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340B Insight provides members and supporters of 340B Health with timely updates and discussions about the 340B drug pricing program. The podcast helps listeners stay current with and learn more about 340B to help them serve their patients and communities and remain compliant. We publish new episodes twice a month, with news reports and in-depth interviews with leading health care practitioners, policy and legal experts, public policymakers, and our expert staff.
Narration (00:03)
Welcome to 340B Insight from 340B Health.
David Glendinning (00:12)
Hello from Washington DC and welcome back to 340B Insight, the premier podcast about the 340B drug pricing program. I'm your host David Glenndinning with 340B Health. Our guest today is 340B Health President and CEO Maureen Testoni. We aim to speak with Maureen every few months on the program and with everything that has happened in 340B since we had our 2025 year in review, this was a great time to have her back on the show. Here's our conversation.
Today we are welcoming back 340B Health President and CEO Maureen Testoni for her first appearance on the show in 2026. Maureen, thank you for being here on 340B Insight.
Maureen Testoni (00:55)
Thanks so much for having me, David.
David Glendinning (00:57)
The
opening months of this year have been a bit of a whirlwind for all of us. What are some of the biggest recent developments in 340B that are taking up your time lately?
Maureen Testoni (01:09)
There are many. Some of them are continuations of what we've been seeing for at least a year and a half. You know, more activity on 3, 4-A-B rebates, activity from manufacturers on getting claims data or not giving 3, 4-A-B pricing. A new area is that the administration has declared its support for drug makers in the area of state contract pharmacy laws. And then there are some new
court decisions that go back to HRSA guidance issued in some cases decades ago, in some cases as late as 2013. And then we're also seeing continued issues with Medicare fare price implementation in terms of what drug makers are and are not sending to covered entities for the MFP refund.
David Glendinning (02:03)
Let's start with rebates, which you mentioned kind of right off the bat. We often have started there on the show, at least since last fall, but rebates continue to be a major issue for us. Where do things stand now?
Maureen Testoni (02:15)
have stopped the rebate pilot that was set to go into ⁓ effect at the beginning of 2026. And it's important to understand why, because this is going to be a theme, think, throughout this podcast. The government failed to comply with two key requirements of federal law. It didn't say why they were going to move away from up-front discounts after 30 years of using them. And they also didn't adequately evaluate the cost and burden
of moving to rebates instead of doing upfront costs. So based on those two requirements, which are requirements of federal law, the court said that the rebate pilot could not stand. So now we're seeing HRSA officially seek more information from stakeholders, especially I think hospitals, on the potential burden of rebates. They are also looking for any potential benefits and I'm sure the manufacturer will be very
verbose on talking about those when they submit their comments. And then they're looking for options for reducing costs or harm. So for example, if there are issues that hospitals think they're going to be harmed by, if there are ways of modifying that. And I personally think there's a strong possibility that HRSA will use this information to launch another rebate pilot later this year, which is why we at 3Privy Health are strongly urging hospitals to submit comments.
I should say hospitals continue to tell us of their strong opposition to rebates due to cost and burden because it would require you to submit millions and millions and millions of claims data, as well as a significant concern that hospitals have that allowing manufacturers to decide whether they are going to pay a 340B discount after the fact essentially cedes control of 340B.
from HRSA over to drug makers.
David Glendinning (04:10)
As we've noted before, the rebate concept ⁓ started unilaterally with drug makers, and then HRSA, as you mentioned, started getting involved. this is now going beyond the executive branch, and we've seen growing bipartisan interest in Congress on this issue. So what's happening there?
Maureen Testoni (04:27)
Yes, we are seeing interest in Congress. I will add Congress has been pretty supportive of not moving to rebates. know, what you mentioned, the drug makers trying to do this unilaterally and Congress was involved then telling HRSA of their concern. And we're seeing it again now. So recently, almost hundred House members wrote a letter to the committee that's in charge of funding HRSA and other areas of the government.
asking the committee to block funding for any HRSA rebate model. So that's a big deal. That is not something that you typically see. They noted that 340B was intended to provide upfront savings, not delayed rebates. ⁓ And 340B Health and other hospitals and association played a big role in educating lawmakers and especially building support. We at 340B Health are really excited that we had our hospital members in
a couple of weeks ago just to visit the Hill and meet with their lawmakers. And there were actually more than 170 meetings with lawmakers.
David Glendinning (05:34)
Yes, it was great catching up with all those folks from our member hospitals in person. And we were so appreciative, of course, of the time they took to come into town and advocate in that way. Whether they were able to attend the fly in or not, what should hospitals do right now in response to these rebate discussions?
Maureen Testoni (05:52)
They should definitely submit comments to HRSA to oppose the rebate model. 3,4-B health members have access to a template which could make it potentially easier to put together comments. But the most important thing is to come up with estimates about what you expect the cost to be to the hospital, the administrative burden to the hospital, and the potential impact on your patients. It's really, really important.
And remember, they are estimates. There is absolutely no way you can know what the costs are gonna be because you have never had to do rebates. It stopped before you had to do it. You could, however, share your experience or think about this in terms of your experience when you were submitting, if you ever submitted data to ESP, because we hear lot of comments about ESP and how much they dropped pricing and how much, what poor customer service they had and how much you've had to hire people.
just to spend time on working with ESP. And that's just for your contract pharmacies. That's not for the millions more for your rebate, for your retail pharmacies, and for your medical pharmacies, for your mixed use pharmacies. So those are the things to think about ⁓ in terms of coming up with estimates.
David Glendinning (07:06)
Another issue you mentioned right at the top that's requiring significant focus from 340B Health and our member hospitals is drug company demands for claims data. So what are you hearing on that?
Maureen Testoni (07:18)
So David, that goes to Eli Lilly, Noah Nordic, and Exelixis, who have all announced plans to turn off 340B pricing for those providers that fail to share claims data with the companies. And again, we're talking about all of your claims data, right? We're not just talking about the drugs that are negotiated under Medicare.
We're talking about commercial, we're talking about whether they're paid by commercial or federal government or state government, and we're talking about all of the dispenses for all of their drugs. So it's many more drugs that would be covered under these policies, and it's going to include everything. So it's a really big deal that they are threatening to not give 340B pricing at all. And HRSA so far,
has not stepped in to perform any kind of oversight role. We and many others have written to HRSA about this issue. And unlike with rebate policies that came out from manufacturers over a year ago, we are not seeing HRSA do anything publicly about these manufacturers' efforts. Now, so far, the companies have not turned off pricing that we know of. So contact us if they have.
but we expect them to do that soon. They're already talking about it.
David Glendinning (08:47)
And of course, as you say, nobody seems to have lost pricing yet, at least as of when we're speaking today. I know sometimes these issues can change pretty quickly. So ⁓ I would encourage everybody to check the show notes, keep an eye on our alerts and our newsletter articles to see the latest on that. And again, with this issue, some of our listeners in the hospital community might be wondering what they should be doing about this. So what actions should hospitals be taking in response to these data demands?
Maureen Testoni (09:16)
So we've been urging our members to use our templates. We have templates, one that you can send to HRSA and one to send to your policymakers in Congress to basically say HRSA should be taking enforcement action against these companies. They should be providing what they are statutorily required to do, which is enforce the 340B rules. Also ask you to let us know, let 340B Health know.
if you actually see any loss of 340B pricing. And also you want to report that to HRSA. Again, we have a template for this, but there's also an Apex's oversight notice. And with the drop in pricing, you would want to explain how much you have lost and how much you're expecting to lose and any other harm that you have ⁓ with that.
HRSA definitely wants the details on how hospitals are affected, and they really want to see what that means for your patients. So the more that you can describe how the drop in pricing is either currently affecting or will be affecting your patients if this goes on, the better. HRSA really, really wants to see that information.
David Glendinning (10:26)
Let's
turn to the courts now if we can. Part of my job here is to draft alerts and bulletin articles for our members. So I know we've seen several important decisions recently. What stands out to you among those decisions?
Maureen Testoni (10:40)
These are huge. There were two really huge decisions. They've been a big part of the type of work that I have done at 340B Health since I arrived in 2011. So one of them pertains to the group purchasing organization Prohibition. This is part of the 340B statute that applies to hospitals that are in 340B under the category of DISH, children's or freestanding cancer hospitals.
And basically what the statute says is if you are in as one of those types of hospitals, you cannot use a GPO to purchase outpatient drugs. But for years and years, the way that was operated was that hospitals purchased everything at GPO initially and then any GPO drugs that were dispensed to outpatients that qualified for 340B.
would then be replenished with 340B drugs. So you really only purchased the GPO drug once and then replaced every other use of that drug with 340B for outpatients. However, in 2013, so this is well after the program began in 1992, HRSA came out with a policy that says you cannot use GPO for those initial purchases at all.
You had to buy drugs at their list price, otherwise known as wholesale acquisition cost or WAC. And that was just a game changer. And certainly initially hospitals paid much more for drugs because they were buying those initial purchases at WAC. So what happened in that lawsuit is that the court said,
HRSA, you didn't really explain why you decided to come out with this. Again, a lot like what I said earlier with the rebate pilot, you didn't explain enough. So we're going to vacate this policy because you just didn't meet the federal requirements for coming out with new restrictions on 340B, which is essentially what that worked out to be for covered entities. Now, this is not going to necessarily prevent HRSA from trying again and coming out with guidance that does really explain
why they wanted to make this change. And we have no idea because it was so recent, we have no idea whether they plan to do that. But for right now, that policy does not apply. However, HRSA still has time to appeal. So we'll have to see whether or not they decide to appeal that new decision. So then another big decision that came out just a few weeks ago that also applied to longstanding HRSA guidance.
was that the judge struck down HRSA's restriction on when you can start using 340B for your new child sites. Right now, they have these rules that can prevent you from using 340B up to maybe 23 months after you start your child site in 340B. And the judge said similarly, HRSA did not really explain.
what its goals were with this and especially how it would tie to anything in the 340B statute. The judge did not believe that this at all tied to anything in the 340B statute. There is no real description for how it could tie to something in the 340B statute. And so the judge said HRSA simply does not have the authority to restrict hospitals' ability to use 340B in these child site locations.
since the statute is very clear that Medicare hospitals qualify for 340B and under Medicare law, these child sites qualify immediately. So that is one where the judge really did look at the legality and I think it will be very challenging for HRSA to try to overcome this decision. But again, there is still some time left for appealing the decision. So we'll have to see where they go from here.
If they do not appeal, expect HRSA to release more guidance on what their expectations are regarding this decision.
David Glendinning (14:45)
Very interesting decisions and we'll have to see where those both go. What about the contract pharmacy issue at the state level? There's ongoing activity there both in terms of legislation and litigation, correct?
Maureen Testoni (14:59)
Yes, there is. so states keep enacting contract pharmacy protection laws, Washington state being the most recent state to do so. But one of the big developments is we have just recently seen for the first time that the federal government filed briefs in some of these lawsuits by drug makers and they are supporting the drug companies. So they are telling judges that they do not believe that states have the right
to protect contract pharmacy, that it's a 340B issue and it oversteps. And that's very concerning. Again, this has been going on for over two years and we have never ever seen the federal government weigh in in support of drug companies. And so they've clearly ⁓ changed their position with these state laws. It's possible that this could reflect a change in position overall and maybe that is supported by the fact that they seem
to be preparing to try to do rebates again, and they have not come out and tried to enforce against Lilly and Novo and Exelixis in terms of mandating claims data in return for 340B pricing. So it is definitely a concern, and I don't know how the judges will respond to a party coming in two years late to this issue. We also saw a third appeals court to consider ⁓ whether these
state 340 laws preempt the federal government's role. And the third appeals court, unlike the first two, said that they could be preempted by federal law. So that means we have two that say that there is no preemption and the states can go forward and one suggesting that there is a preemption. So what could happen here because of the split among these federal circuits is that it could be eventually appealed to the Supreme Court. The Supreme Court is much more likely to take a case where there
is a split so that they can come out with a decision and make the law uniform across the country.
David Glendinning (17:00)
We're also seeing, as you mentioned at the top of the show, changes tied to the Inflation Reduction Act, or IRA. You had mentioned the Medicare Maximum Fair Price. So we've now had a full quarter plus of these IRA price caps on selected Medicare drugs that took effect in January. How is that affecting 340B?
Maureen Testoni (17:21)
So we're hearing a lot from hospitals and we're checking in with hospitals to see whether or not they are receiving the appropriate refunds because that was one of the reasons given for HRSA's rebate model in the first place was to help the manufacturers know which drugs are 340B so that the Inflation Reduction Act could work. Manufacturers wouldn't be giving refunds on drugs they shouldn't and would be giving refunds on drugs they should. So we don't have the rebate plan.
And we are seeing some errors, but we're not seeing huge errors across hospitals. Hospitals are trying to work with the manufacturer's vendor to be able to fix these issues. And it may be that CMS is going to have to get involved. But for the most part, we are not seeing a huge number of problems across the board, even though we do not have the rebate program in place.
Another thing to keep in mind is we are also seeing manufacturers really reduce the list price of these drugs. And that really does affect, you know, 340B savings as well, because when they take it all the way down to the Medicare negotiated price, they don't have to be refunds to anybody. So if you use 340B for those drugs, you will not get a refund because the price is the MFP price. So basically,
you receive the difference between the 340B price and the MFP price and that's it. And then a number of other manufacturers had not reduced their price all the way down to the MFP price, but they have reduced it significantly so that 340B entities are receiving far fewer savings than they would otherwise receive. And I think about half the drugs affected by the MFP this year
are impacted by those significant price reductions. So it's definitely having an impact on 340B entities because these drugs are heavily used by Medicare patients. And now we're looking to 2027 and whether we will see similar types of cuts coming by January 1 of 2027.
David Glendinning (19:31)
Well, Maureen, so much to tackle and keep track of in the 340B world right now with all of these developments. What should hospitals be focusing on?
Maureen Testoni (19:40)
What's really important, I think, is to stay up to speed on these relevant developments, because they really are coming fast and furious. If you're a 340B member, we send out newsletters every week, along with sometimes several alerts, depending on how much is developing in the course of a week. Share any developments that impact your hospitals with 340B Health. We are working hard.
to stay abreast with what you're getting through the MFP process, what Lilly and Novo and Exelixis are doing, and we're also trying to get information out to you about the new court developments. But we would appreciate hearing from you about what you're hearing, for example, from Novo and Exelixis and Lilly in terms of if they're trying to shut off your pricing and other developments that come in. It really helps us stay abreast of things as well, which is really important for the
big advocacy role that we play with both Congress and the administration. And fundamentally, I think it's crucial that hospitals continue to highlight how 340B supports their patient care and community services. We urge our members to use our 340B impact profile that's on our website to help develop your narrative for what 340B allows you to do, and we strongly urge you to share those.
with your policymakers so that they can understand how vitally important 3-4-EB is for your community and its underserved patients.
David Glendinning (21:14)
And that will have to do it for now for this episode. But I'm sure we'll have you back on the show with more updates about all these issues and more. We very much appreciate you taking the time to give us a sit rep on everything that's happening. Thank you, Maureen.
Maureen Testoni (21:27)
You're more than welcome. Thank you for having me, David.
David Glendinning (21:29)
Our thanks again to Maureen Tastoni. We covered several news developments on which we go into much more detail in 340B Health member alerts and bulletin articles that you can find in the show notes. So be sure to check those out to learn more. We will be back in a few weeks with our next episode. In the meantime, as always, thanks for listening and be well.
Narration (21:53)
Thanks for listening to 340B Insight. Subscribe and rate us on Apple Podcasts, Google Play, Spotify, or wherever you listen to podcasts. For more information, visit our website at 340bpodcast.org. You can also follow us on Twitter @340BHealth and submit a question or idea to the show by emailing us at podcast@340bhealth.org.