Drug manufacturers are asking Michigan state legislators to erase language in a new state law that Michigan hospitals say bars the companies from withholding 340B pricing if a covered entity refuses to hand over its contract pharmacy claims data, 340B Report has learned.
Pharmaceutical Research and Manufacturers of America (PhRMA) yesterday declined to address its lobbying efforts. It said, though, that “claims modifiers and other claims-level data are critical to increasing transparency and ensuring the integrity of the 340B program.”
“For example, there is rampant abuse in 340B of duplicate discounts, and claims modifiers and other claims-level data are key to addressing this problem,” PhRMA said.
Sixteen drug companies have imposed conditions on 340B pricing when covered entities use contract pharmacies. Ten will let entities contract with more than one outside pharmacy only if the entities give their contract pharmacy claims data for the company’s drugs to industry vendor 340B ESP. Most of the companies say they will use the data to identify potential duplicate Medicaid, Medicare Part D, and commercial rebates. The federal government and covered entity groups say the requirements are illegal and must end.
(340B Report is holding a May 18 webinar on 340B ESP’s administration of manufacturers’ claims data submission requirements. The webinar is for 340B Report subscribers only. Click here for information.)
In February, Michigan Gov. Gretchen Whitmer (D) signed three bills that prohibit pharmacy benefit managers (PBMs) and insurance carriers from discriminating against 340B covered entities and their contract pharmacies.
One of the bills, HB 4351, said a carrier, PBM, “or other third party” may not require drug claims to include a modifier or otherwise indicate that a drug is a 340B drug “except as required by law to prevent a duplicate rebate” and “unless the claim is for payment, directly or indirectly, by the Medicaid program.”
Chip Falahee, Senior Vice President, Legal & Legislative Affairs at Michigan health system Bronson Healthcare, said yesterday “we are hearing that manufacturers would like to take that sentence out of” the new state law.
Arkansas last year became the first state to enact legislation protecting 340B contract pharmacy arrangements. PhRMA is challenging that law’s legality and constitutionality in federal court. Falahee said his health system and others in the state believe HB 4351’s reference to “other third party” applies to drug manufacturers, making Michigan the second state with a law like Arkansas’s.
“We think it’s broad enough to encompass manufacturers and to apply to requirements for submission of claims data to 340B ESP,” he said.
Comparable bills were filed this year in California, Connecticut, Maine, Mississippi, Missouri, and Utah.
Falahee said Bronson’s typical annual financial benefit from 340B discounts is around $70 million. Of that amount, $25 million normally is attributable to contract pharmacy arrangements. Of that $25 million, around $11 million is now unavailable to Bronson due to the health system’s refusal to comply with manufacturers’ claims data submission requirements.
Falahee said Bronson has declined to accept the manufacturers’ conditions because they are illegal and because of patient privacy and administrative burden concerns.
Despite misgivings, many covered entities nationally have decided to accept the conditions because they cannot afford to forgo 340B revenues earned through multiple contract pharmacy arrangements.