NACHC is the second major 340B covered entity group in recent days to say publicly that Congress might need to resolve the impasse over 340B contract pharmacy.

Second Major 340B Stakeholder Says Congress May Need to Stop Drug Makers’ Contract Pharmacy Actions

The National Association of Community Health Centers (NACHC) told Republican members of Congress last week that “congressional action may be the only solution” to drug makers’ “aggressive actions to limit patients’ access to affordable medications at contract pharmacies.”

NACHC’s Feb. 3 statement to a House Republican task force came two days after hospital group 340B Health said publicly that it is considering moving toward a federal legislative solution to the contract pharmacy stalemate.

The two associations’ back-to-back public statements could quicken federal 340B legislation. But writing and passing a bill and getting it signed by the president would be challenging.

There is no clear public consensus among 340B covered entity groups about what should be in a bill to protect 340B contract pharmacy, or even about whether legislation is needed.

While 340B Health said at last week’s 340B Coalition winter conference that it is prepared to go in the direction of legislation, it did not detail what it thinks such legislation should do. NACHC, in contrast, told the House Republicans that Congress specifically should expand the U.S. Health Resources and Services Administration’s regulatory authority to let HRSA “address issues in ongoing litigation, like the use of contract pharmacies, data collection, and unilateral pricing restrictions.” Hospital groups historically have opposed giving HRSA more 340B regulatory power and there is no indication their viewpoint has changed.

Hospital groups also historically have opposed re-opening the 340B statute, out of fear that the drug industry would control the process. The American Hospital Association (AHA), America’s Essential Hospitals, the Association of American Medical Colleges, and major U.S. health systems have not yet said publicly whether they, like 340B Health, are now open to legislation to end the fight over 340B contract pharmacy.

The AHA last week wrote to the same House Republican task force as did NACHC. It too raised drug manufacturers’ “unlawful contract pharmacy denials.” But it said nothing about Congress possibly stepping in.

Groups other than NACHC that represent 340B grantee covered entities also have not yet said publicly whether they favor or oppose congressional intervention.

The drug industry, meanwhile, will want a say on any 340B legislation. Is has argued for years that 340B should be changed to make sure that needy, uninsured patients benefit more directly from the discounts that manufacturers provide; that the 340B patient definition should be narrowed; that 340B hospitals should have to report how they use their discounts; and that 340B contract pharmacy program should be significantly narrowed. Health care payers and pharmacy benefit managers also will want 340B legislation to address their concerns. 340B provider groups may want to just get a very narrow bill through that would add contract pharmacies to the 340B statute and prohibit drug manufacturers from placing restrictions on the contract pharmacy program.

House GOP Healthy Future Task Force

NACHC raised the prospect of congressional action on 340B contract pharmacy in its response to a Jan. 10 request for information from the House Republican Healthy Future Task Force.

House Republican Leader Kevin McCarthy (Calif.), Energy & Commerce (E&C) Health Subcommittee ranking Republican Brett Guthrie (Ky.) and former Ways and Means Health Subcommittee ranking Republican Devin Nunes (Calif.) announced the task force in June 2021. Its purpose is to write bills the party can advance if the GOP takes the majority in the November elections.

A task force subcommittee on making health care more affordable last month invited “interested parties” to weigh in on four broad topics: improving care for workers and small businesses; engaging employers in improving care and lowering costs; increasing transparency and innovation; and increasing competition and decreasing “anti-competitive” consolidation. The last category included questions about the 340B program.

The subcommittee, chaired by Rep. Kevin Hearn (Okla.), asked about 340B eligibility requirements for hospitals and child sites, reporting requirements for all covered entities, independent audits of “some” covered entities and contract pharmacies, other policies to reduce 340B duplicate discounts, and emerging issues due to the COVID-19 pandemic. Last week Friday, Feb. 4, was the deadline for responses, but Hern’s office said the subcommittee is still accepting submissions.

340B Report asked Hearn’s office, but it did not answer, to whom it sent the Jan. 10 request for information.

The AHA identified itself by posting its response to the subcommittee on its website. NACHC told 340B Report that it responded to the subcommittee’s questionnaire, and it supplied a copy of its response. America’s Essential Hospitals said this morning it is still preparing its response. A 340B Health spokesperson said, “We don’t plan to release anything on that.” Pharmaceutical Research and Manufacturers of America (PhRMA) did not immediately respond to a request for comment about whether the task force sought its input.

NACHC’s Response

NACHC told the Republican task force that “without the use of contract pharmacies, many health centers would not be able to participate in the 340B program due to the significant costs associated with opening an in-house pharmacy.”

It said that although it filed 340B administrative dispute resolution (ADR) petitions against drug manufacturers Lilly, AstraZeneca, and Sanofi “for their failure to ship 340B price drugs to contract pharmacies,” the companies “refuse to comply with the ADR process, making it virtually impossible for health centers to receive 340B drugs.”

HRSA “has dedicated countless resources to defend the true intent of the 340B program, which includes the use of contract pharmacies for safety net providers to stretch scarce resources,” NACHC said.

“However, it is clear” from ongoing litigation over manufacturers’ conditions on 340B contract pharmacy “and the manufacturers’ continued violation of the 340B statute that congressional action may be the only solution to the ongoing instability in the 340B program,” NACHC said. “Specifically, Congress should consider expanding HRSA’s regulatory authority to issue comprehensive policies to govern the 340B program. This authority would allow HRSA to develop regulations to address issues in ongoing litigation, like the use of contract pharmacies, data collection, and unilateral pricing restrictions.”

This is not the first time that NACHC has backed a legislative solution to preserving the integrity of the 340B program. In mid-2020 the group’s board adopted a resolution backing legislation to stop discriminatory reimbursement against 340B health centers.

Since early 2021, NACHC has prioritized letting the new 340B administrative dispute resolution (ADR) process “play out,” a NACHC official said last night. But, the official continued, NACHC is “also aware of the growing frustration with the slow pace of the litigation in 2021. As a result, that is leading to more of an emphasis on a potential congressional solution to provide the stability covered entities need.”

AHA’s Response

AHA told the House Republicans that “just as the COVID-19 pandemic hit in 2020, some pharmaceutical manufacturers began an onslaught of unlawful actions ranging from limiting the distribution of certain 340B drugs to demanding superfluous, detailed reporting of 340B drug claims distributed through hospitals’ contract pharmacies.”

“Despite repeated calls from the Department of Health and Human Services to stop these unlawful practices, pharmaceutical manufacturers have continued to violate the statute by knowingly overcharging for 340B drugs,” the group said.

“The pharmaceutical manufacturers’ tactics have negatively impacted 340B hospitals’ ability to stretch their scarce resources to provide more affordable access to care and must be ended immediately,” AHA said. “The 340B statute is clear—pharmaceutical manufacturers must provide 340B pricing to eligible hospitals for any drug, regardless of where or how that drug is dispensed.”

AHA did not say whether Congress had a role in ending the manufacturers’ contract pharmacy actions. It did say, however, that either Congress or the executive branch “should act to ensure that 340B hospitals that were participating in the program at the start of the COVID-19 public health emergency and may have experienced changes to their DSH adjustment percentage due to the COVID-19 pandemic, retain their 340B eligibility.”

AHA pointed out that bills have been introduced in the House and Senate “to provide 340B hospitals with certainty by allowing these hospitals to continue to access the 340B program during the public health emergency.” It also said it “continues to call on the Biden Administration to provide this same flexibility” through the Medicaid section 1135 waiver process.

“If swift action is not taken to address this issue, it is very likely that some 340B hospitals may lose access to the program, thereby jeopardizing care for the patients and communities they serve,” AHA said.

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