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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.
Intro [00:00:00]:
Welcome to 340B Insight from 340B Health.
David Glendinning [00:01:06]:
Hello from Washington, D.C. and welcome back to 340B Insight, the podcast about the 340B drug pricing program. I'm your host David Glendenning with 340B Health. Our guest for this episode is Danny Ackert with the Minnesota Hospital Association. Last November, Minnesota was the first state to release an annual report on 340B drug purchase costs and the payments that covered entities in the state received for them. We wanted to speak with Danny about that landmark report and what the 340B community should know about it. But first, let's do a quick recap of some of the Latest news about 340B foreign 19th Congress has begun and 340B is already on the agenda on Capitol Hill.
David Glendinning [00:01:07]:
Republicans in the U. S. House of Representatives are considering cutting the amounts Medicare reimburses hospitals for 340B drugs by tens of billions of dollars to help pay for an extension of tax cuts and new spending on border security and other priorities. Congressman Buddy Carter is the new chairman of the House Energy and Commerce Health Subcommittee, which has jurisdiction over 340B. He has said 340B reform is among the list of options lawmakers are considering for federal spending cuts. A recent Congressional Budget Office report stated that cutting Medicare Part B payment rates to hospitals for 340B drugs to average sales price minus 22.5% would reduce hospital pay by an estimated $73.5 billion over 10 years. 340B Health members can read more about these congressional 340B discussions by visiting the show Notes and now for our feature interview with the Minnesota Hospital Association's Danny Ackert. Danny is a repeat guest of the podcast.
David Glendinning [00:02:19]:
We last had him on the show in early 2024 when Minnesota hospitals were preparing to submit Data for the first in the nation 340B report. Now that the first of these annual reports is out for everyone to read, we wanted to get the 340B Hospital perspective on what it says and how it might influence discussions about reporting in other states. Here's that conversation. Today I am speaking with Danny Ackert, the Director of State Government Relations for the Minnesota Hospital Association. Danny, we don't often get to say this with our guests, but welcome back to 340B Insight.
Danny Ackert [00:02:57]:
Good morning, David. Good morning everyone. I'm glad to be back. I think the saying goes, "do one podcast, have a good time to do two podcasts, become a podcaster, and then do three podcasts and I expect to call from a production company to start my own." So we'll go from there.
David Glendinning [00:03:15]:
Absolutely. Well, let's get started on the second one of those. So we are here to speak about Minnesota's 340B reporting requirement. And we last spoke on the topic just about a year ago at the 340B Coalition Winter Conference in San Diego. I think both of us were a little bit warmer that day. We do have a link to that episode in the show notes, and I encourage anyone who didn't hear it at the time to go listen to it and get up to speed. But for those who just need a refresher, please remind us what the Minnesota 340B reporting law established.
Danny Ackert [00:03:50]:
Yeah. So at the end of the Minnesota's state legislature in 2023, law was passed. At the very, very dead end of session, this law was passed that essentially required all covered entities in the state to provide a litany of information that allows the Department of Health in Minnesota to essentially take an aggregated acquisition cost and get an aggregated reimbursement and then subtract the cost and rebarcement and come up with a net savings. Hospitals in particular had a number of additional reporting requirements like listing out the top 50 NDC codes within the 340B program. So new law had been, has actually been passed in 2024 that added some things, made some adjustments. There's been some formal guidance released. But essentially the main target of the reporting is to uncover their word, not mine, the unknown amount of savings that in Minnesota that 340B generates annually.
David Glendinning [00:04:51]:
Okay. And I think you had said the last time that you were getting ready, hospitals were getting ready to do their annual submissions, which I believe began in, in April 1st of last year. And then of course the first state report came out in late November. I think it came out just before Thanksgiving. So what did that first report say?
Danny Ackert [00:05:12]:
There were many new figures in there. A lot received the most attention. Obviously the top level number, which the report concluded there was roughly $630 million in net savings. Now the report talks, uses a different word, talks about revenues. But that was $630 million in 2023. They did go to some length to discuss the fact that administered drugs are not included. And I think we can talk about that in a little bit. Hospitals made up the largest percentage of that figure, roughly 80%.
Danny Ackert [00:05:48]:
There's focus on the costs of actually participating in 340B, whether or not you're using a contract pharmacy, whether or not you're using a third Party administrator, how you associate costs the program. So the total costs that were associated with contract pharmacies and administrators specific to 340B was around $120 million in 2023.
David Glendinning [00:06:13]:
Okay, so you mentioned a $630 million figure. I believe that's what covered entities received in additional payments for 340B drugs than they paid for them in 2023. It seems like that might be considered a pretty large dollar figure. How has your association responded to that 340b purchase data figure?
Danny Ackert [00:06:36]:
We created a, you know, a fact check sheet that lists out, you know, what the report says and actually, you know, grounding readers in what is actually the more day to day actual reality of the program and how it supports safety net providers, our hospitals across the state. The report claims that this program generates hundreds of millions of dollars. And it really makes it sound like it's new money coming from somewhere else and that someone's paying for it. And we can get into that, I guess, but like it's a discount program. And so the cost of drugs for safety net providers is lower and so it's savings, it's not revenue. And so there's differences and distinctions between those two words that do matter, especially at scale of hundreds of millions of dollars. Right. So $630 million is a lot of money asked.
Danny Ackert [00:07:29]:
It's incredibly important in Minnesota for covered entities. But the overall spend on the delivery of care in Minnesota, you know, the total budget for hospitals or the total spend, it just dwarfs that number by multiple factors and not just at hospitals, but other covered entities. So we had to really kind of talk about how the overall drug spending, overall cost of care is far larger than, than 340B and that 340B remains a critical aspect to how to support it all. Another misconception that or mischaracterization that we had to address is just the diff, the comparison of costs, right? Reimbursement, unless there's discriminatory practices occurring, would remain the same with or without 340B. And so one, one aspect that is very nuanced but very real in 340B is the difference between the 340B discount price and what the actual price would have been without 340B versus the reimbursement that would have stayed the same regardless of whether or not that discount existed. So the savings that the report or the revenue that the report says, and we definitely challenge that word again, and we'll always challenge that word, is based on the difference between the reimbursement versus the actual acquisition costs.
David Glendinning [00:08:52]:
Well, thank you for establishing that important context. You'd mentioned a little bit more about the size of this drug discount number being dwarfed by the money that's going out the door in the way of health delivery costs. Can you speak a little bit more about those costs for Minnesota hospitals?
Danny Ackert [00:09:09]:
Yeah. So, you know, Even if it's 630 million, again, it's a fraction of what hospitals spend to deliver care. You know, in hospitals in, you know, in Minnesota, we're talking upwards of 15 billion doll, talking about, you know, a huge amount of money that is directly related to patient care. And then when you look at what the program and, you know, what 340D's intent is and how it serves cover entities not only across Minnesota, but across the nation, you look at what public government payers are offering as reimbursement rates. And in Minnesota, we're talking about an annual $1 billion shortfall in Medicare, roughly an $800 million shortfall on Medicaid. So we're talking about a $1.8 billion, you know, underpayment from government, which is kind of one of the reasons why 340B exists to stretch scarce federal resources. The mischaracterization is that this is just fresh new money coming in that is unaccounted for. It's like, well, we'll start with the Medicaid and Medicare underpayments, and we'll dig out of that.
Danny Ackert [00:10:17]:
We'll start digging out of that hole. When you just line up these numbers, the math, 340B is extremely important, but it is. It's one drop in the bucket in terms of how financing and the cost of care is dealt with and administered and, you know, dispensed with at hospitals, not only talking about charity care, but writing off bad debt. These are all types of benefits that hospitals are offering patients offering their communities. So another thing that, you know, is uniquely missing, that was what we would actually want in the report and actually offered language to include in the report is what do covered entities in Minnesota do with the money? So, again, the 630 million is, you know, put on an island in this report. It doesn't have any context to it. Now, our members and I know that covered entities in the state have formed a large 340B coalition. So they are getting together, creating impact statements.
Danny Ackert [00:11:16]:
We're sharing kind of joint messaging and really zeroing the distance between the figures in the report and the patients that are walking away from covered entities with the care that they need. And outpatient drugs that they need. Maine is referenced heavily in some of these stakeholder calls because Maine has a reporting requirement that simply asks hospitals to tell the state what they do with the money. And that's basically what we offered and wanted as well. Unfortunately, the nature of this program in Minnesota, what led legislators and others to say we're not going to put that in there because hospitals would tell us what they wanted us to hear anyways. But it is misleading to say that this is just revenue and it just goes to hospitals and it just doesn't do anything.
David Glendinning [00:12:03]:
Clearly some dollars coming in the door from 340B, but much more going out in the way of healthcare delivery costs. What about the contract pharmacy and the third party administrative figures? What does that data tell us?
Danny Ackert [00:12:16]:
So we do have a number and it's roughly $120 million. Again, that's cost associated specifically with 340B. You know, the costs are real. Like this program is not free. I've walked through some of the agreements. I've helped when I once worked with the federally qualified health centers, helped administrators do the application and go through that process. And it's not easy. And then you have to actually get to the pharmacy side.
Danny Ackert [00:12:43]:
And then if there's contract pharmacies involved, there's a lot of T's to cross and I's to do and a lot of boxes to check and a lot of ongoing compliance and maintenance. So the costs are a necessary feature of this. And for some, you know, if you didn't have the ability to use a contract pharmacy, if you didn't have the available tpa, you aren't able to hire an in person, you know, an on staff person to do this, which would be more costly than the TPA or, and, or the contract pharmacy, you know, retail pharmacy, which I am not very dangerous with, is, I know, very expensive and not, and not easy to do. That's why contract pharmacies exist. So rural hospitals specifically in Minnesota need TPAs just to participate in the 340B program. But again, they need 340B to keep their emergency room running or their, their front door open. And so, you know, the 120 billion, and the report kind of points to it as saying this is an example that there are middlemen, there are hidden costs in all of these. They kind of put that figure out there as if if 340B were not to exist, those costs were not to exist.
Danny Ackert [00:13:53]:
Right. We're still serving patients. That cost is associated with delivering pharmaceutical products to patients, outpatient drugs to patients. And so that patient still would need that drug with or without 340. So there would still be costs.
David Glendinning [00:14:07]:
You represent hospitals in Minnesota and are always looking out for how public policy decisions affect them. How has the data collection and submission process gone for Minnesota hospitals? In this first round?
Danny Ackert [00:14:22]:
There have been a lot of questions and a lot of answers, and I want to give credit to the Department of Health here in Minnesota that they have been very active partners in asking questions about data, continuing to be engaged in what I think they would characterize as the creating the best data available on this. We do appreciate all of that, but it is the first time that this has been done. And it's pharmacy, as I learn every day, is far more complicated than I ever thought. And that's just because, especially for hospitals, what our patients need is extremely complicated. And so to ask our members to kind of go through this process and put their best foot forward is priority for them. They're going, we are remaining compliant. April 1, 2025 is right here on our doorstep. We're going to get, we're getting ready for our next round of reporting.
Danny Ackert [00:15:15]:
So we just have some internal conversations, more questions. And this program's so valuable to us that we are, you know, there's, we have nothing to hide. We just have some challenges in getting this data.
David Glendinning [00:15:25]:
Yeah, it sounds like a lot of work for hospitals and probably a lot of work for the department dealing with all these data submissions and preparing the report. At the end of the day, what is State hoping to accomplish with these annual reports based on your perspective?
Danny Ackert [00:15:41]:
I think that the way that this started, there was questions about what the actual impact of this program is relative to some of the programs we've seen California, New York and other states pursue, which is that prescription drug purchasing program, moving all Medicaid pharmacy benefits from managed care to fee for service. We anticipate that to be something that is pursued again, which would, you know, again, as we saw in California, New York, create problems for covered entities and roll back the 340B program, especially when it's needed so so much. So this report now makes it clear what that number is in Medicaid here in Minnesota, which is around $86 million. Other than that, you know, I think that there's just more intrigue from a lot of people outside of Minnesota. This is that, you know, the first in the nation. So this can, and we expect this to be referenced in Congress. We expect this to be referenced in many other areas. So we're kind of waiting, we're kind of in standby, we're postured to respond to whatever kind of crops up on 340B, because we anticipate that to occur.
David Glendinning [00:16:50]:
No matter what you had mentioned earlier, you just touched on the fact that the state seemed very interested in administered drugs. I'm assuming that's physician administered, 340B drugs. Can you speak a little bit more about that focus?
Danny Ackert [00:17:03]:
Administer drugs. And I apologize to all the pharmacists who might listen to this. You know, they're part of a clinician visit. So it's. There's bundled costs, there's different aspects of that visit that get bundled together and then they're billed together and then they're reimbursed together. And so when you look at what is all in there as a line of costs associated with the patient care, the reimbursement doesn't necessarily say, here's what we get for the line one, here's what you get for line two. It's just a bundled reimbursement. And so the original reporting language that was passed did not reference explicitly administered drugs.
Danny Ackert [00:17:39]:
We now have administered drugs explicitly in statute. So the task set before us is to essentially create some sort of standardized, accurate process with some precision across the state to inform covered entities on how to actually pull out reimbursement specifically for the pharmaceutical product from a bundled reimbursement. But if you read the report, and again, please, I'll read the report, you'll see that they definitely point to administered drugs as being this kind of lurking, you know, looming, like, well, the $630 million is nothing. When we get. It's going to be more like 2 billion with the administered drugs. And, you know, I have to just kind of point out that that's another mischaracterization. It's like, well, administered drugs can sometimes be cancer drugs. And so like, the savings on that are going to be at scale larger because we're talking about an expensive drug for an incredibly important patient visit.
Danny Ackert [00:18:39]:
Like, yeah, it is. But we're also going to be adding these extremely expensive drugs that if we had to pay full freight for, would make it really difficult to afford, you know, the providers that actually provide that care. Right. There are some hospitals in the state that provide cancer care that is completely funded by 340B. And if that 340B were to go away. Right. You couldn't afford that staff time to provide that care.
David Glendinning [00:19:05]:
It seems like the constant struggle of providing more context and setting the stage correctly. How else is your association advocating to the state for how it should proceed with future reports.
Danny Ackert [00:19:19]:
The first report is out there. The next one's going to come this year. And as more legislators, more people within the executive branch here in Minnesota are aware of this, it's spurring more conversations about, well, what does this mean? Is that money that we could maybe, you know, like, what if we strike a deal with you, can we take some of that and then put it over here? You know, we're going to remain against that because it's not how the program works. Again, we're not getting a check from anybody. There isn't like a pot of money. It's a discount program. But it's always a great opportunity. And our members have always shown up to every stakeholder that they have to say, here's why this matters.
Danny Ackert [00:20:00]:
And again, I'm going to reference the 340B coalition, which is the full group of covered entities in the state that have said, yeah, we're going to band together on this because we see some federal turbulence ahead, we see some more state turbulence ahead. And you can't really get to a better place in health care if you're going to just allow this to just kind of blink off. Having 340B, having it get damaged or reduced in some significant way is not going to really be wind at your back in achieving more health equity or better outcomes across the state of Minnesota, across the country. So this report's been in some ways a challenge, but it's also an incredible opportunity that we've used to talk about the program more and new ears, new eyes on this is just people that we're going to convert to supporters of 340B and realize that, well, when they go to the hospital or when they need, you know, an emergency room, that emergency room is brought to you in part by 340B. And if not, you know, you have, you have some bigger questions that are scarier to talk about how maybe some changes would occur and how care is delivered in Minnesota and again across the United States.
David Glendinning [00:21:10]:
Yeah, and I want to look, you know, beyond the borders of your state. You mentioned Minnesota is the first state to mandate three, four to be reporting. But you also alluded to the fact that there's a mandate in Maine. We also also have one in Washington state and certainly other states are considering such laws. So for hospitals in those states that are considering them, what do you suggest they, what do you suggest they do about those discussions?
Danny Ackert [00:21:37]:
Before this language was coming up, we were, we were working with our members to try to have them create the capacity to do something like this report was going to require them to do anyways and say, you know, we can do this without a mandate. And I think, you know, the, the cat's out of the bag. I mean our, our report is more extensive than any other state's reporting. There's details in there and I would just encourage, use this as a, a model to kind of ask questions of yourself and say, can we answer this question like what from this report should we be adding to our talking points? What from this report should we adding to our one pager or how we talk to our members of Congress, our state legislators, our business partners, our stakeholders, our community, you know, partners, et cetera. So because 340B is so important to anything that hospitals participate in, you know, take this report, ask some of the questions of yourself, talk to your hospital association, reach out to the Minnesota Hospital association if you want. I'm always happy to talk about 340B. You know, I think that you could come away with some good, some good information that helps you talk about this.
David Glendinning [00:22:43]:
Danny, I very much appreciate the update on such an important 340B state policy issue. I think I mentioned in our last interview that you seem to be on the frontier of 340B reporting in Minnesota. So I know those in other states are very interested in your experience and your example. Thank you for taking the time to come back and let us know how things are going.
Danny Ackert [00:23:06]:
We're the North Star State, so we can be the North Star on 340B for everyone. Whether or not that's a good thing or a bad thing. I guess we're now in the constellation of 340B permanently, as you know, the first in the nation to do this. It's great. It's going to be great.
David Glendinning [00:23:21]:
Our thanks again to Danny Eckert for being our north star on the 340B state reporting issue. Be sure to visit the Show Notes to read the full report so you can better understand all the context that he provided us. And if your state is Getting started with 340B reporting or debating it in your legislature, we would love to hear from you. You can contact us at podcastree40bhealth.org More in depth conversations about the types of key 340B issues happen all the time at the 340B Coalition conferences. So if you've not already secured your spot at the upcoming Winter Conference occurring February 24th to 26th in San Diego, please do so now by visiting 340bwinterconference.org we wish you a very happy New Year as we welcome you back to a new full season of 340B insights. We will be back in a few weeks with our next episode. As always, thanks for listening and be well. Thanks for listening to 340B Insight.
David Glendinning [00:24:25]:
Subscribe and rate us on Apple Podcasts, Google Play, Spotify, or wherever you listen to podcasts. For more information, visit our website@340bpodcast.org. You can also follow us on Twitter @340Bhealth and submit a question or idea to the show by emailing us at podcast40bhealth.org.