October 14, 2021

Recent 340B Legislative Activity a Harbinger?

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

After a quiet period, the pharmaceutical industry and its congressional allies are renewing efforts to make long-sought changes to the 340B compliance program. While the moves are unlikely to gain much traction in a Democratically controlled Congress and White House, they are a preview of what to expect if one or both chambers flip next November.

In the last few weeks, a slew of bills and amendments that the drug industry believes are necessary to address alleged 340B abuse have been introduced. They include four amendments that House Energy and Commerce Committee (E&C) Republicans tried to add to Speaker Nancy Pelosi’s drug pricing bill that is making its way through the House. They would have: 

  • Imposed additional sanctions against covered entities that receive audit findings for 340B duplicate discounts or diversion of drugs
  • Required disproportionate share (DSH) hospitals to sell insulin or injectable epinephrine that they obtain at 340B pricing to patients at the discounted prices
  • Added to language on the prevention of duplicate discounts involving 340B drugs through the newly proposed Federal Medicaid Program
  • Protected DSH hospitals from losing 340B eligibility because of patient case mix changes due to COVID-19, provided that the hospitals sold insulin or EpiPens at the 340B price 

Only one of the four amendments was tied to a particular lawmaker (Rep. Larry Buschon, R-Ind.) and none were debated during the committee mark-up. In the House, committee chairs have broad authority to determine which amendments get considered and E&C Chairman Frank Pallone (D-NJ) was able to shelve them. These amendments, not surprisingly, were strongly opposed by 340B provider groups. They believe the legislation was either unnecessary (the insulin/EpiPens bills) or government overreach (increased sanctions and additional duplicate discount prevention measures). 

Just a few weeks later, Rep. Matt Rosendale (R-Mont.) introduced a bill on October 5 to impose a number of new conditions on hospital eligibility in the 340B program. H.R. 5463 includes a two-year moratorium on hospital and child site registration in the program and a steep and arguably unrealistic threshold for eligibility for private non-profit hospitals.

Meanwhile in the U.S. Senate, Sen. John Kennedy (R-La.) recently introduced a bill ( S. 2814) to codify ex-President Trump’s controversial executive order and the related final rule requiring community health centers, as a condition of their federal grants, to pass along all their 340B savings on insulin and EpiPen-like devices to low-income, uninsured, and/or underinsured patients. Health centers have lobbied hard against Trump’s rule. They say it doesn’t address why the price of insulin and EpiPens have increased so much over the years and ignores that centers routinely give the medicines to patients for free or at a price they can afford. The Biden administration formally rescinded the policy in late September but expect further efforts by GOP lawmakers to add the requirement to upcoming legislation.

On the same day that Kennedy filed his bill, Sen. Mike Braun (R-Ind.) introduced a bill (S. 2837) to let the federal government audit 340B providers to determine how they use net income from drugs bought under the 340B program. According to his office, its purpose is “to ensure that the net income from purchases under the 340B program benefits low-income and uninsured patients of all covered entities.” Unlike some of the other recent legislation targeting 340B entities, this bill would apply to all 340B provider categories, not just hospitals. Over the years, Braun has advocated for several 340B reforms that are backed by the drug industry. So far, he has not been able to garner bipartisan support for his efforts. Moreover, 340B providers have several GOP heavy-hitter allies including Senate Republican whip John Thune (R-SD) and House Republican conference chair Elise Stefanik (R-NY).

The Biden administration proposed giving the Health Resources and Services Administration (HRSA) the expanded audit authority in May in its fiscal 2022 budget request for HRSA, upsetting covered entity groups that consider the administration an ally. Those groups will fiercely oppose Braun’s bill and I would be surprised if the administration ends up embracing it. Nonetheless, the fact that HRSA was able to include the idea in its budget proposal means that it has legs.

The drug industry and some congressional Republicans argue that 340B entities should be required to pass along all their 340B program savings to indigent, uninsured, and underinsured patients. Covered entities and other members of Congress from both parties argue that 340B was designed to let entities use savings to serve patients and their communities more broadly, including transportation, language, and medication-management services.

In the coming months, expect more bills to be introduced from the competing sides of the 340B debate. It will be difficult for anything significant to pass unless the contract pharmacy standoff persists, and covered entity groups decide they must make a concerted effort to restore 340B pricing in the contract pharmacy setting prior to the November 2022 elections.

However, starting in January 2023, if Republicans take control (very good chance in the House and 50/50 odds in the Senate), expect the 340B program to get a very close look. This includes congressional hearings, studies, dozens of bills, and perhaps actual legislation making it to President Biden’s desk. I don’t anticipate anything too ambitious to survive the legislative sausage-making process, but it is a reminder that there is still interest in scaling back the 340B program. For more information on the programs history and a digestable synopsis of the 340B program explained, visit our blog!

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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