Sanofi Joins Growing List of Drug Companies Challenging 340B Contract Pharmacy

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Sanofi Joins Growing List of Drug Companies Challenging 340B Contract Pharmacy

Drug manufacturer Sanofi has joined manufacturers Eli Lilly and Merck in challenging 340B drug discounts on products dispensed by covered entities’ contract pharmacies.

340B Report has obtained a letter and related FAQ from Sanofi to a covered entity this week explaining that “Sanofi will require 340B covered entities to submit claims data for 340B prescriptions of Sanofi products filled through its contract pharmacies.” The letter says, beginning Oct. 1, entities must submit the requested data to 340B ESP, the same contractor Merck is using, every two weeks.

“340B covered entities that elect not to provide 340B claims data will no longer be eligible to place Bill To / Ship To replenishment orders for Sanofi products dispensed through a contract pharmacy,” the FAQ states.

Sanofi said in the FAQ it will use the data “to identify and resolve duplicate Medicaid and commercial rebates.” It said that, although neither the U.S. Health Resources and Services Administration (HRSA) nor the 340B prime vendor, Apexus, “has commented publicly on this specific initiative, Sanofi believes 340B ESP provides a simple platform for Sanofi and 340B covered entities to engage collaboratively and in good faith to address duplicate discounts.”

HRSA said this morning it “is aware of Sanofi’s requests to covered entities and is working to better understand their plan.”

Sanofi this morning gave us this response to our request for comment on its data collection requirement:

Sanofi supports the 340B Program’s core objective of increasing access to outpatient drugs among uninsured and vulnerable patients and is committed to maintaining and strengthening its mission. Part of this commitment means ensuring 340B program integrity remains a shared objective of Pharmaceutical Manufacturers, Covered Entities and Health Resources and Services Administration (HRSA).

We are requiring Covered Entities to submit 340B claims data for their contract pharmacies starting October 1, 2020. Covered Entities do not need to provide 340B claims data for prescriptions filled in their own outpatient pharmacies. Sanofi is only requesting data for Sanofi drugs commonly dispensed through Retail, Specialty and Outpatient Pharmacies registered on the HRSA database as a contract pharmacy. Physician-administered drugs are not part of this program. We will exercise flexibility for covered entities who purchase 340B price drugs solely through contract pharmacies, such as grantees.

Several members of the 340B Coalition asked U.S. Health and Human Services (HHS) Secretary Alex Azar earlier this month to halt Lilly and Merck’s crackdowns on 340B contract pharmacy.

Lilly has ceased distributing 340B discounts on three formulations of its drug Cialis to 340B contract pharmacies. Merck has asked (in contrast to Sanofi, which requires) that covered entities submit contract pharmacy claims data for its products to 340B ESP every two weeks to enable it to identify when it pays 340B discounts and Medicaid, Medicare Part D, and/or commercial rebates on the same products. Duplication of 340B discounts and Medicaid rebates is forbidden by law; duplication of 340B discounts and Part D or commercial rebates is not. Merck said it would take “less collaborative, and substantially more burdensome” action against covered entities that decline to supply the requested information. Covered entities have until Aug. 14 to comply with Merck’s request.

Sanofi’s demand for 340B covered entities’ contract pharmacy data came to light just days after President Trump signed an executive order requiring federal qualified health centers (FQHCs) to make insulin and injectable epinephrine available at 340B cost to low-income, uninsured, and/or underinsured patients. It also follows 340B Health President and CEO Maureen Testoni’s statement last week that some drug manufacturers are developing a proposal to change 340B from a discount to a rebate program.

The wave of drug manufacturer activity all appears to trace back to HRSA’s position that it cannot enforce its 340B program guidance absent a clear violation of the 340B statute.

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5 Tips to Stay Audit-Ready

Michael Gonzalez, Lead Consultant, FQHC 340B Compliance Services

340B audits can be daunting, but they do not have to be if you are prepared. Below are five tips on how to be audit-ready. These are tips that we, FQHC 340B Compliance Services, have found most important after working with over 50 FQHC’s 340B programs.

5 Ways to Stay Audit-Ready

  1. Plan on doing monthly internal audits and follow through with them. They are incredibly important with maintaining compliance and catching claims that may cause diversion. If you are auditing monthly, you will have time to reverse claims that were not eligible 340B claims during the allotted window.
  2. We recommend regularly updating your contracts and OPAIS data to ensure the data matches. This includes contract pharmacies and site locations. There have been many instances where we find that the two do not match, which would result in a finding during an audit.
  3. What you state in your policies and procedures needs to be accurate and followed through with, whether it be how you plan on using excess 340B savings, or how many procedures are in place to maintain compliance. All need to be completed when stated and have records of doing so.
  4. You want to make sure that you are monitoring compliance with clinic administered drugs. These can be easily overlooked or missed, but are just as important as pharmacy 340B transactions.
  5. Lastly, we recommend utilizing all resources available for aiding in 340B compliance. Whether this be attending Apexus 340B University to stay up to date on 340B rules and regulations, or hiring a consultant to help maintain and monitor your 340B operations.

Any steps you take towards managing and monitoring your 340B program will benefit you immensely. These few tips will help keep you compliant and audit-ready.

FQHC 340B Compliance Services is the preferred resource for all community health center needs. Contact us at or (760) 780-7469.

Health Center and Hospital Leaders Challenge Trump and Azar’s Suggestion that Centers Abuse 340B

340B health center and hospital representatives this afternoon took strong exception to President Trump’s and U.S. Health and Human Service (HHS) Secretary Alex Azar’s remarks last Friday suggesting that federal qualified health centers (FQHCs) profit from 340B drug discounts at the expense of vulnerable patients.

Speaking during the 340B Coalition virtual summer conference, Colleen Meiman, Director of Regulatory Affairs for the National Association of Community Health Centers (NACHC), and Maureen Testoni, President and CEO of hospital group 340B Health, addressed remarks Trump and Azar made as the president announced an executive order conditioning FQHCs future federal grants on making insulin and injectable epinephrine available at 340B cost to low-income, uninsured, and/or underinsured patients. Trump said FQHCs “should not be receiving discounts for themselves while charging their poorest patients massive full prices.” Azar said Trump was “taking on the issue that [FQHCs] are getting radical discounts on insulin and EpiPens so that low-income Americans get the benefits of those discounts.”

“Health centers around the country were shocked and confused by the rhetoric coming from the White House and the HHS secretary on Friday,” Meiman said. The implication “that health centers are somehow personally benefitting from 340B savings at the expense of their low income patients…is simply not true.”

“There was no outreach done, there was no head’s up to NACHC about this executive order,” Meiman said. “By mission, regulation, and law, health centers take every penny of savings from the 340B program and invest it in something that expands access for medically underserved patients. The idea that health centers need to be told to make insulin and epinephrine affordable is completely unnecessary.”

Regarding the suggestion that safety net providers might not be using 340B to serve populations with low incomes, Testoni said, “Nothing could be further from the truth.”

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Drug Manufacturers Decline Trump’s Invitation to Meet About Drug Prices

Drug manufacturers declined President Trump’s offer to meet with him today to either “do a deal” on prescription drug pricing or face an executive order that, the White House says, “ensures the United States pays the lowest price available among economically advanced countries for Medicare Part B drugs,” according to Politico.

Trump on Friday signed four executive orders on drug pricing (including one related to 340B) but did not release the contents of the fourth, the so-called “most favored nation” order. He said he would “hold off” on that order until Aug. 24, “hoping that the pharmaceutical companies will come up with something” to “substantially reduce drug prices” during the meeting that was to have been held today.

Drug industry leaders reportedly did not want to meet with Trump without knowing the most-favored-nation order’s details. A lack of unanimity on how best to lower drug prices also reportedly was a factor.

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Senate’s New COVID-19 Package Apparently Excludes 340B and Drug Pricing Bills; 340B Bill Gains Sponsors

The $1 trillion COVID-19 relief package that U.S. Senate Republicans announced late yesterday apparently does not include a bipartisan Senate bill to temporarily protect hospitals from losing their eligibility for 340B drug discounts due to changes in patient mix during the COVID-19 public health emergency.

The HEALS Act—which is comprised of several pieces of legislation, each announced separately by Senate committee chairs—also apparently does not include Sen. Finance Chair Chuck Grassley’s (R-Iowa) bill to reduce drug prices. Grassley’s bill includes language opposed by 340B covered entities.

The text of Senate Health, Education, Labor, and Pensions Chair Lamar Alexander’s (R-Tenn.) Safely Back to Work and Back to School Act was not yet available this morning. A section-by-section analysis does not address the aim of the 340B legislation, S. 4160. Neither the text of Grassley’s contribution to the COVID-19 package, his American Workers, Families, and Employers Assistance Act, nor the section-by-section summary of that bill reflects Grassley’s drug pricing bill, S. 4199. The HEALS Act’s appropriations component (text and summary) mentions neither the 340B nor drug pricing legislation.

The appropriations component proposes adding $25 billion to the CARES Act Provider Relief Fund, an additional $7.6 billion for community health centers, and $225 million more for rural health clinics. It also includes $16 billion for COVID-19 testing, contact tracing, and surveillance in the states, and $6 billion to develop and implement a national vaccine distribution campaign.

The 340B bill, which is sponsored by Sen. John Thune (S.D.), the Senate’s second most-senior Republican, recently picked up two more co-sponsors—Sens. Susan Collins (R-Maine) and Sherrod Brown (D-Ohio). Including Thune, that brings the total to eight, evenly divided between the two parties. The bill would protect hospitals from losing their 340B eligibility if changes in patient mix during the pandemic cause their Medicare disproportionate share patient adjustment percentages to fall below the level needed for eligibility.

Grassley’s drug pricing bill has nine co-sponsors, all Republican. Senate Finance ranking Democrat Ron Wyden (Ore.) co-sponsored an earlier version with Grassley but withdrew his support. Both versions include language, strongly opposed by 340B covered entities, to require Medicaid managed care organizations and/or their pharmacy benefit managers to reimburse covered outpatient drugs at ingredient cost plus a dispensing fee. That essentially would end providers’ revenues on 340B-purchased drugs billed to Medicaid (most states already require acquisition cost billing for 340B drugs in Medicaid fee for service). There is identical language in the U.S. House-passed drug pricing bill, H.R. 3.

Last week, Rep. Doris Matsui (D-Calif) announced that she and Rep. Chris Stewart (R-Utah) were getting ready to introduce a bill similar to Thune’s to provide temporary 340B program requirement flexibilities to hospitals during the pandemic. 340B Report learned that their bill will not only protect hospitals from losing their 340B eligibility due to changes in patient mix during the public health emergency, it also will temporarily waive the 340B statutory prohibition on hospital purchases of covered outpatient drugs through group purchasing organizations (GPOs). Matsui and Stewart’s bill had not yet been filed as of early this morning.

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Hospital Groups Weigh In on Medicaid Value-Based Drug Purchasing Proposal

The American Hospital Association (AHA) and hospital group 340B Health separately commented on the U.S. Centers for Medicare & Medicaid Services’ proposed rule to support value-based purchasing (VBP) for Medicaid covered outpatient drugs. The rule could have repercussions for the calculation of 340B ceiling prices. Both hospital groups asked CMS to extend the 30-day comment period, as did drug industry trade groups Pharmaceutical Research and Manufacturers of America (PhRMA) and Biotechnology Innovation Organization (BIO).

AHA said the proposed rule would place intensive data collection and reporting requirements on providers, without compensation, to determine whether a drug delivers sufficient “value” to merit enhanced Medicaid payment to manufacturers. AHA also warned that states would have to spend money on new information technology and staff to launch value-based purchasing arrangements just as “state Medicaid programs currently are facing deep budget cuts” due to COVID-19 and the economic recession.

AHA said it supported CMS’s recommendation regarding how patient assistance programs should be accounted for in Medicaid “best price” reporting. “In some cases, the health plans and PBMs have not passed on the full value of the assistance to the patient or consumer,” the group said. “CMS proposes to address these concerns by explicitly stating that a drug manufacturer’s patient assistance programs may only be excluded from the Medicaid ‘best price’ reporting to the extent that the full value of the assistance is passed on to the patient.”

AHA also supported CMS’s proposed definition for line extension drugs for Medicaid rebate purposes. It said CMS wants “to define a ‘new formulation’ of a line extension drug as any change to the drug that contains at least one active ingredient in common with the original drug.”

340B Health said it was concerned that CMS has not conducted an analysis of the impact of the VBP proposals on Medicaid rebates and, by extension, the impact on 340B ceiling prices. As a result, it said is not clear whether the proposed changes could have the unintended consequence of increasing costs for state Medicaid programs and for safety-net providers participating in 340B.

340B Health said it was concerned about the broad nature of the rule’s proposed redefinition of bundled sale to allow VBP arrangements to qualify as bundled sales under certain conditions. If finalized, the group said, the new definition could allow manufacturers to include discounts in bundled sales in “creative ways” that would avoid setting a new best price and would reduce their Medicaid rebate obligations, which could affect 340B prices.

340B Health asked CMS to clarify the use of multiple best prices for the calculation of Medicaid rebates and the 340B ceiling price. It said CMS should consider the impact of multiple best prices on safety-net programs and ensure that actions intended to encourage the use of VBPs do not increase costs for 340B providers.

340B Health said it was concerned about a CMS proposal to extend the 12-quarter time limit for making changes to previously reported best price and average manufacturer price when the change is the result of a VBP arrangement. It said if CMS proceeds with this proposal, it should coordinate with the U.S. Health Resources and Services Administration (HRSA) to ensure that when changes to drug pricing information occur outside the current 12-quarter period, 340B ceiling prices are recalculated and refunds to 340B covered entities are issued, as appropriate.

Finally, 340B Health said it supported CMS’s proposal to define the terms line extension and new formulation broadly for Medicaid rebate purposes, “as they would ensure rebates are calculated correctly.”

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Azar Extends COVID-19 Public Health Emergency

U.S. Health and Human Services (HHS) Secretary Alex Azar on July 23 extended the national public health emergency due to COVID-19 for another 90 days. It was set to expire on July 25. The renewal extends temporary 340B program flexibilities during the pandemic regarding documentation of compliance with the 340B patient definition, group purchasing prohibition, and other matters.

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