CMS Takes Another Step Toward Collecting Hospitals’ 340B Acquisition Costs

CMS Takes Another Step Toward Collecting Hospitals’ 340B Acquisition Costs

The Centers for Medicare & Medicaid Services (CMS) has taken another step toward requiring hospitals to let it see their 340B drug acquisition costs so CMS can base the hospitals’ Medicare Part B drug reimbursement on those costs.

The latest development came yesterday in a notice CMS posted for public inspection prior to publication in the Federal Register tomorrow. It says CMS is seeking White House Office of Management and Budget approval under the federal Paperwork Reduction Act for the forms necessary to collect hospitals’ 340B drug acquisition costs. Comments on the new notice are expected to be due on March 9.

The move to collect hospitals’ 340B drug acquisition costs stems from the lawsuit over CMS’s nearly 30 percent reduction in Medicare Part B drug reimbursement since 2018 for many 340B hospitals. CMS has indicated that, if it ultimately loses in court, it might:

  • reduce the cuts, from the current average sales price (ASP) minus 22.5 percent to ASP plus 3 percent, all relative to the original baseline of ASP plus 6 percent,


  • collect drug acquisition data from 340B hospitals in order to set Medicare Part B payments rates on drugs bought by those hospitals.

CMS announced its intent to begin moving forward on the latter in a Sept. 30, 2019 Federal Register notice. In its comments on the notice, the American Hospital Association asked CMS to withdraw the planned hospital survey. It said singling out 340B hospitals for data collection would violate the law; completing the survey would be a burden for hospitals; and non-disclosure provisions in contracts between drug manufacturers and wholesalers “may prevent 340B hospitals from sharing any drug pricing information with any entity not party to the contract.”

Astellas Pharma Posts 340B Overcharging Notice

Astellas Pharma US says 340B covered entities “may be eligible for potential payment” for charges above ceiling prices on 15 products during the first quarter of 2019, according to a notice posted Feb. 5 on the Health Resources and Services Administration (HRSA) Office of Pharmacy Affairs (OPA) website. Astellas said it will work with the 340B Prime Vendor to issue refunds to entities “that may be owed $1,000 or more.” The notice instructs entities “that may be owed less” how to contact Astellas by email.

In a noteworthy inclusion, Astellas says it “is not seeking reimbursement or repayment where covered entities paid a lower price” than the company’s recalculated 340B ceiling prices. Although covered entities have been required to repay drug manufacturers following adverse HRSA 340B audit findings, we are unaware of any federal law, regulation, or policy guidance that permits a drug manufacturer to seek reimbursement from entities for underpayments due to a manufacturer’s recalculation of its own 340B ceiling prices.

Kentucky Bill Opposed by 340B Providers Teed Up for State Senate Vote

The Kentucky Senate Health and Welfare Committee yesterday passed legislation (SB 50) opposed by 340B covered entities that would move the state Medicaid prescription drug benefit out of Medicaid managed care (MCO) and into Medicaid fee-for service, under the management of a state contracted third-party administrator.

According to Louisville cable news station Spectrum News 1, SB 50’s sponsor, state Sen. Max Wise (R), said his goal is to recapture state dollars lost to MCOs and pharmacy benefit managers, and to help struggling independent pharmacies. His bill is patterned on similar legislation passed in West Virginia.

Kentucky Hospital Association President Nancy Galvagni testified that the bill’s enactment would make “Kentucky’s 340B hospitals part of a national experiment which could result in dire consequences.” Wise said, “We’re not trying to eliminate 340B we are trying to protect it.”

President Says He Would Sign Bipartisan Bill to Lower Drug Prices “Without Delay”

In his Feb. 4 State of the Union address, President Trump called “bipartisan legislation that achieves the goal of dramatically lowering prescription drug prices.”

“Get a bill to my desk, and I will sign it into law without delay,” he said. “I have been speaking to Senator Chuck Grassley of Iowa and others in the Congress in order to get something on drug pricing done, and done properly.”

Grassley (R) and Senate Finance Ranking Member Ron Wyden’s (D-Ore.) legislation would require drug manufacturers to pay Medicare rebates when prices of products reimbursed under Medicare Parts B and D rise faster than the rate of inflation. Senate Majority Leader Mitch McConnell (R-Ky.) has declined to bring it to the Senate floor for a vote.

In his prepared remarks, the president said he “campaigned on the core promise to reduce the price of healthcare and prescription drugs.”

“The next major priority for me, and for all of us, should be to lower the cost of healthcare and prescription drugs, and to protect patients with preexisting conditions,” he said. “Already, as a result of my administration’s efforts, in 2018, drug prices experienced their single largest decline in 46 years. But we must do more. It’s unacceptable that Americans pay vastly more than people in other countries for the exact same drugs, often made in the exact same place. This is wrong, this is unfair, and together we will stop it — and we’ll stop it fast. I am asking Congress to pass legislation that finally takes on the problem of global freeloading and delivers fairness and price transparency for American patients, finally. We should also require drug companies, insurance companies, and hospitals to disclose real prices to foster competition and bring costs way down.”

The president also said that in his fiscal 2021 proposed federal budget, slated for release on Monday, he will ask both parties “to make the needed commitment to eliminate the HIV epidemic in the United States within 10 years.” In April 2019 the administration announced a plan to end HIV transmission in the U.S. by 2030. Administration officials have said the plan’s success depends in large measure on using 340B-enrolled community health centers to provide Truvada, a pre-exposure prophylactic (PrEP) HIV medication, to people at risk of infection. A month’s supply of Truvada can cost up to $1,700 and many of those needing it lack insurance.

The president also said his budget would seek $500 million over the next 10 years for research on childhood cancers.

Michigan Gov. Gretchen Whitmer gave the Democratic response to the address. “Millions of people struggle to get by or don’t have enough money at the end of the month after paying for transportation, student loans or prescription drugs,” she said. House Democrats’ “groundbreaking legislation to finally give Medicare the power to negotiate lower drug prices for America’s seniors and families” is “just gathering dust on Senate Majority Leader Mitch McConnell’s desk.”

CMS Proposes Prescription-Drug Oriented Changes to Medicare Advantage and Part D

CMS proposed changes yesterday to the Medicare Advantage and Medicare Part D prescription drug benefit programs to “lower beneficiary cost sharing on some of the most expensive prescription drugs, promote the use of generic drugs, and allow beneficiaries to know in advance and compare their out-of-pocket payments for different prescription drugs.” Comments are due April 6. Highlights include:

  • Letting Part D plan sponsors establish a second, “preferred” specialty tier with lower cost sharing than the current specialty tier, encouraging use of more preferred, less expensive drugs.
  • Require Part D plans for the first time to disclose the measures they use to evaluate pharmacy performance in their network agreements.
  • Making technical changes to Medicare Advantage’s and Part D’s quality rating system.

GAO Reports on Barriers to Opioid Addiction Treatment

Some state and federal policies can restrict opioid-addicted Medicaid beneficiaries’ access to medication-assisted treatment (MAT), which combines behavioral therapy and the use of certain medications such as buprenorphine, the Government Accountability Office says in a new report. MAT has been shown to be effective at reducing the misuse of or addiction to opioids and increasing treatment retention. About 40 percent of states may not provide Medicaid coverage for some formats of MAT medication, GAO found. Difficulty complying with prior authorization requirements so that MAT medications can be covered by Medicaid is another barrier.

Connecticut 340B hospital Yale New Haven Hospital conducted pioneering research published in 2015 showing that medication assisted treatment initiated in hospital emergency departments significantly increased engagement in addiction treatment, reduced self-reported illicit opioid use, and decreased use of inpatient addiction treatment services. California 340B hospital Highland Hospital-Alameda Health System in Oakland spearheaded the creation of California Bridge, which has helped more than 50 hospitals statewide establish MAT programs.

“By suppressing withdrawal long enough to create a bridge for patients to enter and remain in treatment, physicians can save lives,” said Andrew Herring, MD, Director of Emergency Department Services for the Bridge Program and an attending emergency medicine physician at Oakland’s Highland Hospital. “We know this model works, and now we are bringing it to hospitals and emergency rooms all across the state that are anxious for real solutions to address the enormous pain and suffering they see every day caused by the opioid epidemic.”

Tweets of Note

@ProtectKYHealth: “No other state in the nation has implemented this type of partial carve out making Kentucky’s 340B hospitals part of a national experiment which could result in dire consequences”

@340BHealth: #Maternalhealth is a major focus at #340B hospitals. These hospitals are 49% more likely to offer obstetrics care than non-340B hospitals. Learn more:  #Protect340B

@AIR340B: Did you know 29% of #340B DSH hospitals provide charity care representing less than 1% of their total patient costs? That raises the question: #WhoisBenefiting from #340B? Read the #2019CharityCareReport to see it’s not always patients. Learn more:

@SusanManchester: I held a press conference for HB 482, a bill that would prohibit discriminatory contracting to PBMs to 340B providers. Thank you to all the patients and community health centers for your advocacy on this important legislation as well as your work in wellness of Ohioans. #OHLeg

@dapattmd: It is hard to imagine drug prices coming down without reform and oversight of 340B and PBMs. While both can be useful tools, we need to make sure they can’t pull the tens of billions of dollars out of the system without providing meaningful access and value to patients.

@KYHospitals: KHA President Nancy Galvagni urged the KY Senate Health & Welfare Committee to have all stakeholders come together to find a solution instead of passing SB 50. #340B helps hospitals & other providers give needed services to all patients. #kyga @ProtectKYHealth

@KYHospitals: Thanks to @TRHosp CEO Jane Wheatley for testifying today sharing how KY’s #hospitals use #340B funds to help low-income KY patients receive medications and keep safety net hospitals open. #kyga20 @ProtectKYHealth

@AIR340B: Communities are losing their physician practices to hospital mergers and acquisitions, and incentives within the #340B program encourage it. A new study in @NEJM confirms that consolidation leads to lower quality care for patients. Read more: