Helen Pfister headshot
"The big question for a lot of 340B stakeholders is if Congress is going to step in," Mannatt law firm partner Helen Pfister observed during a Nov. 9 webinar on state action on 340B and mounting pressure on Congress to clarify the 340B program.

Law Firm Releases Survey of State Action on 340B Amid Mounting Calls for Congressional Action

Pressure on Congress to clarify the 340B program is reaching unprecedented levels, health care attorneys at the Manatt law firm said during a webinar Wednesday on the future of the program.

Meanwhile, a new survey by the firm showed that more than half of U.S. states have proposed or enacted laws prohibiting pharmacy benefit manager and payer discrimination against 340B covered entities. 

“I’ve been watching this program for a long time and it has definitely garnered more interest and attention from members of Congress and from the media in the last couple of years than at any time that I can think of in the program’s history,” Manatt partner Helen Pfister said during the webinar.

“One big open question with 340B is, is Congress going to act? And if so, what is Congress going to do?”  she said. “I don’t know that the mid-term elections have really shed any light on that … but I do think there is more pressure on Congress now to act when it comes to 340B than there [has been] in the past.” 

Areas ripe for congressional action include the role contract pharmacies should play in the 340B program and the appropriate criteria for how 340B entities can use their savings and for eligibility to take part in the program, Pfister said.

Recent reports by the Government Accountability Office (GAO) and the Congressional Research Service (CRS) have described steps Congress could take to increase program oversight, she noted.  

Complicating the issue, Pfister added, is the patchwork of recent conflicting federal court decisions about 340B contract pharmacy, with two courts siding with drug makers’ right to impose restrictions on 340B providers’ use of contract pharmacies, and two other courts sympathetic to federal health officials’ censure of drug makers. Six cases are currently on appeal before the circuit courts, with oral arguments in three cases scheduled for Nov. 15 in the U.S. Third Circuit Court of Appeals in Philadelphia.

Thus far, 18 drug manufacturers have imposed conditions on 340B pricing when entities use contract pharmacies to dispense 340B-acquired drugs.

“I think we can ultimately expect a circuit court split and I think it’s also not unlikely that this will end up in the Supreme Court,” she said. “The bottom line is that any judicial resolution to this issue is likely to be a fairly long way off. So the big question for a lot of 340B stakeholders is if Congress is going to step in.”

 “For the most part, members of Congress have come out at least publicly on the side of 340B covered entities,” she said.

Survey highlights

During the webinar, Manatt released the findings of a 50-state analysis of efforts by states to curb discrimination by PBMs and insurance plans against 340B providers and/or contract pharmacies that dispense 340B drugs. The law firm’s policy and business advisory practice, Manatt Health, conducted the survey.

It found that, from January 2018 through September 2022, 12 states enacted laws and 22 more states proposed legislation that targets discriminatory practices by insurers and PBMs against 340B providers and/or their contract pharmacies.

These practices include:

  • Reimbursing covered entities and/or contract pharmacies less for 340B drugs than for non-340B drugs
  • Limiting participation by 340B contract pharmacies in plan networks
  • Charging fees to 340B covered entities and/or contract pharmacies that aren’t charged to non-340B entities
  • Imposing administrative requirements specific to 340B covered entities or contract pharmacies, such as requiring them to use claim modifiers to identify 340B drugs.

Manatt’s analysis found that:

  • More than half of all states had either proposed or enacted legislation to address at least one facet of these practices
  • The most common policies found across the states were prohibitions on: 
    • Reimbursing covered entities and/or contract pharmacies less for 340B drugs than for non-340B drugs
    • Limiting participation by 340B contract pharmacies in plan networks
    • Charging fees to 340B covered entities and/or contract pharmacies that aren’t charged to non-340B entities
    • Imposing administrative requirements specific to 340B covered entities or contract pharmacies, such as requiring them to use claim modifiers to identify 340B drugs.

“Open questions”

During the webinar, Pfister identified a number of “open questions” related to the 340B program, the resolution of which will steer the program going forward.  

One example is “patient definition” for purposes of the 340B program, which she said has been criticized in its current form as too broad or too vague. Pfister noted that, in 2015, the U.S. Health Resources and Services Administration (HRSA) tried and failed to narrow the definition, and the issue is currently before a federal district court in South Carolina. “It’s definitely a major question as to what is going to happen with the patient definition and what that will mean for the 340B program,” she said.

Another question is whether a bipartisan bill currently pending in Congress, the PROTECT 340B Act, co-sponsored by Reps. Abigail Spanberger (D-Va.) and David McKinley (R-W.Va.) will pass, Pfister added, with the federal legislation largely mirroring some of the state anti-discrimination laws.

Also, uncertainty remains over HRSA’s proposed replacement of the current administrative dispute resolution (ADR) rule. “An open question is … will the ADR replacement rule ever actually be released and if so, what will it look like?” Pfister said.

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