March 02, 2021

A New Administration = A New Era of 340B Program Guidance

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

Since its inception in 1992, the 340B program has largely been governed by federal guidance, rather than regulations. Until the Affordable Care Act (ACA), in fact, ; every aspect of the 340B program was interpreted through guidance.

The ACA—which included 340B expansion to rural and cancer hospitals, orphan drug discount restrictions, and stronger drug pricing enforcement mechanisms—gave the Health Resources and Services Administration (HRSA) some ability to issue regulations. However, HRSA’s regulatory authority currently extends to only a few narrow areas of the 340B program: ceiling price calculation, civil monetary penalties, and the administrative dispute resolution(ADR)process.

Although both federal guidelines and regulations share similarities, a “regulation” carries more weight than “guidance” from a legal perspective. When issuing both guidance and regulations, government agencies are required to publish their proposed policies in the Federal Register, request notice and comment from the public, and address questions raised during the comment period.

The key question in the contract pharmacy debate;

HRSA had made it clear over the four years of the Trump administration that its hands were tied when it came to 340B enforcement, due to a Trump administration policy that had required federal departments and agencies to treat guidance documents as non-binding, both in law and in practice, except as incorporated into a contract. HRSA repeatedly requested that Congress give it broad regulatory authority, which would allow its Office of Pharmacy Affairs (OPA) to issue regulations on every aspect of the 340B program. Those efforts have been rebuffed, largely due to concerns from the 340B covered entity community.

HRSA’s supposed lack of authority to enforce its 340B guidance—its 1996 and 2010 contract pharmacy guidance in particular—is central to the recent debate over the contract pharmacy program. The six drug manufacturers who have refused to provide 340B discounts or have restricted access to 340B pricing at contract pharmacies argue that they are not required to do so, since they believe that HRSA’s guidance is not enforceable.

However, General Counsel Robert Charrow of the Department of Health and Human Services (HHS) issued a December 30 advisory opinion that notes that HHS’s “consistent position over the past 24-plus years” that “manufacturers are required to offer ceiling prices even where contract pharmacies are used” would factor into any court’s interpretation of the 340B statute. So, too, would the fact that “contract-pharmacy arrangements have been utilized and honored by manufacturers since 1996 and earlier.”

An evolving view on federal guidance brings us full circle 

Charrow’s memorandum precedes an important executive order President Biden issued on his first day of office. On Jan. 20, the President revoked a Trump administration policy that required federal departments and agencies to treat guidance documents as non-binding both in law and in practice, except as incorporated into a contract. Biden’s executive order is also intended to empower agencies to confront various challenges including COVID-19 and racial justice.

Now that the new administration has returned to the government’s long-time position on federal guidance, we should expect to see stronger enforcement from HRSA, as well as the possibility of new guidance. It should feel like a return to normalcy after a wild, few years.

ADDITIONAL 340B PROGRAM UPDATES

California court dismisses lawsuit; defers to ADR process

A February 17 th ruling by a federal judge in California to dismiss a lawsuit by hospital groups against the U.S. Health and Human Services (HHS) underscores the important role that the ADR panel will play in resolving disputes between covered entities and drug manufacturers. Hospitals called on the court to require HHS to act immediately to sanction drug companies that have refused to provide 340B discounts. The court ruled that the ADR process must play out prior to any potential intervention by the judicial branch.

CV340B establishes advisory committee

As you may know from my previous columns, Community Voices for 340B ( CV340B) is the first grassroots/grasstops organization committed to raising awareness of the important role that 340B plays in protecting and improving access and the quality of care for communities nationwide.

CV340B recently established an advisory committee with a group of exceptionally strong and compelling voices They include Sue Veer of Carolinas Health Centers, Derek Robertson, a long-time advocate for& people with hemophilia, John Shaski of Sparrow Health, Nathan Awrich of UVM Health, Sima Dinesh Shah of Howard Brown Health, and Zach Zwieg of Avera Health.

Advisory committee members will be tasked with building regional advocacy teams to engage the community “where they are.” CV340B has already hosted meetings with civic leaders in several states and hopes to build on its success utilizing its advisory committee.

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.

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