The 340B Summer Conference held in the National Capital Region this year attracted a diverse group of attendees from all across the country.  They came together with a common goal of seeking clarity and guidance amidst the complex and uncertain 340B landscape. The conference addressed various issues important to stakeholders, including the current state of affairs, future  prospects, the implications of increasingly stringent manufacturer restrictions (particularly due to an unfavorable ruling from the Third Circuit), and the forthcoming implementation of Inflation Reduction Act provisions aimed at reducing drug spending. Additionally, the conference explored transparency reporting requirements and other operational challenges that significantly impact the quality of care provided to patients by safety net providers.

Manufacturer Restrictions No Longer Solely Concerned about Duplicate Discounts

In 2020, when  manufacturer restrictions were introduced, they exacerbated an already challenging  global pandemic situation. The stated rationale behind these restrictions was rooted in concerns related to Medicaid duplicate discount rebates.  Preventing  duplicate discounts is a statutory obligation for covered entities, necessitating the implementation of mechanisms to ensure compliance with this requirement. 

Covered Entities attempting to purchase  drugs from the growing roster of manufacturers imposing contract pharmacy restrictions were faced with the dilemma of  whether to upload claims data through Second Sight’s 340B ESP platform vs forfeiting 340B savings altogether. Additionally, manufacturers imposed limitations on the number and proximity of contract pharmacies they would permit. These conditions posed additional operational challenges for covered entities and in many cases, pricing  restoration was not effectively achieved.

HHS and PhRMA filed lawsuits, and while district courts rendered some favorable decisions for covered entities, the first appealed ruling within the Third Circuit did not go in their favor. The court found that HRSA’s interpretation of the statute was unpersuasive, enabling AstraZeneca, Sanofi and Novo Nordisk to move forward with damaging restrictions. 340B stakeholders are hoping for more favorable decisions from the Seventh and DC Circuit Courts and eagerly await upcoming arguments in the Eighth Circuit Court.

As the  lawsuits progress through the Appellate Courts, manufacturers continue to levy more stringent conditions in a seemingly expedient manner shedding light on their true objective which no longer appears solely aimed at maintaining  duplicate discount integrity. 340B covered entity stakeholders believe pharmaceutical companies are clearly driven by a profit-seeking motive, which contradicts the principles outlined in the 340B statute and is contrary to the best interests of the safety-net communities. The general sentiment of conference attendees is that this situation has the potential to create catastrophic circumstances, as patients bear the consequences through unnecessary hospital re-admissions due to lack of access to life-sustaining medications, delayed medication access, and medication noncompliance due to rising costs ultimately imposed  on patients resulting from the loss of savings programs previously provided by discounted drugs.

Evolving Strategies for Mitigating Savings Losses due to Manufacturers’ Restrictions

As manufacturers chip away at savings that help keep covered entities’ doors open, covered entities are actively engaging strategies to mitigate and offset savings loss.  Their objective is to avoid cutting services and programs that are vital to our communities. Some potential solutions involve expanding the number of in-house retail pharmacies, optimizing existing ones, and either establishing specialty pharmacy partnerships or incorporating specialty pharmacies within the organization. 

The most recent strategies include assessing spend metrics across all classes of trade to implement measures for improved cost reduction, contract pricing integrity, alternative medications, or competitive market dynamics to support opportunities such as sub-ceiling price negotiation and direct manufacturer contracts.  It isn’t the most thrilling 340B optimization area, but closely monitoring WAC spend in the mixed-use setting and utilizing tools, analytics (e.g., Medicaid carve-in vs. carve-out), or processes either to operationalize procurement changes or recover lost opportunities may add up to considerable savings for covered entities willing to utilize a disciplined approach.

Covered entities are also implementing systems to “default” discharge prescriptions to their in-house pharmacies, while providing patients opportunities to “opt out”, and efforts are being made to further develop and optimize meds-to-beds programs. 

Advocacy and Request for Information (RFI)

While recent developments have been disheartening and challenging, there is hope on the horizon. Congresswoman Doris Matsui,  a longstanding 340B advocate for the 340B program, intends to introduce legislation within the next few weeks. The  proposed legislation aims to prohibit the restrictive conditions imposed by manufacturers regarding contract pharmacy and bring contract pharmacy back to its original state for all covered entities.

In addition to these efforts, a bipartisan group of senators are also requesting public comments by July 28th, 2023, specifically on 340B program compliance, contract pharmacy issues and government oversight. These developments amplify the importance for covered entities to  “tell their  story”, stressing the need for covered entities to explain how they are benefiting patients, providing essential services and programs, and sustaining their operations with 340B savings; and, equally as important, engaging and educating lawmakers about the significance of the 340B program and garnering their support to protect the program so it remains of utmost importance.

The conference addressed  various important topics pertaining to the health and wellness of the 340B Program  and its stakeholders.  One such topic was the significance of HRSA audits and the need for proactive measures before receiving an audit  letter. Covered Entities were strongly encouraged to engage in mock audits and practice preparing data for a DRL (Data Request Letter) to identify any compliance  gaps, hurdles, and the need for education and resources.  These steps help in presenting a clear and comprehensive way to ensure audit and program success in these crucial times of transparency and integrity..

During the  keynote remarks, Amy Walter, the Publisher and Editor-In-Chief of the Cook Political Report, delivered an engaging speech.  Of note was her reference to Donald Rumsfeld’s response in a press conference, which he gave years prior, regarding “known unknowns and the unknown unknowns.”As we face several known unknowns in  the  coming month and years, such as the extreme political polarization on the 340B Program and HRSA’s intentions  with the 60 RFI responses received from covered entities when asked how they use their savings, and how the Inflation Reduction Act drug list purchases will be made, one thing remains certain.  Despite these known unknowns and unknown knowns, we are resolute in our commitment to persevere and find  ways to protect  and ensure the success of the 340B Program in  the  years to come.

The Author Noelle Keller is a 340B Subject Matter Expert with Alinea.  Follow Noelle and the Alinea Group on Twitter and LinkedIn.