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November 11, 2020

A 340B advocacy group punching above its weight

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

I have had the privilege of being on the frontlines protecting the 340B compliance program since 1996 , just a few years after the program was enacted into law.   We have had our share of challenges over the years, including a close call in the mid-1990s when the program almost became voluntary for drug manufacturers to various efforts in Congress to take away 340B savings. We have also experienced partisan investigations that seemed to be driven more by drug industry lobbyists than a real concern with the program or patients.

Now, the program faces its greatest existential threat in over two decades.   Some drug manufacturers have unilaterally stopped providing 340B discounts to contract pharmacy partners, cutting off a vital benefit that safety net providers depend upon to continue their mission of providing care to all patients, regardless of ability to pay.   These decisions are particularly painful for small and rural health care providers who cannot build their own pharmacies – and for their patients who depend on affordable medications to stay healthy.   To make matters worse, the U.S. Department of Health and Human Services (HHS) has abdicated its responsibility to police the program. 

Leadership at just the right time

As I wrote in last month’s column, the U.S. Supreme Court has made it clear that only the HHS Secretary may enforce a manufacturer’s obligation to charge at or below the 340B ceiling price.   340B providers cannot sue the companies that are flouting the 340B law.   Fortunately, we have a number of advocacy groups that have stepped up to defend the long-standing right to dispense drugs through contract pharmacies. 

Two of them, Ryan White Clinics for 340B Access (RWC-340B) and the National Association of Community Health Centers, have filed separate suits in the United States District Court for Washington, D.C. against HHS and HRSA.   While the suits have some differences, they are both attempting to compel the department to protect the long-standing right to utilize the contract program, which HRSA first established in 1996 and expanded in 2010.

RWC-340B was the first off the bat, filing its suit on Friday evening, October 9 th.   RWC-340B is led by President Shannon Stephenson, a dynamic leader who also serves as CEO of Cempa Community Care, a Federally Qualified Health Center Look-Alike and Ryan White Clinic based in Chattanooga, Tennessee.   Their counsel, Powers Law, has close to three decades of experience with the 340B program.   the firm’s drug pricing practice is led by Bill von Oehsen, who played an instrumental role in drafting the 340B law and founded the hospital trade group 340B Health.   Barbara Straub-Williams adds her significant, in-depth compliance expertise. And Peggy Tighe, another veteran health care lawyer and lobbyist at Powers, serves as the day-to-day strategic advisor to RWC-340B.

RWC-340B began six years ago with just three members.   While it is still a relatively small organization with less than 50 members, it plays an outsized role in the 340B community and with federal and state policymakers.   Not only was the organization the first to sue the government, but it has also provided a great public service by developing a helpful tracking tool that you can download  and other resources on the ongoing contract pharmacy battle. They also recently released an important white paper on the adverse impact of policies reducing resources to Ryan White clinics, including any reductions in 340B savings.

Addressing discriminatory reimbursement

While RWC-340B has cemented its standing among 340B stakeholders with its leadership on the contract pharmacy crisis, this is not the only area where it is making a big difference. Over the past decade, we have seen a growing trend where PBMs and other payors have reduced reimbursement rates to pharmacies due to their 340B status. In some cases, PBMs have gone further and excluded 340B covered entities’ pharmacies from pharmacy networks altogether, Stephenson points out. 

As a result, the savings that providers rely on to meet 340B’s original intent to “stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services,” disappears.   The 340B program was never intended to provide a windfall to the PBM industry, she points out.   Stephenson adds that, without these savings, Cempa Community Care’s laudatory work in combatting the HIV/AIDS, Hepatitis C and STD epidemics would be in great jeopardy.   RWC-340B has been very active on the state front, challenging these discriminatory reimbursement cuts

The organization has given formal testimony, developed legislative language, and shared resources directly with state lobbyists in a dozen states.  Seven states have adopted laws preventing discriminatory reimbursement, and more were set to do so before COVID-19 took over the legislative agenda.   RWC-340B has also worked closely with Rep. Doris Matsui and other 340B champions to build momentum to address the matter on a national level.   RWC-340B is also a leader in New York and other states in trying to combat harmful Medicaid pharmacy reimbursement cuts to 340B providers. 

Strange bedfellows?

RWC-340B has also been savvy in getting its message across to traditional 340B critics.   Last month, Stephenson wrote a guest column in Adam Fein’s Drug Channels, a blog widely-read by the pharmaceutical industry and other industry stakeholders.   Fein, a consultant to pharmaceutical manufacturers, has been the most vocal critic of the 340B program, focusing much of his criticism on hospitals and the contract pharmacy program. 

In the column, Stephenson challenges the pharmaceutical industry to work collaboratively with the 340B provider community to enact legislation in states and at the federal level to prohibit discriminatory reimbursement. “Despite our differences, we can work together to prevent this blatant and dangerous abuse of the 340B program,” she says.

At a time when the 340B community faces unprecedented challenges, we should all be grateful for groups like RWC-340B.


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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