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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 [00:00:04]:
Welcome to 340B Insight from 340B Health.
David Glendinning [00:00:12]:
Hello from Washington, D.C. and welcome back to 340B Insight, the premier podcast about the 340B drug pricing program. I'm your host, David Glendenning with 340B Health. Our guest today is 340B Health President and CEO Maureen Testoni. We speak with Maureen about once every quarter to let us know everything that's on her mind and on the minds of the broader 340B hospital community. So let's get right to it. Here's that conversation. I am speaking today, as I often do, with 340B Health President and CEO Maureen Testoni.
David Glendinning [00:00:50]:
Maureen, thank you as always for being here. Welcome back to 340B Insight.
Maureen Testoni [00:00:54]:
Thank you, David. I'm really happy to be here.
David Glendinning [00:00:57]:
We spoke to you last in December. So weather is a tad warmer than when it was then. So what has been going on with 340B since then?
Maureen Testoni [00:01:07]:
So it's been very busy and I feel like I say that almost every single time. But we're seeing a number of themes. The biggest one right now is the idea of changing how 340B operates, its operations and oversight, and that is really being led by the movement to turn 340B from an upfront discount program to a backend rebate program. There's still a lot of interest in contract pharmacy access, and we're also seeing interest on reporting by covered entities on how they're using their savings. There's also discussions about limiting how providers can use their 340B savings, as well as discussions at the federal level about what the Medicare reimbursement should be for 340B drugs.
David Glendinning [00:01:57]:
You mentioned rebates right at the top. That is a huge issue for 340B hospitals, and I'd like to start our discussion there. Where do things stand on that issue?
Maureen Testoni [00:02:08]:
340B Health, along with two of our member hospitals, Genesis Healthcare System in Ohio and UMass Memorial Medical center in Massachusetts, have intervened in the litigation that the manufacturers brought against HRSA. And they're trying to get a court to tell HRSA that HRSA does not have the legal authority to prevent them from moving forward with their rebate plans. And we just had our oral arguments in that case just a few days ago. And that really gave us an opportunity to present information about the harm to hospitals if the manufacturers were allowed to move forward. It allowed us to challenge the manufacturer's assertion of widespread non compliance in the issues of diversion and duplicate discounts. So we were Pleased that we had that opportunity because those were not necessarily arguments that were being made by the government in that case.
David Glendinning [00:03:06]:
Yes, many of us were listening in on the phone during those oral arguments. I know you were in the courtroom that day, so I'm interested in your on the ground perspective. How did you those arguments go? What did the judge overseeing the case have to say?
Maureen Testoni [00:03:20]:
So the judge had some strong views. She's a very impressive judge. She was clearly, you know, had read the briefs and had a really good understanding of the issue. So she was pretty tough with the manufacturer attorneys, you know, going back over and over to the potential devastating consequences that could befall hospitals if the manufacturers were allowed to just go ahead and impose rebates. She commented about one of the manufacturers saying, well, we promise that we will get rebates to hospitals within seven days. And she said, well, what happens if you don't, you know, there isn't any enforcement mechanism for hrsa. However, she was also pretty tough on the attorney for the Department of Health and Human Services, noting that, you know, government agencies have raised concerns about 340B compliance in the area of duplicate discount and, and diversion. And it didn't seem like the agency had really done very much in that area.
Maureen Testoni [00:04:17]:
And so she said it's no surprise that manufacturers would try to address some of these compliance issues through a rebate. She asked the attorney to give her an estimate for how long it would take for the agency to review these rebate cases.
David Glendinning [00:04:31]:
Okay, so we just got a filing back from the government a little bit more about their thinking in that area. So what does it say? What happens next?
Maureen Testoni [00:04:39]:
So what that document says is that the HHS is going to release guidance for stakeholders within the next 30 days. It specifically notes it's trying to address clearly the comments that the judge was making. It notes that rebates would be a significant change, and the implications of how that would work are not straightforward, and that the agency is also looking at their ongoing program integrity matters and what they're doing on that issue, as well as the deadlines coming up for the Inflation Reduction act for manufacturers to try to put it all together. So, David, that does not tell us that the rebate is going to move forward. It doesn't tell us that it's not going to move forward. But it does suggest that HHS is looking at these deadlines for the ira. The IRA is, you know, a separate law that's administered by the Centers for Medicare and Medicaid Services, and it will require manufacturers to have a lower price for 10 drugs in 2026. And because of the complicated type of administration for how that reduction would work, it's going to be coming back to entities as a rebate.
Maureen Testoni [00:05:57]:
There is concern about how 340B would fit within that. And that was certainly an issue that the manufacturers have been raising in court and that the judge was sympathetic to. We remain at 340p health very concerned and opposed to moving to a rebate program. So we will be working with our members and with HHS on that issue as we wait for the guidance to come out. The judge had told us in our session that she had hoped to come out with a decision in early May and that that was unlikely to happen. But she said it is one of her top two priorities. So we should expect a decision soon. Not clear to me after reading this notice whether she would come out with a decision before this guidance is released.
Maureen Testoni [00:06:44]:
But that is, even if she doesn't, I would expect a decision to come out potentially by June if she does decide to wait for that guidance to be released.
David Glendinning [00:06:54]:
Okay, so potentially a court decision by June and potentially more information from the government by June if we're looking at that 30 day clock. So earlier you mentioned potential, potential changes not just for 340B operations but for 340B oversight is one of the themes you've been noticing lately. So what are those oversight issues about?
Maureen Testoni [00:07:14]:
Well, I think the biggest one is information that we have seen from the Trump administration. It was a leaked copy of a budget proposal that stated that the Office of Pharmacy affairs, which is the office that oversees 340B within the health Resources and Services Administration, which is would be moved from HRSA to the Centers for Medicare and Medicaid Services. And that is a big concern for us. They have oversight over Medicare and Medicaid. Those are their two big charges. Both of those operate more like an insurance program. And 340B is not that. It's almost the opposite of that.
Maureen Testoni [00:07:56]:
It's intended to provide funding for providers that treat a lot of low income populations. We have seen CMS in the past, you know, propose cutting 340B reimbursement to hospitals and use the money elsewhere in Medicare. We have seen that their interest in and support of rebate types of structures since that's how they're moving forward with the IRA. So we are concerned the 30 plus years that OPA has been within HRSA and moving to CMS will be a big shift because it's just the goals and how it works are just so different and There really isn't that kind of, you know, decades of understanding that we saw within hrsa.
David Glendinning [00:08:42]:
I'm actually a little surprised it's taken us this long to get to contract pharmacy. That's usually one of the, you know, top one or two questions I ask you. So clearly a lot going on. So on contract pharmacy, what is the latest on that dispute?
Maureen Testoni [00:08:56]:
So we have seen contract pharmacy protections grow by four more states. So there's a total of 12 states now that have laws to allow the distribution of 340B drugs to contract pharmacies. The new states are Nebraska, North Dakota, South Dakota and Utah. And there's definitely possibilities that that list will grow this year. The drug makers immediately, you know, challenge every state law that is filed. So some of those decisions are reaching federal appeals courts. We have seen that in the vast majority of these cases, the decisions are supportive of the, of the state. However, there are a lot of decisions that just have not even been heard yet by the lower court, much less gone up to the appellate court.
Maureen Testoni [00:09:47]:
There were oral arguments recently in the fifth Circuit around some of these cases. So that will be a very important decision that we're waiting for.
David Glendinning [00:09:57]:
You said at the top of the program that reporting was a key 340B theme as well that you're seeing. How are states acting in that area?
Maureen Testoni [00:10:06]:
So reporting has definitely become a theme among these state legislators, at least 10 are considering requirements. And that's on top of three states that have already done so in the prior years. Idaho was the first state to actually pass legislation on this issue this year. These laws are definitely concerning to us because they are primarily being drafted in ways that we think kind of misdirect people on 340B. So they're asking for the acquisition cost of your 340B drugs, and then they're comparing that to what you got paid by insurance companies and other payers for those drugs, thereby making look like your savings is making much larger than what it really is. But then they're also asking for, you know, charity care payments, which we think also suggests that then 340B, that's its main purpose, which is not its main purpose or only purpose. They're also asking for payments that covered aids are making to contract pharmacies and to third party administrators, which we think is really outside the scope of 340B.
David Glendinning [00:11:18]:
And what are the proposed new limits on 340B that you talked about at the start? Perhaps we could start with what states might be trying to do in that area.
Maureen Testoni [00:11:27]:
This is another Thing that is pretty concerning. We're starting to see some state legislation attempting to define how hospitals must spend their savings. So it's basically a limit on how you can use your savings. We've seen them be introduced in three states so far this year. They can require things like you have to charge, you can't charge patients more than your actual acquisition cost for your 340B drugs. So basically you're passing on the savings. Other things that we're seeing is a mandate that some portion, a certain portion of your savings is used for direct patient care or for cost assistance. And we're also starting to hear that to some degree at the federal level.
David Glendinning [00:12:14]:
And on the federal level, those who follow our regular communications will know that Senator Bill Cassidy, a Republican from Louisiana, called for new 340B limits in a recent report. I'm assuming that's what you're talking about here.
Maureen Testoni [00:12:29]:
Yes, David, it is. So Senator Cassidy is the chairman of the Senate Health, Education, labor and Pensions Committee, the HELP Committee, and he's very well respected physician, very well respected legislator in Congress, and his committee has jurisdiction over 340B. He's had concerns about 340B for some time. And in fact, he launched an investigation in September 2023 focused on two hospitals, two health centers, two contract pharmacies, and two drug makers. So he's been conducting this investigation and he just came out with a report very recently. That's where we're also seeing some of these themes of 340B. It's clear how 340B is being used. It would be clearer if savings were devoted to direct patient care because then there it would be easier to know for sure that 340B was being used to directly help patients.
Maureen Testoni [00:13:32]:
We, you know, appreciate that the senator appears to be trying to find a way of addressing transparency and reporting in a way that might be easier than some other proposals that are asking you to, you know, report your charity care for every single service in every single location. But we're very concerned about this kind of model because 340B is used by hospitals for the services that they need to be able to provide care to low income patients and remain a strong healthcare provider for their community. So, for example, I've heard from members that are saying, you know, would this mean that we couldn't use 340B to build the behavioral health clinic that we built because they have such a dearth of behavioral healthcare services in their community? And we're getting those kinds of comments from hospitals all over the country. So we think it is important for hospitals to be able to use their dollars to address the needs in the community. And this would include direct patient care, but it could also include capital improvements. Remember that 340B hospitals have a much higher percentage of uninsured or publicly insured patients for whom they do not really receive reimbursement that covers the cost of care. Most of them tend to have far lower commercial payer. So they just don't have the revenue to be able to make all of these improvements and to be able to build additional structures or bring in the specialties that have been created over the past 30 plus years of 340B.
Maureen Testoni [00:15:03]:
So those are some of the conversations that we will certainly have with Senator Cassidy and with other policymakers. And I really do want to make clear, I'm not suggesting that this is a view that everybody in Congress has, or even the majority, because this is not really a majority view, but it does show that we still need to do, as a community, a lot more education and advocacy around 340B so that we don't wind up in a situation where our hands are tied in terms of being able to use 340B to best serve our patients.
David Glendinning [00:15:38]:
You had referenced past Medicare pay cuts that CMS put into place. Those, I believe were the 2018 cuts. And you had said at the top that new cuts might be on the table. So what are those about?
Maureen Testoni [00:15:51]:
So President Trump issued an executive order on drug prices within the past few weeks. And one of the provisions really directs CMS to essentially cut reimbursement for 340B hospitals. And it appears that what they are considering is really taking it potentially all the way down to actual acquisition cost, which is going to be a higher level of cuts than what hospitals saw when the administration started doing this back in 2018. At that time, there was litigation by hospitals, and it went all the way up to the Supreme Court, which ended up striking down the cuts because they were saying that CMS did not follow the proper procedures for doing so. The executive order is now, it was very clear you need to follow the proper procedures. You need to conduct a survey. But it was a survey was of actual acquisition cuts. And it was very clear that the goal was to reduce reimbursement to 340B.
Maureen Testoni [00:16:46]:
It also suggests that they would reduce that reimbursement in a budget neutral manner, which would mean that the cuts to 340B drugs, that revenue would go back into higher reimbursement for other Part B Medicare services and supplies.
David Glendinning [00:17:02]:
What Is Congress talking about on this? Are there 340B pay cuts that are, are in play on Capitol Hill right now?
Maureen Testoni [00:17:09]:
So I can't say for sure that cuts are in play. What I can say is that earlier this year there was, you know, a really long list of items, policy changes that Congress could consider in order to have the revenue to be able to do some of the other things that the Trump administration and the Republicans in Congress are trying to do, such as reducing taxes. And so we did see in that long list there was a comment about cutting reimbursement to 340B hospitals, which would bring in over $70 billion over a 10 year period. We have not heard that type of proposal would be included in the budget reconciliation package. But one of the concerns with Congress doing it is that that revenue is gone. You know, there's no way to bring it back. There's no way to go to the Supreme Court because it would basically be Congress changing the law and putting that money, using the money that that revenue to fund other initiatives.
David Glendinning [00:18:14]:
Well, Maureen, so much going on, you know, amid all of these themes that you're seeing in the 340B debate, what are the, what are the themes 340B Health has been using in response to some of these really potentially big changes for 340B?
Maureen Testoni [00:18:29]:
A big part of what we do is we educate, you know, elected officials and other policymakers focusing on how hospitals are using the, using 340B, how it's helping patients. And one of the ways that we do that is by putting out research reports and we recently put out two reports to outline some of the measurable ways that 3.4B hospitals are serving low income populations. So one of our report demonstrates that 340B hospitals are serving more areas with social and economic challenges. So their patients are coming from zip codes that report, you know, high poverty levels, for example, greater housing costs, even higher poverty level levels for children in those areas. We have another report out showing that 340B hospitals are spending more on to subsidize care for patients in need as a percent of the revenue. And we saw that 340B Hospital are spending almost 30% more of their net revenue than other providers, other non340b providers. And that gap between the 340b and the non340b has just grown over the past few years. So really trying to demonstrate some of the critical data points to show how vital 340B hospitals are for our nation's healthcare system.
Maureen Testoni [00:19:55]:
But what's really important that I'm sure you you are all picking up from this podcast already. Is advocacy how critical? Advocacy is how critical it is for covered entities to connect directly with their policymakers to fill out. We have something that we call a340B impact profile which is a one page document or that has where you can outline how as a 340B hospital, you're able to provide services to low income populations and to your community. We strongly encourage people to complete that or update it if they've already done it in the past or to use their own form that you know. Absolutely you can use your own form. But it's really important that that you are all up to date on how you can describe to your policymakers, you know, to the public, to your neighbor, you know what 340B means for you. And again, I am never talking about a dollar for dollar match. You know, this dollar came in and this is where it went to.
Maureen Testoni [00:20:55]:
But you should be able to Describe As a 340B hospital we are able to provide this kind of care or we built this behavioral health clinic because it was so needed in our community. That's the type of information that is really important to be able to share with your policymakers because it is a privilege that 340B exists and that manufacturers are required to contribute to it and contribute to health care for low income populations in this country.
David Glendinning [00:21:24]:
And as always, we'll put those reports and some of those other items of interest in the show notes so our listeners can access them. Maureen, it's always our privilege to have you here joining us. We always enjoy having you on the program. So thank you again for being here.
Maureen Testoni [00:21:39]:
Thank you so much. I really appreciate the opportunity to participate in this.
David Glendinning [00:21:43]:
We thank Maureen Testoni again for joining us. To recap a frenzied few months of 340B activity, please be sure to check out those show notes to read the report she mentioned toward the end to learn more about 340B impact profiles and access some member only content with further analysis of everything that's going on. We will be back in a few weeks with our next episode. In the meantime, as always, thanks for listening and be well.
Narration [00:22:14]:
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.