Groups that represent 340B hospitals yesterday slammed the multi-point 340B contract pharmacy policy that Bristol Myers Squibb (BMS) released last Friday.
Representatives of grantee covered entities, which BMS exempted from its contract pharmacy restrictions involving most of its products, overwhelmingly said solidarity with hospital covered entities remains as strong as ever. Privately, though, other grantee stakeholders said grantees are thinking about what they can do to make sure that manufacturers continue to let them use multiple contract pharmacies.
Individual health systems and hospitals, meanwhile, are trying to figure out how to take advantage of BMS’s offer to let them finally access 340B pricing on three cancer drugs that have been off limits for years. The BMS policy change on myeloma drugs comes on the heels of a six-part investigative series that 340B Report conducted last summer that raised concerns over the legality of the policy which restricted access to 340B pricing on the expensive therapies to a small number of providers throughout the country. The series also reported on allegations of fraud raised by a former senior executive at Celgene. The government declined to intervene on behalf of the whistleblower and the case was dismissed.
Lawyers are warning entities, individually and collectively, to be aware of potential downsides to deciding to accept BMS’s offer.
BMS Policy’s Main Points
BMS announced on Jan. 14 that starting March 1 it 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.
BMS also gave many 340B hospitals (and grantees) something that many hospitals say they have been wrongly denied for years—access to 340B pricing on BMS’s multiple myeloma drugs Revlimid and Pomalyst (and a third related but less-used drug, Thalomid). BMS acquired the drugs when it acquired drug manufacturer Celgene in 2019. Celgene and then its new owner BMS let fewer than 250 health care providers (including an unknown number of 340B entities) buy and dispense the drugs, which can cause fetal death or severe birth defects when taken by women who are pregnant or plan to become pregnant. Most of those providers obtained the drugs from Celgene/BMS’s closed network of about two dozen specialty pharmacies. An unknown number could buy directly using their own specialty pharmacies.
Under BMS’s new policy, starting March 1, 340B hospitals and grantees can contract with one of the pharmacies in BMS’s network to purchase the myeloma drugs at a 340B price.
BMS also invited covered entities and the U.S. Health Resources and Services Administration (HRSA), the agency that runs the 340B program, “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.”
Hospital Groups’ Reactions
Senior officials at two national hospital groups blasted BMS’s new 340B pricing policies yesterday.
“Bristol Myers Squibb, like other pharmaceutical companies before it, has made a disappointing decision that puts profit over the health and welfare of low-income patients,” said Beth Feldpush, senior vice president of policy and advocacy at America’s Essential Hospitals. “We call on BMS and the other manufacturers to put an immediate end to these illegal practices, which serve only to limit access to lifesaving medications.”
Maureen Testoni, president and CEO of hospital group 340B Health, said BMS’s actions “will weaken the health care safety net and harm patients who rely on 340B providers for access to affordable drugs and care while enriching the company and its stockholders.”
“Federal regulators and two federal courts have found community pharmacy restrictions such as those planned by BMS to be unlawful under the 340B statute,” Testoni said. “The company’s actions fly in the face of those warnings, and we are calling on the government to use all its enforcement powers to put a halt to these harmful policies.”
“While hundreds of drug companies selling their products in the U.S. are keeping their legal promises to provide 340B discounts in return for access to the Medicaid and Medicare Part B markets, there are now a dozen, mostly large companies that are in clear violation of the law,” she said. The government must compel these outlier companies into line before the problem worsens.”
The American Hospital Association declined to comment on BMS’s new policy.
Feldpush and Testoni did not address BMS’s new policy on access to 340B pricing on its myeloma drugs. They also were silent on BMS’s offer to partner with it to consider and test potential solutions to the 340B program’s challenges.
Grantee Stakeholders’ Reactions
The National Association of Community Health Centers (NACHC) declined to comment on BMS’s new policy.
Including BMS, eight of the 12 drug manufacturers that have placed restraints on the contract pharmacy program have given grantees a pass. (Sanofi’s restrictions apply to health centers but not to the other 340B grantee entities). A ninth manufacturer, United Therapeutics, sells mainly to hospitals, so grantees essentially are untouched by its policies.
“The grantee community is relieved that manufacturers recognize the multiple protections grantees have in place to ensure compliance with 340B program requirements and to guarantee that the program’s benefits are used to expand access to care for underserved populations,” one veteran grantee stakeholder said.
Other grantee stakeholders yesterday characterized these exemptions as attempts by manufacturers to drive a wedge between hospital and non-hospital entities.
“Let’s call this what it is—a political tactic to split the 340B safety net,” said one grantee stakeholder. “The fact that these drug companies are selecting which types of covered entities bear the brunt of these self-serving, drug company invented ‘policies’ is exactly why manufacturers should not be allowed to continue these practices.”
“Thus far, the transparent attempt to drive a wedge between hospitals and grantees is not threatening the solidarity of covered entities as a whole,” an attorney who represents 340B grantee entities said. “Today it might be hospitals, but tomorrow it might be all of us.”
“Regardless of 340B entity type, there is an understanding that this is not just a threat to any one entity type but all 340B covered entities,” said Tim Olmstead, co-founder and managing partner of consulting firm The Alinea Group.
The way that manufacturers “are treating hospitals and FQHCs separately, it’s almost as if they are trying to divide the community into two parts, where the FQHCs and hospitals will begin to look out for themselves,” said Ryan Rushing, a vice president of pharmacy services at consulting company CarepathRx.
Tim Mallett, a vice president of 340B third party administrator 340Basics and former pharmacy director at a Michigan community health center, observed that insulin and diabetes drug manufacturers AstraZeneca, Lilly, Novartis, Novo Nordisk, and Sanofi led the first wave of manufacturer conditions on 340B contract pharmacy. There is a relatively high prevalence of diabetes among health center patients, so the first wave hit health centers quite hard.
After the first wave of manufacturers “laid out their plans, which included grantees, the other manufacturers seemed to back off and chose to exclude grantees,” Mallett said. “I truly believe this was to reduce bad optics. I feel the manufacturers wanted to make a statement, while at the same time not look bad in the press by harming the grantees—the little guys.”
“To my knowledge, there are no plans by grantees to circumvent any joint work being done by grantees and hospitals,” Mallett said. “I do not believe there is an issue with solidarity.”
Other grantee stakeholders who requested anonymity, however, said 340B grantee entities know the value of the exemptions they have been given and are thinking about how they can keep protecting themselves from any future manufacturer contract pharmacy restrictions. One said grantees are tired of being collateral damage in a war mainly between manufacturers and hospitals.
Individual Hospitals’ Responses
Some individual health systems and hospitals scrambled this long federal holiday weekend and yesterday to try to take advantage of BMS’s offer of 340B pricing on its myeloma drugs starting March 1.
Yesterday, Jan. 18, was the last day for covered entities to register themselves, their child sites, and their contract pharmacies for participation in 340B starting April 1. BMS announced its new policy late in the afternoon on Friday, Jan. 14. Due to the Martin Luther King Jr. federal holiday on Monday, yesterday was the only business day for hospitals to get a contract pharmacy services agreement for a child site executed with a pharmacy in BMS’s REMS specialty pharmacy network and registered with HRSA in time to take advantage of BMS’s March 1 start date for 340B pricing on Revlimid, Pomalyst, and Thalomid.
One health system pharmacy official who attempted the challenge said last night of the three prescribing locations she tried to execute contract pharmacy agreements for and register with HRSA, she succeeded to do so for only one. “I don’t count one in three as a win,” the official said.
CarepathRx executive Ryan Rushing said BMS’s offer of 340B pricing on its myeloma drugs “looks like a win, but it’s not.”
Generic versions of Revlimid and Pomalyst, the most widely used of BMS’s three myeloma drugs, are expected to hit the U.S. market early next year, Rushing explained. He said there is perhaps just one year for hospitals to realize significant savings from buying the brand versions at 340B price and billing payers at above acquisition cost. After the generic versions arrive and payers, in effect, begin mandating their use, “the 340B savings scenario completely changes.”
BMS’s policy change may be an attempt to protect their brand products’ market share, Rushing said. “It seems as if BMS said, ‘Hey, let’s get as many of our brand drugs into the hands of patients before generic manufacturers begin distribution.”
Hospitals and grantees that want to access to 340B pricing on the myeloma drugs through a contract pharmacy arrangement with one of the pharmacies in BMS’s REMS network must, in exchange, submit specified claims information to BMS. The company says it needs the data to ensure that prescription fill dates occurred after March 1 and that multiple 340B pricing requests are not claimed on a single prescription.
Attorneys who represent 340B entities recommended yesterday that entities that take BMS up on its offer of 340B pricing on the three drugs send letters to BMS explaining that they disagree with the claims information submission requirement and are complying under financial duress.
One of the lawyers added that if a significant number of hospitals accept BMS’s 340B pricing offer on the three drugs, the drug industry may conclude that it can “push through any new requirement and that at a certain opportunity cost the hospitals will captulate.”
“We are clearly hitting that point as the math is now starting to favor data sharing” with at least two manufacturers, BMS and AbbVie, the lawyer said.