October 26, 2020

Congress Continues to Display Strong Bipartisan Support for the 340B Drug Pricing Program

Ken Perez
VP of Healthcare Policy, Omnicell

Created in 1992 via an amendment to the Public Health Service Act with bipartisan congressional support, the 340B Drug Pricing Program enables “safety-net providers”—select hospitals, clinics, and health centers that serve a disproportionate share of poor patients in urban and rural areas—to buy prescription drugs at discounted prices.

The initial intent of the program is captured in the Congressional Record: to enable covered entities “to stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.” Initially a response to the end of the Medicaid rebate program, the impact of the 340B program has grown substantially over the past decade. 

Yet, while 340B discounts equate to only about 1.4 percent of drug industry sales, based on 2018 data, the pharmaceutical industry continues to lobby against the program. Nevertheless, there is firm bipartisan support for the 340B drug pricing program—primarily because of how it clearly benefits safety-net providers that serve the nation’s poor communities.

COVID-19’s Challenge to 340B

As the coronavirus pandemic worsened in the United States this past spring, on April 28, Reps. Doris Matsui (D-Calif.) and Chris Stewart (R-Utah) wrote to House leadership in support of 340B hospitals, “To support our safety net hospitals through this crisis, we write to ask that any future supplemental relief bill include policies to temporarily protect these hospitals from losing 340B eligibility [due to reduced DSH percentages caused by expanding capacity to fight COVID-19, resulting in payer mix shifts].”

Similarly, on July 2, Sen. Shelley Moore Capito (R-W.Va.), along with Sens. John Thune (R-S.D.), Debbie Stabenow (D-Mich.), Rob Portman (R-Ohio), Tammy Baldwin (D-Wis.), and Ben Cardin (D-Md.), introduced legislation that would provide certainty to hospitals participating in the 340B program during the COVID-19 public health emergency.

Pharma’s Challenges to 340B

During July and August, several large pharmaceutical companies challenged the operation of the 340B program. Astra Zeneca and Eli Lilly challenged the Health Resources and Services Administration’s contract pharmacy guidance, questioning the agency’s authority to allow covered entities to contract with multiple pharmacies. As a result, they have limited the availability of 340B pricing for their drugs to one pharmacy per covered entity.

Merck, Sanofi and Novartis have also enacted new claims submission requirements in order to access 340B pricing for their drugs. These data requirements exceed the traditional parameters of the 340B program and would require covered entities to violate terms in their existing wholesaler and pharmacy agreements.

In response to these actions, various bipartisan groups in Congress have communicated their concerns to the Department of Health and Human Services (HHS) and the Pharmaceutical Research and Manufacturers of America (PhRMA), the trade group representing the pharmaceutical industry in the United States.

On Sept. 3, the House Energy & Commerce Committee sent a letter to HHS Secretary Alex Azar expressing the Committee’s “strong concerns” about the drug makers’ actions, describing them as “contravention of the law.” The letter also called on HHS to “ensure drug manufacturers comply with the law and use the tools provided by Congress to enforce compliance.”

Then on Sept. 14, 243 members (or 56%) of the House sent a bipartisan letter to Azar, demanding “immediate action to stop [drug] companies from either denying or limiting access to 340B pricing to hospitals, health centers, and clinics participating in 340B.” Signers included 176 Democratic members (76%) and 67 Republican members (34%).

The following day, 22 Democratic senators sent a letter to PhRMA positing that pharma’s recent actions against the 340B program likely violate the law and asking the drug makers to cease their actions.

Also on Sept. 15, conservative Democratic Sen. Joe Manchin (D-W.Va.) wrote a letter to Azar, asking him to direct HRSA to notify the five offending drug makers that their actions are counter to the guidance governing the 340B program and that they must cease and reverse their actions.

Finally, on Sept. 17, 28 senators (15 Democrats, 12 Republicans and one independent) sent a letter to Azar that echoed the request of Manchin. Notably, three of the six senators who led the effort were Republicans, including Senate Majority Whip John Thune (R-S.D.), the second highest-ranking Republican in the Senate.

Conclusion

This year’s challenges to the 340B drug pricing program—the coronavirus pandemic and actions taken by a handful of large pharmaceutical companies—have prompted lawmakers on both sides of the aisle and in both chambers of Congress to repeatedly and forcefully voice their support for the program. Regardless of the outcome of the 2020 general elections, strong bipartisan support for the 340B program is expected to continue just as it has throughout the program’s nearly 30-year history.

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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