the drugs’ purchasers. In other words, this will not be a white-bagging policy in which the purchaser of record is the pharmacy, not the entity, putting 340B pricing out of the entity’s reach.
Hospitals and grantees that designate a contract pharmacy to dispense 340B-purchased Revlimid, Pomalyst, and Thalomid will have to submit claims information to BMS directly. BMS said contract pharmacy dispenses of the three myeloma drugs under the new policy must occur after the policy’s March 1, 2022, effective date. The company said the claims data requirement “will ensure customary business practices and program integrity are maintained, which will support supply chain stability during the transition to the integrated distribution approach.”
BMS said in an FAQ that accompanied the Jan. 14 letter that the required information includes: 340B ID, covered entity name, prescription ID, dispense date, NDC, quantity, contract pharmacy name, HIN & DEA number. BMS said it will send entities a data submission template after they place their contract pharmacy orders. “BMS will re-evaluate the need for information submission after 340B purchasing patterns are clearly established and the integrated distribution practice has transitioned to a normal business activity.”
How Entities Will Respond Is Unclear
It is unclear how 340B provider groups will respond to BMS’s decision to give covered entities something they have wanted for years—broad access to 340B pricing on BMS’s three very expensive and widely used drugs to treat multiple myeloma. Hospitals are expected to argue that BMS should not be limiting access to the company’s handpicked specialty pharmacy network and instead should provide the drugs at a discounted price directly to their own specialty pharmacy if its meets safety and clinical standards. They are also likely to argue that BMS/Celgene owes them refunds for what they consider to be years of overcharges.
Under both the Revlimid/Pomalyst/Thalomid policy and the policy for all other BMS covered outpatient drugs, entities will have to make their contract pharmacy designations by Feb. 15 to begin purchases beginning March 1. BMS is using drug manufacturer contractor 340B ESP as its handling agent for entities’ designations.
A health system pharmacy director observed last night that it could be hard for some covered entities to take immediate advantage of BMS’s new policies on 340B pricing on Revlimid, Pomalyst, and Thalomid and its other covered outpatient drugs.
The first quarter 2022 period for 340B covered entity, child site, and contract pharmacy registration ends on Jan. 18 (HRSA extended it by three days this quarter.) It would be almost impossible at this late date for an entity to execute a contract pharmacy services agreement by Jan. 18 to be able to comply with BMS’s March 1 effective dates for its new 340B pricing policies for its myeloma drugs and non-myeloma drugs, the pharmacy director said. “Those who are not nimble in 340B won’t even begin eligibility until July 1,” the first day of the third quarter.
Company Wants Détente with HRSA and Covered Entities
“BMS considers the 340B program to be a critical part of America’s health care safety net,” the company said. “BMS also recognizes, however, that the program is evolving and has become increasingly complex for stakeholders to navigate. Accordingly, BMS invites covered entities, HRSA, and others to partner with BMS to consider and test potential solutions to the challenges that face 340B. Such models may include extending 340B pricing directly to uninsured and vulnerable patients at the point of sale, sharing data to prevent diversion and duplicate discounts, or exploring third party contract pharmacy models that align with state and federal law.”
Separate Email to 340B TPAs
BMS yesterday also sent 340B third-party administrators (TPAs) a separate email with two additional FAQs about its 340B pricing policy change.
The first addresses what happens if a covered entity elects not to provide the claims information for 340B contract pharmacy orders of Revlimid, Pomalyst, and Thalomid. “BMS will decline to distribute orders of 340B priced drugs to covered entity contract pharmacies that elect not to provide the information,” BMS said.
The second FAQ asks, “How can TPAs support covered entities?”
TPAs can help by coordinating with covered entities to identify the covered entity’s contract pharmacy for Revlimid, Pomalyst, and Thalomid purchases and its contract pharmacy for all other BMS covered outpatient drug purchases, the company said. The TPA also may wish to determine if the entity chooses to submit claim information to BMS for Revlimid, Pomalyst, and Thalomid purchases, it said. “If a covered entity chooses to submit this information, TPAs can help the entity complete BMS’s information submission form and identify only 340B eligible transactions with dispense dates that align with BMS’s distribution practices,” BMS said.