Doris Matsui
340B Health and the AHA say they support 340B contract pharmacy legislation that Rep. Doris Matsui (D-Calif.) is working on.

In Shift, 340B Health and AHA Now Say They Back Congressional Action on 340B Contract Pharmacy

Hospital group 340B Health and the American Hospital Association both have decided to support federal legislation to prohibit drug manufacturer restrictions on 340B covered entities’ use of contract pharmacies. A senior AHA official was quoted in a news article just eight weeks ago saying it wasn’t time for legislation yet.

According to 340B Health members, lawmakers were asked during two days of 340B Health lobbying on Capitol Hill last week to sponsor a bipartisan 340B contract pharmacy bill that the group said Rep. Doris Matsui (D-Calif.) is working on. Matsui’s office did not respond to a request for comment yesterday about the bill. 340B Health said it had no further comment.

Asked yesterday if the AHA has a position on Matsui’s bill, AHA Vice President of Advocacy and Grassroots Aimee Kuhlman said: “While we fully believe [the Health Resources and Services Administration] already has the authority to require drug companies to provide 340B discounts under contract or community pharmacy arrangements, we are supportive of congressional efforts to end these unlawful acts from drug companies. We agree with Rep. Matsui that drug company restrictions on the use of contract or community pharmacy arrangements are extremely problematic—in addition to being unlawful—because they make it harder for many underserved patients to get vital medicines. We look forward to her legislation being introduced.”

America’s Essential Hospitals, which represents about 325 mainly urban 340B hospitals, said yesterday it did not “have anything to share at this point on the pending Matsui legislation.”

The National Association of Community Health Centers said in March that hospitals’ disinterest in legislation to end drug makers’ 340B contract pharmacy limits motivated it to reach a separate peace with Pharmaceutical Research and Manufacturers of America. NACHC was publicly calling for such legislation as long ago as June 2022. NACHC says it told hospital groups, to no avail, that its members need immediate relief from manufacturers’ limits on 340B pricing in the contract pharmacy setting.

Axios Pro (subscription required) quoted Kulhman in early March, “I don’t think we’re at the point yet of saying that legislation is needed. I think we need to see where the court cases go.” A federal appeals court ruled in January that the 340B statute does not require delivery of 340B drugs to an unlimited number of contract pharmacies. Two other appeals courts are expected to issue opinions on the matter at any time.

340B Health President and CEO Maureen Testoni said in February 2022 and August 2022 that her group was “prepared” to go in the direction of a federal legislative solution if a pathway led there.

Neither AHA nor 340B Health said what changed their minds.

Organizers of a new group, 340B Truth, said it was launched partly in response to NACHC and PhRMA’s alliance and partly in response to a sense among many who attended the 340B Coalition annual winter conference that “the legislative route is the way to go at this point.”

There were reports in March and April of different 340B stakeholders, including hospitals, organizing to prod the major hospital groups to ask Congress to intervene or ask Congress themselves if the groups did not. A common thread between 340B Truth and at least some of the other ad hoc groups is openness to the idea of a trade in which covered entities get relief from manufacturers’ contract pharmacy restrictions in exchange for more accountability from hospitals about what they do with their 340B program earnings.

Matsui might have been trying to get at this during a House Energy & Commerce health subcommittee hearing last week on 17 filed and draft bills regarding transparency and accountability in health care, including subcommittee Vice Chair Larry Bucshon’s (R-Ind.) draft bill to impose new reporting requirements on disproportionate share hospitals and potentially other covered entities as well.

Matsui asked AHA Senior Vice President of Public Policy Analysis and Development Ashley Thompson whether AHA could back new federal 340B reporting requirements that reflect 340B’s purpose and value, such as AHA’s own voluntary 340B good stewardship principles for its members. Thompson paused for a moment before answering that it could not.

“I’m just not sure additional reporting requirements are needed at this time,” Thompson said.  In her written testimony, she said, “340B hospitals are committed to transparency, but believe transparency should involve mutual concessions.” She said any transparency measures for 340B providers should be counterbalanced with “greater transparency for drug companies, including how they set their prices and how much they decide to increase their prices.”

The contents of the bill Matsui is working on are not known.

A 340B Health one-pager, shared with 340B Report, that the group’s members gave lawmakers and their staffs during 340B Health’s Hill Days last week said Congress should clarify that:

  • Drugmakers are required to offer and sell 340B eligible drugs to eligible entities at the 340B price regardless of the dispensing method or pharmacy location.
  • Drugmakers are prohibited from refusing to deliver or interfering with the delivery of eligible 340B drugs as requested by a hospital or other provider, including to community and specialty pharmacies.
  • Drugmakers are prohibited from placing conditions on a hospital’s ability to access 340B pricing for eligible drugs, including those dispensed through community and specialty pharmacies.
  • HHS has the authority to impose civil monetary penalties on a drugmaker that refuses to offer, sell, or deliver eligible 340B drugs as requested by a hospital, including through community and specialty pharmacies.

A person who works closely with an association that represents non-hospital 340B covered entities said no one has reached out to that group to collaborate or coordinate on Matsui’s bill. They said the bill’s purpose appears to be to set a marker “to outline the debate—to be the direct opposite of what [NACHC and PhRMA are] trying to do.”

The disclosure that Matsui is working on a 340B contract pharmacy bill comes about a month after Reps. Abigail Spanberger (D-Va.) and Dusty Johnson (R-S.D.) reintroduced the PROTECT 340B Act—a bipartisan bill to shield 340B covered entities and contract pharmacies from discrimination by insurers and pharmacy benefit managers. AHA, America’s Essential Hospitals, 340B Health, and NACHC support its passage.