2023 May Look Very Different in Washington, D.C., for 340B Stakeholders

Ted Slafsky
Founder and Principal of Wexford Solutions, Publisher, 340B Report

It's hard to believe that election season is around the corner. But in less than a year, Congress could look ve­­­ry different than it does now. All signs foretell a Republican takeover of the House and a very good possibility of the GOP assuming control of the closely divided Senate. This will have significant implications for the 340B drug pricing program, not only for policy but also for the key players setting the agenda.

Several factors point to a major shakeup in Washington, D.C. They include:

• Historical trends: The President's party almost always loses ground during the midterm elections. Since World War II, the President's party has lost an average of 27 seats in the House, and an average of 2.5 seats in the Senate during the midterms. With House Democrats having the narrowest majority since the Civil War and the Senate tied at 50-50 with Vice President Kamala Harris breaking the tie, we will likely have Kevin McCarthy (R-CA) as House Speaker. There is a better than even chance that Mitch McConnell (R-KY) will be Senate Majority Leader
• Party preference: Just a year ago, Democrats had close to a 10-point lead in Gallup's generic ballot survey when Americans were asked which party they identified with or leaned towards. As respected political analysts Chris Cillizza and Adam Wollner recently observed, "by the fourth quarter, the Democrats' average advantage had completely vanished: 47 percent of those surveyed identified with or leaned toward the GOP, compared to 42 percent for the Democrats—a net swing of 14 points." Strikingly, "the Republicans' five-point edge in party preference is the largest they have established over the Democrats since 1995—right after the GOP took control of the House for the first time in four decades." Other polls show similar trends. Congressional Democrats' challenges are compounded by a relatively unpopular president. Unless President Biden's low poll numbers begin to climb significantly, he could be a real drag on the ticket in November.
• Retirements and redistricting: So far, 29 House Democrats have announced their retirements compared to only 11 Republicans. Many members have decided to throw in the towel due to redistricting, the once-a-decade rewriting of the political maps to reflect population changes. Many House lawmakers are running in significantly changed districts, and some have to endure the experience of competing against a colleague of theirs in their own party.

This is the case in West Virginia. Due to population loss, the state is losing a Congressional seat. As a result, Rep. David McKinley (R-WV), the leading House GOP champion for 340B providers, is pitted in a tough primary race against Republican Rep. Alex Mooney in the 2 ^nd Congressional district. McKinley starts with an advantage since most of the new district is comprised of his old district. However, McKinley faces strong headwinds since President Trump has endorsed Mooney and has criticized McKinley for supporting an independent January 6 commission and the bipartisan infrastructure bill. Meanwhile, in neighboring Virginia, Rep. Abigail Spanberger (D-VA), another important voice for 340B providers, faces a tough race in her newly created swing district. Fortunately for her, the district has become more friendly, moving from Republican+3 to Democratic+1, according to David Wasserman of The Cook Political Report.

Implications of a GOP Takeover

House Republicans (who controlled the chamber until the end of 2018) have repeatedly tried to place restrictions on the 340B program over the past decade. So did the previous administration and a few influential players in the Senate.

The Trump administration cut Medicare Part B reimbursement to 340B hospitals by close to 30 percent. Rather than embracing 340B, President Trump's Blueprint for Lowering Drug Prices described the program in a negative light and implied that 340B contributes to higher drug prices. At the same, House Republicans (under the leadership of now-retired Energy and Commerce Committee Chairman Greg Walden (R-OR) and former Health Subcommittee Chair Michael Burgess (R-TX) held numerous hearings and introduced dozens of bills to place restrictions and additional requirements on 340B providers. These Congressional efforts ultimately stalled due to a lack of consensus in the House GOP caucus and a near-universal opposition to 340B changes from Democrats. Meanwhile, in the Senate, the HELP Committee, under the leadership of now-retired Chairman Lamar Alexander (R-TN), held several hearings on the 340B program but did not pursue reform legislation. 340B providers are fortunate to have champions such as Sen. John Thune (R-SD), the second-ranking Senate Republican who recently decided to run for re-election.

340B's Resiliency

Despite the interest in the House Republican leadership and sustained lobbying by the pharmaceutical industry, we have not seen any of a myriad of bills—which have included putting a pause or reducing the number of hospitals eligible for the 340B program, requiring hospitals to report more information on their patient mix and billing practices, limiting the contract pharmacy program—make it to the House floor for a vote. I don't anticipate that will change in 2023 or 2024. With 340B healthcare facilities located in every Congressional district and lawmakers increasingly being educated on the program's importance, 340B is now thoroughly woven into the nation's healthcare fabric.

Nonetheless, 340B covered entities should expect a bumpy ride. Even in a Democratically-controlled House and Senate, 340B hospitals have not been able to convince Congress to give it even small wins like allowing hospitals to remain in the program during the COVID-19 pandemic. If hospital advocacy groups turn to Congress to clarify the contract pharmacy law, it is no sure thing that the effort will be successful. Moreover, to the surprise of the 340B hospital community, the Biden administration decided to maintain the large Medicare Part B cuts.

So, what should we expect if there is a red wave in November? More 340B Congressional hearings, government studies, and bills to be introduced. But at the end of the day, the status quo should reign.

Disclaimer
The views and opinions expressed in this blog are those of the authors and do not necessarily reflect the official policy or position of any other agency, organization, employer, or company. Assumptions made in the analysis are not reflective of the position of any entity other than the author(s). These views are always subject to change, revision, and rethinking at any time and may not be held in perpetuity.