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December 09, 2020

340B Advocates Face an Important Decision at a Critical Juncture

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

“To be or not to be?” is probably the most famous question posed in English literature. For 340B stakeholders, the most pressing question for the coming year is “to amend or not amend 340B?” Since the Affordable Care Act (ACA) was enacted a decade ago, most 340B provider advocates have preached caution, as 340B providers scored significant victories in the ACA. These wins included expanding the 340B program to include rural hospitals, increasing pricing transparency and providing additional oversight over drug manufacturers. Ever since, 340B advocates have been largely playing defense – reacting, rather than setting the agenda.

Since 2010, most of the 340B legislation introduced in Congress, as well as most of the 340B initiatives from the Obama and Trump administrations, would have curtailed program growth or imposed more requirements on providers. There were few 340B provider-friendly bills, and most of those were in reaction to drug manufacturer-supported bills.

Providers worry that if the 340B law is opened up, drug industry lobbyists with deep pockets and vast influence will swoop in and add harmful provisions to the law. There is some precedent.   While the overall effect of the ACA was positive for 340B providers, the ACA did include a last-minute, secret deal between the Obama administration and the drug industry that prevents rural and free-standing cancer hospitals from accessing 340B pricing on orphan drugs.

The Power of the 340B Provider Community

Nonetheless, the only provider-friendly 340B bill to garner widespread support in the past decade was a 2017 bipartisan bill sponsored by Reps. McKinley (R-W.Va.) and Thompson (D-Calif.) to block the Trump administration’s nearly 30 percent Medicare Part B reimbursement cut to 340B hospitals. Unfortunately, this legislative initiative, which gained 200 co-sponsors, was abandoned in favor of an all-out focus on challenging the Part B cuts in the courts. On Oct. 19, the full U.S. Court of Appeals for the District of Columbia declined a request to re-hear a 2-1 decision that upheld the cuts, thus likely killing the judicial avenue. Rather than an either-or approach, I would argue that a two-pronged strategy would have been far more effective.

Recent actions by certain drug manufacturers to cut off 340B pricing at contract pharmacies have renewed debate in the 340B provider community about whether it is time to open up the 340B law. The National Association of Community Health Centers has publicly stated that it believes the 340B law should be amended to remove any ambiguity about the contract pharmacy program’s legality and also address what it describes as “pick pocketing” by pharmaceutical benefit managers (PBMs) and other payors. Discriminatory reimbursement and the orphan drug restriction are clearly areas that need to be addressed by Congress. However, hospital groups have opposed opening up the statute, believing that it is too risky and that their members would be susceptible to significant new restrictions and requirements.

Why the Next Two Years Are Critical

The 340B provider community perceives the election of Joe Biden as President as a welcome development. Regardless of your political persuasion, the Trump administration has been no friend of 340B, and providers are confident that the new administration will be much more sympathetic. The argument for moving forward with amending the statute now is that the stars are aligned: a Democratic White House and House of Representatives, along with a closely divided Senate. Whether Republicans win one or more of the Georgia Senate seats and remain in power or the Democrats sweep the races, very little legislation will pass the Senate without bipartisan support.

Moreover, the political landscape could be very different in two years. If 340B advocates decide to address shortcomings in the law, they will want to do it in the first two years of the new administration. House Democrats will start the new session of Congress with what may be the smallest majority since 1919, and the President’s party almost always loses ground during 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 midterms. With just a few more House races to be decided, Republicans will need a net gain of between five and seven seats to take back control of the House. Under House Republican rule, we can once again expect a coordinated and sustained effort to curtail the program and add onerous requirements that would be opposed by 340B provider stakeholders. 

Is It Time for Compromise?

340B advocates face an important decision. Should they work aggressively to improve the program and be prepared for compromises, including new reporting requirements for hospitals and potentially for other 340B stakeholders? Can they accept additional oversight and rules, particularly to ensure that all covered entities are good stewards of the program? Can we all agree there should be a better system for preventing duplicate discounts that does not place a heavy burden on overstretched providers and manufacturers? These are some examples of where compromise will be needed.

At the end of the day, it is very possible that no 340B legislation will actually make it to the President’s desk. Nonetheless, it is better to have a forward-looking agenda than to be left behind.


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.

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