White House Clears 340B Insulin Final Rule for Publication



Community health centers say the Trump administration rule that could take away their 340B program savings on insulin and epinephrine autoinjectors is based on a fundamental misunderstanding of how they and the 340B program operate. | Source: Shutterstock

White House Clears 340B Insulin Final Rule for Publication

The White House Office of Management and Budget (OMB) yesterday cleared the U.S. Health Resources and Services Administration (HRSA) to publish a controversial final rule that could take away health centers’ 340B program savings on insulin and epinephrine autoinjectors.

HRSA’s final rule could be released for public inspection as soon as this afternoon. It will implement President Trump’s July executive order stripping health centers of 340B drug discount program savings on insulin, plus EpiPens and comparable epinephrine devices, dispensed to low-income patients.

Trump’s executive order conditions health centers future federal grants on making insulin products and epinephrine auto-injectors available to low-income, uninsured, or under-insured patients at the reduced price FQHCs pay for the products under the 340B program. It was one of four executive orders on drug pricing that Trump signed on July 24 in the White House in front of an invited audience on a stage with props to mimic a pharmacy.

At the White House signing ceremony, Trump and U.S. Health and Human Services (HHS) Alex Azar said health centers were getting “radical” 340B discounts on insulin and EpiPens, keeping the savings for themselves, and charging their poorest patients “massive full prices.” The National Association of Community Health Centers (NACHC) pushed back strongly on the accusation and the need for the executive order.

In comments it submitted to HRSA in late October, NACHC urged the administration not to issue the rule, saying the presidential order it is based on fundamental misunderstanding of how FQHCs and 340B operate, and if implemented would do “significantly more harm than good.”

NACHC told the administration if it was determined to move forward, it should make five changes to the rule at a bare minimum:

  • “Align the definition of ‘low-income’ individual who is eligible for discounts under this regulation with the definition that has been in place throughout the FQHC program for over 50 years—200% [of the federal poverty level] FPL.”

  • “Clarify in the regulatory language that only those patients who meet the 340B patient definition are eligible for the 340B (or lower) price.”

  • “Add regulatory language to ensure that FQHCs are not forced to provide discounts to underinsured patients if doing so would violate the terms of their insurance contracts.”

  • “Clarify the definition of ‘high cost sharing requirement.’”

  • “Recognize that, as a result of this regulation, the ‘minimal administration fee’ for insulin and injectable epinephrine will differ from the fees (if any) associated with dispensing other pharmaceuticals.”

HRSA Says It Is Still Reviewing and Hasn’t Approved Kalderos’ 340B Rebate Model

The U.S. Health Resources and Services Administration (HRSA) told 340B Report late yesterday that it “has not approved” drug industry contractor Kalderos’ 340B Pay service to enable manufacturers to deliver 340B pricing on clients’ products as rebates instead of as discounts. HRSA said it “is reviewing the information Kalderos provided on its rebate model to determine the model’s compliance with 340B statutory requirements.”

Kalderos announced this week it has reconfigured 340B Pay to let covered entities decide, but only for drugs they themselves dispense, whether they want reduced 340B pricing in the form of an up-front discount or a back-end rebate. For drugs dispensed at contract pharmacies, the only way to get 340B pricing will be via a Kalderos rebate. The company said in a news release that it “has directly communicated the change” to the U.S. Health and Human Services Department (HHS) HHS and HRSA, “which have not identified any compliance concerns with 340B Pay or its latest product update.” Kalderos said it expects “a number of manufacturers” will begin using 340B Pay during the first quarter of 2021.

Last month, a bipartisan group of 217 U.S. House members asked outgoing HHS Secretary Alex Azar “to make clear that manufacturers may not implement a 340B rebate model without approval from HRSA.” They said HRSA should not approve the use of a rebate model “without first soliciting feedback and publishing guidance through the notice-and-comment process.”  340B provider organizations have also been vocal in criticizing any move towards a rebate model as well as other efforts to place conditions on the availability of 340B pricing.

Ohio Lawmakers Send 340B Anti-Discrimination Bill to Governor for Signature

Ohio health center advocates reported at about 1 a.m. EST today that the Ohio legislature has passed a bill to stop private payors from taking advantage of 340B covered entities. Gov. Mike DeWine (R) is expected to sign it.

The bill (Senate version, House version) prohibits private insurers, Medicaid managed care organizations, and their pharmacy benefit managers (PBMs) from including provisions in their contracts with 340B entities that would deny them the financial benefit of participating in 340B. Reimbursement could not be lower than National Average Drug Acquisition Cost (or wholesale acquisition cost if NADAC is unavailable), and payers could not impose fees on 340B entities that are not imposed on other providers or that are higher than those imposed on others. Nine states have passed similar legislation during the past two years, including Utah, Oregon, West Virginia, Minnesota, South Dakota, Montana, Massachusetts, and Rhode Island. Georgia was the latest to do so in late June.

PhRMA Responds to “Inaccurate” New York Times 340B Article

Pharmaceutical Research and Manufacturers of America (PhRMA) yesterday struck back in its blog against the “inaccurate picture of the 340B program” that it said The New York Times presented in an article this week.

The Times article focused on pharmaceutical manufacturers’ denials of 340B pricing on drugs shipped to contract pharmacies, and Monday’s bipartisan letter by 29 state attorneys general insisting that outgoing U.S. Health and Human Services (HHS) Secretary Alex Azar “prohibit drug manufacturers from dictating whether and how a covered entity can access 340B pricing for their contract pharmacies.”

PhRMA wrote that the manufacturers at the center of the controversy still give 340B discounts to covered entities, but “not to offsite pharmacies that were never included in the program to begin with.” PhRMA also said:

  • “The biopharmaceutical industry fully supports the program”

  • “Despite 4,000% growth in contract pharmacy participation in the program, there is no clear evidence 340B hospitals and their contract pharmacies always or even usually help needy patients access medicines”

  • “The program was created to support qualifying nonprofit hospitals and safety-net clinics, not corporate companies like Walgreens and CVS”

  • “Contract pharmacies were never authorized by Congress”

  • “Clearly this program is fraught with problems,” as evidenced by the U.S. Health Resources and Services’ admissions that “the 340B statute does not provide criteria for determining patient eligibility” and that “the 340B statute does not address contract pharmacy use.”

“To get the program back on track, we need to have a fully informed and honest conversation about what is working and not working, as well as real solutions that will help patients, PhRMA concluded. “Incomplete pictures that mischaracterize the 340B program only make efforts to improve the program for patients harder.”

Health Centers, Their Funding Due to Expire at Midnight, Watching Congress’ End-of-Year Activity Closely

As of mid-day today, Congress still had not passed legislation to continue funding the government past midnight or to provide another round of COVID-19 relief.

Community health centers are following negotiations closely, as their main source of funding potentially could expire in a matter of hours.

Twenty Democratic U.S. Representatives and six Democratic U.S. Senators separately wrote to the House and Senate’s party leaders this week asking them to reauthorize funding for the Community Health Center Fund—due to expire at midnight. The House members asked for a five-year reauthorization, the Senate members reauthorization for four years. The National Association of Community Health Centers (NACHC) is seeking a $41.9 billion, five-year reauthorization of the fund, which is the main source of health center funding. NACHC also is seeking $10.77 billion in emergency COVID-19 relief funds over the next six months, and $2.73 billion in COVID-19 vaccine funding.

What’s in and what’s out of the end-of-year bills Congress is working on remains very fluid.

House Democrats Add Five New Members to E&C Committee

The U.S. House Democratic Steering and Policy Committee yesterday recommended the appointment of five new members to the Energy and Commerce (E&C) Committee, the panel with primary jurisdiction over the 340B program. The E&C Committee, which has jurisdiction over a broad scope of the U.S. economy, is considered one of the most coveted committee assignments in Congress.

The new members are:

  • Rep. Angie Craig (Minn.)

  • Rep. Lizzie Fletcher (Texas)

  • Kathleen Rice (N.Y.)

  • Kim Schrier (Wash.)

  • Lori Trahan (Mass.)

It is not yet known whether any of the new members will be assigned to the Health or Oversight and Investigations subcommittees. Those two subcommittees focus the most attention to the 340B program. Rice was selected over fellow Democrat Rep. Alexandra Ocasio-Cortez (N.Y.) for the open seat set aside for the New York state delegation. This will be a relief for the pharmaceutical industry, which was concerned that Ocasio-Cortez, a outspoken industry critic, could stir trouble.

The U.S. House Republican Steering Committee earlier this month chose Rep. Cathy McMorris Rodgers (Wash.) to succeed retiring Rep. Greg Walden (Ore.) as E&C’s ranking Republican. The steering committee has made no announcements about changes in E&C’s GOP lineup.

E&C Committee Democrats will not able to afford many defections on key votes due to their very slim majority.


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