U.S. Rep. Abigail Spanberger (D-Va.) said her successful amendment today to a spending bill sends big pharma the message "Stop hiking drug prices on consumers and discriminating against our 340B providers and pharmacies."

Opposition to Express Scripts’ 340B Claims ID Requirement Grows

Correction, Tuesday March 16, 4:00 p.m. EDT—Earlier today, we reported that during a March 16 webinar, advisers to 340B covered entities said that U.S. Rep. Abigail Spanberger (D-Va.) had written to pharmacy benefit manager Express Scripts (ESI) about its new claims identification requirement for 340B drugs. According to a spokesperson for Spanberger, while it is true that the congresswoman’s staff has been in close contact with 340B covered entity organizations to explore the implications of Express Scripts’ actions on 340B covered entities, a letter has not been sent from Spanberger’s office to Express Scripts. 340B Report regrets the error.

Legislation addressing pharmacy benefit manager Express Scripts’ (ESI) new claims identification requirement for 340B drugs could be introduced in Congress soon, advisers to 340B covered entities said yesterday.

Groups representing HIV/AIDS clinics and hospitals in the 340B program, meanwhile, have sent letters to ESI pointing out that the PBM told their members about the requirement less than a week before it took effect, making compliance impossible, lawyers for and a consultant to 340B providers said during a webinar. The clinics asked for a postponement of at least two months. The hospitals asked ESI to reconsider the new policy and to meet with them to discuss the policy’s implications, the speakers said.

Community health centers have had positive discussions at a high level with ESI about the requirement, the speakers said. The health centers and hospitals, they said, are working with the National Association of Chain Drug Stores (NACDS) to persuade ESI to change course.

NACDS’s alliance with the 340B covered entities is notable because the two sides collaborate infrequently and NACDS has appreciable political clout. According to a 2018 U.S. Government Accountability Office report, the five biggest pharmacy chains—CVS, Walgreens, Walmart, Rite-Aid, and Kroger—represent a combined 60 percent of 340B contract pharmacies. 340B covered entities worry that if contract pharmacies conclude that they cannot comply with ESI’s requirement, to protect their other business with ESI they will stop sending entities’ claims to the PBM for 340B-purchased drugs, depriving the entities of revenue to support their safety-net missions.

That NACDS is working with covered entities to persuade ESI to drop the requirement, and that entities’ congressional champions are engaged on the matter, should be a huge relief to providers, the webinar speakers indicated.

“We are not alone, and that should make you feel better,” said Peggy Tighe, principal at Powers Law (a 340B Report sponsor) and counsel to Ryan White Clinics for 340B Access (RWC-340B).

“There is no indication that the chains are going to capitulate to Express Scripts’ demands,” added Tim Mallett of 340B third party administrator 340Basics, also a 340B Report sponsor.

The March 15 webinar about ESI’s new 340B claims identification requirement was co-hosted by Powers Law and 340Basics.

ESI’s Claims ID Requirement

ESI notified 340B covered entities by email on Feb. 24 that, beginning March 1, to resubmit a claim determined post-adjudication to be 340B-eligible, the entities or their contract pharmacies will have to submit a National Council for Prescription Drug Programs (NCPDP) N1 transaction, with values in fields identifying the transaction as 340B-eligible. The N1 must be submitted within 10 days of the claim’s being identified as 340B-eligible.

The PBM says it gave covered entities adequate notice of the change, first in August 2020 and again in January 2021. Covered entities overwhelmingly report they first learned about the requirement and its March 1 effective date in ESI’s Feb. 24 email.

During the webinar, Powers principal William von Oehsen explained that, while covered entities appreciate that ESI is letting them identify 340B claims retrospectively rather than at point-of-sale, the requirement applies to all ESI claims, and collection of non-Medicaid claims, he said, falls outside of the 340B program’s scope. Although ESI says the requirement is not intended to lead to reduced reimbursement or other adverse contracting practices, there is no guarantee the data collected won’t be used to 340B entities’ detriment, he said.

ESI’s alleged inadequate notice of the requirement and insufficient provision of time to implement it raises legal and contractual concerns, von Oehsen continued. No one has ever tested whether the NCPDP N1 transaction at the heart of ESI’s requirement will work as ESI intends, and it is unclear if providers’ and contract pharmacies’ claims management software can even implement N1 transactions, he said.

Entities in states that have passed laws addressing PBMs’ involvement with the 340B program should ask their lawyers whether those laws absolve them from compliance with ESI’s requirement, von Oehsen recommended.

Just yesterday, the Utah Senate sent to Gov. Spencer Cox (R) for his signature final legislation to forbid insurers or their PBMs from forcing federally qualified health centers to include modifiers on claims identifying drugs as being 340B purchased, Medicaid claims excepted.

During yesterday’s webinar, Mallett said there is a move underway to add language similar to Utah’s to legislation in Michigan to prohibit PBMs from reimbursing 340B entities at a lower rate than similar non-340B pharmacies. Tighe said sponsors of a similar bill in Tennessee are trying to amend it to echo Utah’s bill.

Tighe called ESI’s new requirement “yet another in a long list of egregious actions taken against entities in the 340B program.”

What manufacturers, PBMs, and insurers “could not do to the 340B program in the context of congressional action a couple of years ago, they are now making up the rules themselves,” she said.