Think Tank to States: Use 340B to Reduce Drug Prices

Think Tank to States: Use 340B to Reduce Drug Prices

States should do more to help hospitals and other providers enroll in the 340B program as a way to lower drug prices, a liberal think tank with ties to the Obama and Clinton administrations says in a new report.

“The 340B program can result in savings for states both through maximizing participation and ensuring that participating providers are maximizing those savings,” the Center for American Progress (CAP) says in a Feb. 13 paper outlining state policy options to reduce prescription drug spending. Cash-strapped, thinly staffed hospitals, health centers, and clinics might lack resources needed to confirm their eligibility and apply for 340B drug discounts, the center says. States could offer their non-enrolled covered entities help “to ensure that all…are aware of their eligibility under federal law as well as the state regulations on how such hospitals may operate.”

CAP says a recent Pew Charitable Trusts study found that states spend between 15 and 23 percent of their corrections health budgets on prescription drugs. Texas was a notable outlier, spending only 7 percent on drugs “due to its extensive use of the 340B Drug Pricing Program,” CAP said.

Beyond maximizing 340B participation, CAP says “states can also ensure that their policies promote the highest savings within those covered entities.” With respect to preventing duplicate 340B discounts and Medicaid rebates on the same drugs, states could change their regulations to either “[exclude] all Medicaid prescriptions from the 340B program or [identify] all 340B prescriptions when they are billed to Medicaid,” the report recommends. “By changing these regulations to allow just one of the two approaches, states can reduce provider confusion and ensure that the highest savings are achieved, particularly if supplemental rebates are pursued.”

“Minimizing regulatory confusion is an important step toward maximizing participation in and savings under the 340B program,” the think tank says.

While 340B healthcare providers will recoil at the suggestion that states should carve 340B drugs entirely out of Medicaid, they might react more warmly to the idea of identifying all 340B drugs billed to Medicaid if it can be done retrospectively. Hospital groups, in particular, often tout the “Oregon model,” in which entities with contract pharmacies that dispense 340B drugs to Medicaid beneficiaries give the state’s Medicaid contractor a file at the end of each calendar quarter with the information necessary to exclude all 340B claims from the state’s Medicaid rebate requests to drug manufacturers.

Kentucky Providers and Pharmacists at Odds over Medicaid Drug Benefit Bill

A bill in Kentucky designed to give independent pharmacists relief from pharmacy benefit managers’ (PBMs) Medicaid drug reimbursement practices “would reduce Kentuckians’ access to healthcare and raise costs for the state,” a Kentucky Primary Care Association (KPCA) executive says in an op-ed that ran recently in two state publications (here and here).

The National Community Pharmacists Association (NCPA), meanwhile, sent a letter this week to Kentucky Senate President Robert Stivers, cc’d to all state senators, urging them to pass the bill, saying it would “bring transparency to the Medicaid program by eliminating the role of PBMs and their impact on prescription drug costs and patient access to pharmacy providers.”

The Background

Kentucky Senate Bill 50, passed by the chamber’s Health & Welfare Committee Feb. 5., would move the state Medicaid prescription drug benefit from Medicaid managed care to Medicaid fee-for service, under the management of a state contracted third-party administrator, with one big exception: Kentucky 340B covered entities would continue to submit Medicaid claims to Medicaid managed care contractors.

Kentucky 340B hospitals say they understand that if SB 50 becomes law, pharmacies would need to be able to determine at point of sale whether a Medicaid beneficiary was or was not 340B-eligible, in order for the pharmacy to correctly submit the claim either to Medicaid MCO or FFS. No other state Medicaid agency has implemented a system out such as this, the hospitals say. Also, as the Centers for Medicare & Medicaid Services recently pointed out in its Jan. 8 guidance to states on avoiding 340B duplicate discounts, in 340B contract pharmacy, prescriptions generally are not identified as 340B at point of sale, but instead are identified retrospectively. The upshot, Kentucky 340B hospitals say, is that 340B contract pharmacy may become impossible in the state if SB 50 becomes law, costing hospitals and other covered entities tens of millions of dollars in lost 340B savings.

KPCA Op-ed

Moving Kentucky Medicaid’s pharmacy benefit into FFS “plays right into the hands of big drug companies,” KPCA Director of Advocacy John Inman said in the op-ed published on Feb. 11 in Kentucky Today and two days later in Central Kentucky News-Journal. “These big pharma companies relish when states formerly covered by managed care entities that operate over multiple states reduce their bargaining power by only negotiating with a single state Medicaid program.”

The bill’s effect on safety-net hospitals and health centers would be “even worse,” Inman said. “SB50 supporters tout that it ‘protects the 340B program.’ However, it isn’t operationally feasible.” Providers’ revenues from 340B contract pharmacy “would disappear and cause severe cuts to services from clinics and hospitals. Or worse yet, closures.”

“The bottom line is that SB50 is the cure for what ails the independent pharmacists, but it creates unintended consequences for the rest of Kentucky healthcare safety-net,” Inman said. “There are alternatives to addressing the independent pharmacists’ concerns, and they don’t involve forfeiting millions of dollars from drug manufacturers and gutting essential funding from rural hospitals and health centers.”

NCPA Letter

NCPA Vice President for State and Federal Government Affairs Anne Cassity had a very different take on SB 50 in her letter to Kentucky state senators.

Across America, “community pharmacists’ role in the Medicaid program is being threatened by the opaque practices of managed care plans and their pharmacy benefits managers,” Cassity said. “Because of these opaque practices and lack of proper oversight, PBMs are able to ratchet down reimbursement rates, and pharmacy providers are frequently reimbursed at rates that leave them ‘underwater’ on the medications they dispense.”

“States across the country have learned the hard way that opaque PBM practices in their Medicaid programs come with significant costs,” Cassity said. “SB 50 will bring transparency and accountability to drug pricing in Kentucky while protecting both taxpayers and patient access to vital pharmacy services.”

Update: CMS’s Proposed 340B Hospital Drug Acquisition Cost Survey

Inside Health Policy (subscription required), Fierce Healthcare, Politico Prescription Pulse, Becker’s Hospital Review, RevCycle Intelligence, K&L Gates, and Advisory Board all weighed in recently on the Centers for Medicare & Medicaid Services’ Feb. 7 public notice that it is moving forward with plans to survey 340B hospitals about their drug acquisition costs.

CMS announced the proposed hospital survey last September. That Federal Register announcement included a draft instruction sheet for the survey. It said all hospitals enrolled in 340B in the last quarter of 2018 or first quarter of 2019 would have to complete the survey between March 23 and April 10, 2020. The White House Office of Management and Budget (OMB) has to sign off on the survey before CMS can field it, and CMS sought the go-ahead in the Feb. 7 public notice. It remains to be seen if OMB will give CMS the green light in time for CMS to field the survey as scheduled next month.

Tweets of Note

@ProtectKYHealth: Every 25 minutes, a baby withdrawing from an opioid is born in the U.S. The Maternal Opioid Stabilization (MOMS) program @TLRMC_info in Leitchfield helps expectant mothers overcome addiction. It’s possible with 340B funds. SB50 could jeopardize that.

@jburcum: At @StribOpinion, we’re in favor of striking a good deal now on emergency #insulin vs waiting an unknown length of time for the perfect deal at #mnleg. Excellent bipartisan leadership from Mike Howard, Dr Scott Jensen and Jim Abeler.

@OpenCitiesCEO: @jburcum I’d love to discuss an alternative to the #insulin problem. At @OpenCitiesHC, with the #340B program, we can provide cheap or affordable #Insulin4all!!

@AIR340B: Fixes to the #340B drug discount program would help improve overall health outcomes for rural communities served by the safety-net program. Watch this video to see the impact #340B has on patients:

@340BHealth:  #340B hospitals are using the program to provide critical care to more patients with low incomes than non-340B hospitals  #Protect340B

@KyPharmAssoc: #SB50 will not interfere with the proper use of the 340b discount program. Patients will still be able to access safety-net hospitals even under a carve out model. #SB50 #kyga20 #kyleg

@CaptureRx: Rural patients face multiple challenges when they need specialty care for illnesses such as cancer. One big barrier is affordability. See below how #340b can help.

@CAP_Health: States should lower the unit prices of prescription drugs by:

✔️Establishing an Rx affordability board

✔️Using reference pricing

✔️Maximizing 340B participation

✔️Promoting use of generic drugs

✔️Reducing cost of physician-administered drugs

✔️Importing prescription drugs

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