Vermont Bills Would Require 340B Hospitals to Report Drug Discount Savings and Spending

Vermont Bills Would Require 340B Hospitals to Report Drug Discount Savings and Spending

Companion bills filed this month in the Vermont House and Senate would require hospitals to report how much money they save through the 340B program and how they use the savings. In addition, the state health department would have to make recommendations to the legislature by Nov. 15 on how best to modify Vermont Medicaid’s 340B drug pricing policies “to improve the efficiency, accountability, and cost effectiveness of the program.”

State hospital sources say they are keeping an eye on the bills, which have been referred to the legislature’s health committees. The current two-year legislative session is expected to end this summer.

Columnist: States Are an Emerging Battlefield in the Fight Over 340B

The Vermont bills exemplify a phenomenon 340B Report Publisher and CEO Ted Slafsky examines in his latest column for Pharmaceutical Strategies Group.

“Until recently, the 340B program policy was primarily debated and effectuated in Washington, D.C.,” writes Slafsky. But as Congress remains at a stalemate on drug pricing, state capitols have suddenly leaped to the forefront of 340B legislative and regulatory activity.”

Last year, he notes, “five states—South Dakota, West Virginia, Minnesota, Montana, and Oregon—enacted 340B-friendly bills that prevent Pharmacy Benefit Managers (PBMs) and other payors from paying 340B pharmacies less than other pharmacies based on 340B status.”

Two others, Ohio and Wisconsin, “came close to enacting pharmaceutical industry-supported legislation that would have placed onerous reporting requirements on 340B hospitals,” Slafsky continues. “Both bills were framed as pro-transparency initiatives. However, the information that hospitals would have been required to submit to the government would have been difficult and time-consuming to collect, potentially creating a misleading picture of the 340B program. I anticipate there will be a renewed effort in state capitols to enact this type of legislation in 2020.”

Healthcare providers in Michigan, Massachusetts, and California, he said, are trying to block or mitigate state Medicaid policy changes that would make it harder for them to realize savings when they provide 340B purchased drugs to Medicaid beneficiaries. As we recently reported, the Centers for Medicare & Medicaid Services recently issued Medicaid program guidance that tells states they may “limit the ability of some or all of the covered entities and/or contract pharmacies in the state to use 340B-purchased drugs for Medicaid beneficiaries.” Slafsky says providers in Alabama, Indiana, and other states have blocked mandatory carve-out rules.

Slafsky urges 340B stakeholders to work with state and national groups that represent 340B providers and with their institution’s government relations teams to engage with their state government officials and lawmakers.

Trifecta: Purdue Pharma Owes Refunds—Again—for 340B Overcharges

For the third time in little over a year, Purdue Pharma, the drug manufacturer at the heart of the national opioid addiction crisis, has announced it owes 340B covered entities refunds for charging them above statutorily defined 340B ceiling prices.

Purdue Pharma and its Avrio Health subsidiary posted Purdue’s latest overcharge notice on the Health Resources and Services Administration (HRSA) Office of Pharmacy Affairs (OPA) website yesterday. It covers 38 products for the third quarter of 2017 (including formulations of the painkillers OyxContin, Dilaudid, and Butrans) and one for the first quarter (Butrans). Purdue posted two similar overcharging notices last year (here and here).

Amgen Posts Notice About Enbrel

Biopharmaceutical company Amgen yesterday posted a notice on the OPA site about replacement National Drug Codes (NDCs) for four existing forms of the autoimmune disease treatment Enbrel. “Because the new NDCs are, in fact, the same product (drug, dose, formulation, or volume) with the same price as the corresponding old NDCs, Amgen believes that a covered entity utilizing a 340B inventory replenishment model may count accumulations of the Old NDC’s toward replenishment of equal quantities of the corresponding New NDC,” the notice states.

Update: MedPAC’s 340B Analysis

The Medicare Payment Advisory Commission (MedPAC) this week released its staff’s slide presentation about its analysis of whether the 340B program incentivizes hospitals to use more expensive drugs. The staff found evidence of slightly higher spending on drugs to treat lung and prostate cancer but said 340B’s effects on drug spending are probably not generalizable and its effects on patient cost sharing are probably small.

Healthcare publications Becker’s Hospital Review and Revenue Cycle Advisor ran articles about the analysis this week. “The 340B program has a minimal effect on overall healthcare spending,” Becker’s reported. “The 340B drug discount program does not appear to incentivize hospitals to use more expensive drugs,” Revenue Cycle Advisor wrote.

Law firm McDermott Will & Emery discussed the 340B analysis in a National Law Review article  about MedPAC’s entire two-day meeting. “MedPAC found 340B hospitals spent more on certain types of cancer drugs,” it said. “However, MedPAC could not attribute these differences in spending between 340B and non-340B hospitals to incentives within the discount program because 340B ceiling prices for acquisition are confidential.”

PhRMA Touts EBRI Study on Cancer Care Costs at Hospitals vs. Physician Offices

In our last issue, we told you about a new study from the Employee Benefit Research Institute (EBRI) that finds that hospitals (340B and non-340B) charge private payers more for cancer drugs than physician offices. In the study’s discussion section, the authors say “340B provides an extra incentive for oncologists to sell their practices to hospitals… increasing price disparities in cancer treatment by site of care [and] further adding to the growing cost burden shouldered by the U.S. health care system.”

Pharmaceutical Research and Manufacturers of America (PhRMA), which helped pay for the study, touted it this week in its blog. “This study underscores just how much hospitals are driving health care spending in the United States by marking up medicines,” PhRMA said.

The American Hospital Association (AHA) offers several reasons why the study is “misleading” in its blog. “It is time for drug companies to stop attacking others and come to the table with solutions on how to rein-in their out-of-control prices,” association Executive Vice President Tom Nickels says.

340B Hospital Leader Cautiously Optimistic About the Year and Decade Ahead

Hospital group 340B Health President and CEO Maureen Testoni said, “we start this new year and new decade with cautious optimism” during a Jan. 13 appearance on Monitor Monday, the podcast of RAC Monitor, an online publication that covers Medicare and other healthcare audits. Testoni touched on the new 340B ceiling price secure website, the national debate on drug pricing, Medicare drug reimbursement cuts for 340B hospitals, action to reduce HIV infections, and state legislation to stop discriminatory reimbursement by private payers against 340B entities.

Hey Big Spender: PhRMA Spent a Record-High $29 Million on Lobbying Congress in 2019

PhRMA “spent a record-high $29 million lobbying Congress in 2019,” the federal politics and policy news organization The Hill reported Jan. 22. “That is a 5 percent increase over what [it] spent in 2018, marking the most it has spent on lobbying in a single year.”

Insurers Team Up With Hospital-led Nonprofit to Produce Lower-Cost Generic Drugs

The Blue Cross Blue Shield Association and 18 of its local member organizations announced a partnership yesterday with Civica Rx, the hospital-led nonprofit generic drug supplier, to create a Civica subsidiary “with the goal of bringing lower-cost, generic medications to individuals and families.”

In a news release, the partners said the national and local BCBS groups will invest $55 million in Civica “to bring select high-cost generic drugs to market for consumers. The subsidiary will acquire and develop Abbreviated New Drug Applications (ANDAs) for select generic drugs and partner with Civica and manufacturing partners to bring more affordable generic drugs to uncompetitive markets in exchange for aggregated volume and multiyear purchasing commitments. Initially, several generic medications identified as having high potential for savings will be prioritized by the partnership and will evolve into a platform that can be used to enhance competition for additional generic drugs.”

Health systems with a large presence in 340B (including Intermountain Healthcare, SSM Health, and Trinity Health) banded together with three philanthropies in 2018 to establish Civica. It has grown to nearly 40 such systems.

Azar Makes Pitch for Grassley-Wyden Drug Pricing Bill

The Washington Post’s Health 202 blog reported yesterday that Health and Human Services Secretary Alex Azar praised Senate Finance Chairman Chuck Grassley (R-Iowa) and Ranking Member Ron Wyden’s (D-Ore.) bipartisan drug pricing legislation during an interview with an Iowa radio station. “Chairman Grassley and Sen. Wyden have an incredible bipartisan package to get drug prices down and lower what seniors pay out of pocket for their drugs,” Azar said in the interview. “I have worked closely with them — we’ve got to get that package to the Senate floor. We’ve got to get that passed out of Congress.”

Tweets of Note

@NVHR1: Today’s webinar w/ @BakerDonelsonIP & @Langco on “Demystifying #340B” demonstrated how #HepatitisC #HCV drug rebates can be used to address health inequities & fund testing, linkage to care, & treatment across diverse settings. @340BHealth

@340BHealth: Research organization @Altarum found that #drugprices increased 3% year-over-year in December 2019. This is one of several recent reports detailing the continued rise in drug prices and underscoring the need for #340B. #Protect340B

@TSlafsky: State legislatures are back in action. 5 states enacted #340B provider-friendly bills last year & two almost enacted onerous bills.  More activity is expected this year. Learn more how and why you need to engage at the state level in my new column.

@AIR340B: What happens if you get sick and learn your local doctor’s office was bought by a #340B hospital? For some patients, it means higher costs and less personalized care. Click through #APatientsJourney to see why we need to #Fix340B for patients:

@ms_ess: Strong conclusion from a non-par source: MedPAC says 340B hospitals don’t use more expensive drugs via @modrnhealthcr @340BHealth @340BCoalition

@walidgellad: According to MedPAC analysis: “The 340B Drug Pricing Program doesn’t create strong incentives for participating hospitals to use more expensive drugs…” higher spending at 340B hospitals driven by the type of cancer and characteristics of patients.

@walidgellad: (Continuation) Reminder that CMS reduced payments for 340B drugs to hospitals in 2018, and impact of that change is unknown right now. The MedPAC analysis goes through 2017. Our prior write up about the change…

@bruceymonkey: I would look at children’s hospitals. That way you’re comparing apples to apples. Some children’s hospitals are 340B hospitals, others are not. All serve the sickest kids. I would suspect that there is little (if any) difference in the kind of care they children access.

@AndyWilson340B: I viewed this analysis as showing relatively weak “absence of evidence” vs. “evidence of absence” of 340B effect, like the MedPAC commissioners quoted in various articles. Do you see it differently?

@walidgellad: Agree the commissioners were a bit circumspect in how they discussed result. I was quoting the first line of piece. But lack of evidence in this case is really important.

@davidchao: modrnhealthcr: RT AtulGroverMD: “Hospitals in 340B serve 43% more Medicare-Medicaid dual-eligible patients—an indirect measure for low socioeconomic status—than non-participating hospitals.” via modrnhealthcr

@Derek_Griffin1: MedPAC: 340B hospitals spent more on lung, prostate cancer drugs compared to other facilities via @FierceHealth #curecancer

@westweet57: MedPAC: 340B hospitals spent more on lung, prostate cancer drugs compared to other facilities.