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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.
Speaker 1 (00:04):
Welcome to 340B Insight from 340B Health.
David Glendinning (00:13):
Hello from Washington DC and welcome back to 340B Insight, the podcast about the 340B Drug pricing program. I'm your host, David Glendinning with 340B Health.
(00:24):
Our guest today is Maureen Testoni, the president and CEO of 340B Health. As you know, we have Maureen on the show regularly to give her perspective on the latest developments in 340B, and to look at what might be coming over the horizon. 2024 has gotten off to a furious start in the world of 340B, so we have a lot to catch up on since we last had her in the podcast booth back in December. So here's that conversation.
(00:55):
I am here with Maureen Testoni, president and CEO of 340B Health. Maureen, welcome back to 340B Insight.
Maureen Testoni (01:03):
Thanks so much, David. It's great to be here.
David Glendinning (01:06):
So we last had you on the show back in December. I think we were all getting ready for the year-end holidays, and I think we are just past the peak of the cherry blossom bloom here in DC, so a few months have elapsed since then. What has been going on in the 340B world since the start of the new year?
Maureen Testoni (01:28):
Well, I would say there's been activity in really two big areas. We're seeing a lot of discussion of 340B on Capitol Hill. There's been legislation introduced, there's other legislation that is being worked on. We're also seeing a lot of activity in the states in terms of trying to protect 340B, and there's also been some significant court development, so it's been a very active period.
David Glendinning (01:54):
Let's start with the new federal legislation that you mentioned. Can you walk us through what that bill is?
Maureen Testoni (02:00):
Yes. This is legislation that was introduced by a long-time, 340B champion Congresswoman Doris Matsui, who's a Democrat from California. And she introduced a bill recently just in March, it's called the 340B Patients Act of 2024. And basically what that bill is intended to do is restore access for covered entities to 340B pricing through their community and specialty pharmacies that they contract with. It also goes a step further to protect access to pricing even outside of those pharmacies, so just for the regular covered entities by prohibiting manufacturers from imposing conditions on access to 340B.
(02:45):
And that's a growing trend that we're seeing where manufacturers are saying, "Well, you can only get 340B on my products if you use this specific wholesaler," which is very expensive for 340B entities to have to enter into separate legally binding contracts with different wholesalers. And then also suggesting that, "Well, we will give you your 340B discount, but only if you do it as a rebate." Banning those kinds of conditions on accessing 340B. It's also really important for all covered entities. It would enforce this by allowing HRSA to impose civil money penalties for the drug companies that would violate these prohibitions. We worked really closely with Congresswoman Matsui's office and her wonderful staff to develop the language around this bill. We strongly support it.
David Glendinning (03:34):
We've been talking about the contract pharmacy dispute now unfortunately for a few years on this podcast, so I know that new bill is welcome news for many of the covered entities out there that have been dealing with that. You did mention other legislation that might be in the works on Capitol Hill. Can you speak a little bit more about that?
Maureen Testoni (03:52):
Congresswoman Matsui's bill was introduced in the House, in the Senate we're seeing a group of six senators, bipartisan, three Democrats, three Republicans, that are working together to try to address contract pharmacy and other areas of 340B. They're trying to develop what they call a compromise legislation on 340B that would help covered entities but also address some of the restrictions or try to put something out that a lot of the stakeholders in 340B could support. And so they came out recently with legislative language to implement some of those provisions, and they also indicated areas where even though they have legislative language, they would be open to amending it depending on what kind of feedback they got. Certainly 340B Health, but a lot of other organizations, the 340B provider organizations, drug companies and pharma as well as hospitals and other individual covered entities have submitted comment letters to the senators.
(04:56):
We are very supportive of the provisions proposed in the legislation that would end restrictions on access to 340B discounts at community and specialty pharmacies, and also very supportive of restrictions in the bill that would ban PBMs and payers from paying 340B entities less than what they paid in non-340B entities. We do, however, have concerns about some of the provisions in the bill that would really narrow the scope of 340B by limiting the types and number of patients that 340B could be used for, especially by hospitals. Our provisions in the bill that apply to offsite locations that really limit the scope of patient definition, if those were expanded to apply to the entire hospital, that could really be devastating for many of the hospitals that participate in 340B. So those are areas of concern for us.
(06:02):
It's a really large piece of legislative language that has a lot of different provisions in it. It is important to balance what we think might be the impact of all the various provisions in there. We're also strongly urging that the senators close the orphan drug loophole that affects about half the hospitals in 340B. We're talking about critical access hospitals mostly. They are a large, large number of the hospitals in 340B. And we're just really glad that the senators are giving everybody the opportunity to weigh in on these various proposals and we're really pleased to see their level of interest in 340B.
David Glendinning (06:48):
I know those comment letters, putting that together is a lot of work for our policy staff, as I imagine it is for the other stakeholders who do weigh in. Are there additional advocacy efforts that 340B Health is taking on these issues, this pending senate draft legislation and the new House bill that you mentioned?
Maureen Testoni (07:08):
It's very important to be constantly educating policymakers on the role that 340B plays for our hospital members and for the underserved patients that they're providing services to. And certainly at 340B Health we engage with policymakers all the time and we can share national data of 340B, like the fact that 340B hospitals are responsible for 77% of Medicaid care in this country. But what's really, really vital is for hospitals to engage directly with their policymakers. That is what can really turn the corner of 340B is when we see hospitals go in and really describe what their savings are from 340B and here's how they use it, and here's what could happen in that member's district if 340B were to be seriously curtailed or go away entirely. We provide a lot of information to our members to help them to engage with policymakers.
(08:08):
And we also host twice a year an advocacy day where we take our members up to visit with their policymakers. And we just finished one recently and we had a day of education around 340, updates on all the new things that are going on in the 340B space. And then this next day we took our hospital members up and they met with hundreds of offices on Capitol Hill where they were able to really talk about Congresswoman Matsui's bill and really encourage the members of Congress to cosponsor that legislation, and then they could also talk about the Senate proposal and talk about the provisions they support or provisions they have concerns about. We're also seeing by a partnership that has formed over the past year between the drug industry lobby pharma and the Association for Community Health Centers where they have joined together and they have been advocating on the Hill for a number of measures that would really, really shrink hospital's participation in 340B. And so that's another issue that members were discussing with their policymakers.
David Glendinning (09:27):
Okay. So some of that old-fashioned shoe leather advocacy going on. You mentioned the Pharma-MAC Alliance. As of right now, when I'm speaking to you, I do not believe there's any actual legislative language out from that alliance, but that could always change, of course. What would a Pharma-backed bill, if it were to follow these principles they have put out mean for 340B if Congress were to consider it.
Maureen Testoni (09:55):
So there are the principles that they put out, but they have also actually shared with a member of Congress a number of months ago, a very detailed description of the kinds of restrictions that they would like to impose on hospitals. And that's really where our concern is that the principles don't really go into that level of detail, but since we have seen what language that they have shared with members of Congress, and we also shared it with our members as well, and what we're seeing looks like it would really dramatically decrease the number of hospitals in 340B by changing hospital eligibility requirements. It would really restrict hospital access to 340B for their community and specialty pharmacies, just in a number of ways.
(10:40):
We understand where this is coming from because certainly we've spoken to the association and they've also publicly said this, their members are really getting hit hard by the restrictions that manufacturers... We totally understand that, we believe that these restrictions can represent over $8 billion of 340 revenue for hospitals. So we're very concerned about that as well. But we don't believe that shrinking the number of providers in 340B is going to be the answer for hospitals, but really for any organization, any type of provider organization that is in 340B. We believe that Congress needs to make clear that this is not acceptable by passing Congresswoman Matsui's legislation.
David Glendinning (11:28):
You mentioned at the top of the program, Maureen, that there have been another series of developments in the states and the courts. So where do things stand with those states and courts?
Maureen Testoni (11:41):
This has been a very fun development. So just as background, both Arkansas and Louisiana passed legislation a while ago to reinstate access to 340 discounts at specialty and community pharmacies, and that was immediately challenged by pharma and by various drug companies, and there were wins at the state level in Arkansas, which were then immediately appealed to the federal appellate court in the Eighth Circuit.
(12:11):
And we recently had a major ruling by the Eighth Circuit confirming the lower court's decision saying that the Arkansas law is valid, it can go forward. It is not preempted by federal law. So really thrilled about that. This decision, like any, can be appealed to the Supreme Court. Many, many decisions are, but the Supreme Court actually takes and listens to very few. We also then saw other drug companies file lawsuits to try to use different legal arguments than were already heard by the Eighth Circuit. But nevertheless, this is a very influential decision. The judges on the Eighth Circuit noted how important these pharmacies are for delivering 340B drugs, and it basically bans drug companies from interfering with these contractual arrangements between the covered entities and these community and specialty pharmacies. So that was a really great outcome.
David Glendinning (13:11):
Is there any significance to that decision that may go beyond the Arkansas law?
Maureen Testoni (13:17):
Well, the law, because it's coming from the Eighth Circuit, which basically controls a region of states, it has implications for all of those states. This decision applies specifically to the Arkansas law, but if other states within that region have similar laws, that's going to apply to those laws as well. And some of the other states in the region include Iowa, Minnesota, Nebraska, North Dakota, and South Dakota. If this is coming up in other circuits, which it will be, the Eighth Circuit reasoning will definitely be reviewed by the judges in the other circuit. It doesn't mean they have to follow the Eighth Circuit, but it definitely sets a standard that will have some influence over other courts.
(14:07):
Another way though that it has influence is there are a lot of states that have been interested in pursuing similar legislation to what has already passed in Arkansas and Louisiana. But one of the ways that this has been sort of stymied in some states is pharma and others will say, "Well, you should wait. Why do this now? We're suing, let's see what all the decisions are." But now that this decision has come out and has been so supportive of the state legislation, it helps remove that as a barrier. With this Eighth Circuit decision, a number of the drug companies really lifted the restrictions in Arkansas, so it really does have an immediate impact for covered entities. So I think those together just has a really big influence in terms of supporting the state efforts to move in that direction.
David Glendinning (14:58):
And we have mentioned several times on the show previously that a number of states were considering these contract pharmacy protections during their current legislative sessions, beyond Arkansas and Louisiana that have already passed laws. So any new news from that front?
Maureen Testoni (15:16):
Well, yes. As a matter of fact, West Virginia became the third state where the governor signed into law legislation to ban these restrictions, and the West Virginia statute is very similar to the statute that was enacted in Louisiana. So we were again, really pleased to see that. We've seen in other states that legislation has moved out of one or both legislative bodies, so we're hopeful that there will be more laws signed into law later this year. Certainly hospitals are playing a really big role in moving this legislation, that the hospitals of West Virginia were very, very involved with advocating for the law there. I believe there's more than 20 states were legislation has already been introduced. And David, I think we've talked about this before, but 340B Health, we try to work as closely as possible with the states that are active on this. We have a lot of information on our website about this, and we work directly with the hospitals or their state hospital associations as well in the states that are working on this.
David Glendinning (16:26):
All right, so we'll stay vigilant on the state houses. On the court side, is there any other court activity that our listeners should be aware of?
Maureen Testoni (16:34):
We are seeing a lawsuit that was filed by about 40 hospitals that was challenging a policy imposed by the government that has been imposed since 1994 that actually restricts access to 340B for new hospital locations. It's a very technical requirement where the government says that any new location has to appear on a filed Medicare cost report before it can access 340B drugs.
(17:06):
So what this lawsuit is doing is it's arguing that HRSA just really does not have the authority to restrict access to 340B for these new locations. HRSA has been arguing that the reason they do this is it helps them to make sure that these locations really are fully integrated with the hospital before they allow them to access 340B. However, there are many, many ways that the government can ensure compliance with that rule other than by restricting access to 340B. And so 340B has filed a friend of the court brief supporting the fact that HRSA really has no basis to restrict access to 340B for these new locations. It's important to understand that the restrictions can apply for up to 22 months and that that can be worth a lot of money for those hospitals and it can really limit their ability to provide services in those new locations. So we're happy to file that friend of the court brief and it will be interesting to see how this all works out through the court.
David Glendinning (18:25):
What else are you seeing coming ahead in the coming weeks and months for the 340B community?
Maureen Testoni (18:32):
Well, there are so many things. We have these decisions that we're still waiting to get answers from Federal Appeals Court relating to specialty and community pharmacies. We have what will be the outcome with these [inaudible 00:18:46] and all of this future legislation. But one of the things that I'm focusing on right now for our members is our upcoming 340B Coalition Summer Conference that will be held July 8th through the 10th here in Washington DC. We were thrilled that we just announced that we will have the Deputy HRSA Administrator present at our conference, Jordan Grossman, who will let us know and talk about what the administration foresees for 340B and what their plans are. So very excited about that.
(19:22):
This coalition conference is for all types of covered entities, so all the different types of grantees, community health centers, Ryan White Clinics, STD clinics, as well as hospitals, and it has a lot of information about how to run your 340B program in a compliant manner. Optimizing your 340B program, making sure you're using it in ways that you can use it. You will hear from other employees of 340B covered entities who will talk about their real life examples of what they're doing in their facilities and how to make 340B work. We'll be talking more about these legislative efforts on the Hill. We'll be talking about what's going on with the litigation. And most of all, you'll also have lots of opportunities to network with your peers to also meet with 340B vendors that help you to run your program. Really looking forward to seeing people at that event in early July.
David Glendinning (20:22):
Well, we will be there as well interviewing panelists for this podcast. Maureen, as always, very much appreciate your time and your expertise and I know our listeners do as well. So thank you for being here.
Maureen Testoni (20:34):
Great. Thank you very much, David.
David Glendinning (20:36):
Our thanks again to Maureen Testoni for filling us in on what has been a busy quarter for 340B. Please be sure to visit the show notes to register for the 340B Coalition's Summer Conference in July that Maureen mentioned. Early sign-up gives you valuable discounts on the registration fees, and like Maureen, we look forward to seeing you in National Harbor in July. We will be back in a few weeks with our next episode. In the meantime, as always, thanks for listening and be well.
Speaker 1 (21:15):
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 340bhealth.org.org. You can also follow us on Twitter at 340B Health, and submit a question or idea to the show by emailing us at podcast@340bhealth.org.