The NRHA wants HHS to act against drug companies that deny 340B pricing when covered entities use contract pharmacies and ensure that rural hospitals do not lose their 340B eligibility due to factors related to COVID-19.

Rural Providers Ask Becerra for Action on 340B Contract Pharmacy and on Hospitals at Risk of Losing 340B Eligibility

The National Rural Health Association (NRHA) asked U.S. Health and Human Services (HHS) Secretary Xavier Becerra this week to act against drug manufacturers that deny 340B pricing when covered entities use contract pharmacies.

NRHA CEO Alan Morgan also urged Becerra in a Feb. 22 letter to use his power under Section 1135 of the Social Security Act to ensure that rural hospitals do not lose their 340B eligibility due to changes in their patient mix caused by the COVID-19 pandemic. Section 1135 lets the HHS secretary waive or modify statutory requirements during major disasters or public health emergencies for health care providers that serve Medicare and Medicaid beneficiaries.

Morgan told Becerra that the 14 drug companies that impose conditions on 340B drug sales involving contract pharmacies are acting “contrary to the intent of the 340B program and the Health Resources and Services Administration’s (HRSA) 2010 guidance on contract pharmacy arrangements.

More than 450 rural hospitals are vulnerable to closure and 40 percent of all rural hospitals are operating on negative margins, Morgan said. The 340B program helps them continue obstetric care and other vital services in their rural communities, he said.

Manufacturers attacks on 340B have not ceased, Morgan continued. “In addition to the pressures created by the drug manufacture restrictions, rural providers may be in jeopardy of losing their 340B status due to changes in their patient mix during COVID-19,” he said. A Mississippi sole community hospital that expects to lose its 340B eligibility for this reason estimates the loss “will lead to a deficit of $1.5 million to $2 million per year. This would be absolutely devastating to their bottom line and result in a loss of services,” Morgan said.

“As the country moves beyond the pandemic, and federal resources such as the Provider Relief Fund come to an end, NRHA believes the 340B program will be critical to ensuring important services remain in … rural communities,” the letter concluded. 340B “is simply too critical to rural health care to be undercut at a valuable time in our nation’s health care system.”

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