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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 (00:12):
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. Our guest today is Amanda Sellers Smith, legal counsel at 340B Health. One important role that Amanda plays to help support our member hospitals and health systems involves keeping close tabs on 340B activity at the state level. We have had several important developments in that area in the recent weeks and months, and we wanted to get the latest updates from our resident expert on the states. But first, let's do a quick recap of some of the other latest news about 340B.
(01:03):
Bristol Myers Squibb recently announced it would be making its 340B contract pharmacy policy more restrictive. Numerous other companies have changed their policies to impose more limits or conditions on access to 340B pricing. But the BMS change also attempts to limit certain drug distribution channels that 340B hospitals use. And this is the first time that a drug maker has taken such a step. 340B Health members can read our analysis of this unprecedented policy change by visiting the show notes.
(01:35):
The Health Resources and Services Administration recently released additional reports from its 340B audits of drug companies for fiscal year 2023. HRSA audits 200 covered entities and 5 drug makers per year for compliance with 340B rules. The agency now has released results for four of those five drug maker audits, and all four companies received findings for overcharging covered entities. HRSA has directed the drug makers to refund affected entities for the overcharges and to submit corrective action plans designed to prevent future pricing violations. You can find a link to those audit findings in the show notes.
(02:23):
And now for our feature interview with Amanda Sellers Smith. 2023 has been another busy year for state activities on 340B with several noteworthy legislative developments at state houses and several important lawsuits that are pending in the courts. Our own, Monica Forero recently sat down with Amanda to hear all about it. Here's that conversation.
Monica Forero (02:45):
This is Monica Forero, Communications Coordinator at 340B Health. I'm here with Amanda Smith. Amanda, how are you doing today?
Amanda Sellers Smith (02:54):
Hi, Monica. I'm doing well. Thanks for having me. I'm looking forward to our conversation.
Monica Forero (02:59):
Thank you, Amanda. And of course there is a lot going on in the states regarding 340B. We have not had you on the show yet in 2023 to talk about some of the developments in the states. So what has been going on in the state level for 340B this year?
Amanda Sellers Smith (03:16):
So over half of states have now enacted some level of 340B non-discrimination laws, and our most recent one was California had recently enacted and the governor had signed a non-discrimination law in that state. I think our current count is at 29 states with this type of law on the books. Those non-discrimination laws I talk about are mostly targeting PBM activity. But we have two states including a new state that is adding 340B drug company restrictions at the state level. So that's been another exciting development. Not everything has been good news in 2023 when it comes to 340B laws enacted at the state level. We have a few states that enacted some reporting requirements for 340B providers.
Monica Forero (04:02):
Well, I'm glad to hear that there have been some positive developments. Let's start with 340B non-discrimination laws. Would you please remind us why these are so important?
Amanda Sellers Smith (04:13):
Absolutely. The pharmacy benefit managers will sometimes enact policies where they'll pay providers less for drugs that were purchased at the 340B price or they'll just pay providers less based on 340B participation. We oppose these types of policies because what they really end up doing is transferring that 340B benefit that's intended for the provider to the PBM, or they find some way to disincentivize covered entities from using 340B drugs. So minimizing the 340B benefits. So unfortunately there's no real federal protection against this type of action. A couple of years ago we saw states really take the lead in protecting providers in the state.
Monica Forero (04:57):
We understand more state legislators are done with their sessions for the year. So where do we stand with states that have non-discrimination laws in place?
Amanda Sellers Smith (05:06):
So we have wrapped up on a lot of state legislative sessions for the year, though there are some states that have year round legislative sessions. California is one I mentioned, and that's why they were able to enact a law really recently this past month for 340B protections. And California is especially significant just due to its size and the number of providers it will affect. We don't expect a whole lot of activity through the end of the year just because again, those sessions are mostly wrapped up. But what we're at now in October when we're chatting, is starting to prepare for next year because most of the states are going to come back in January. And so you have, again, over half of states that do have a 340B non-discrimination law, but you have a lot more activity that can be done either within those states or you have additional states that could join the club. Different 340B advocates at the state level are looking to see what they want to do, if anything, once all those lawmakers come back in January to start legislating again.
Monica Forero (06:08):
More than 25 states with such a law is such a big development, especially California. So that's great news. And what about the new state that has banned contract pharmacy restrictions?
Amanda Sellers Smith (06:21):
So the contract pharmacy issue has been going on as I think most of our listeners probably know for about three years, a little over three years. So we have had a lot of federal lawsuits related to those actions. And in the meantime, the state of Arkansas a couple of years ago implemented a law where it bans this activity at the state level. And this past year, Louisiana joined them. So we now have two states that have just heard of the impact that these drug company restrictions have had on their providers and looked to see what they could do at the state level to offer some sort of protection to the safety net. They really are subject to some federal litigation there as well with different parties challenging both Arkansas' and Louisiana's laws, but it's still just a really huge development.
Monica Forero (07:14):
Yes, plenty of activity going on here. We know the Arkansas law has been in effect since 2021 and now we have a new state law. How has it affected hospitals and other [inaudible 00:07:27] entities in these states?
Amanda Sellers Smith (07:29):
So one initial really interesting development is that you have a couple of drug companies who have notified hospitals in those states, in Arkansas and Louisiana, that they're going to suspend or partially suspend the restrictive policies. You have Merck and Teva were the first two drug companies that they have a policy restricting contract pharmacy, but they notified hospitals in Arkansas and Louisiana that they were going to change those restrictions because of the Arkansas and Louisiana state laws.
(08:04):
Then you also have a couple other drug companies who have since joined Merck and Teva. ESI is a drug company that recently came out with a brand new policy with contract pharmacy restrictions, and they include language that hospitals in those two states should contact the company to discuss options. And then we also just recently had Astellas, another drug company that has implemented restrictions. So that's four total that we know of, at least as we're talking now, Monica, that have adjusted their policies based on these two state laws. So that's pretty noteworthy in that it's kind of a temporary reprieve for at least those drug company policies in those two states for hospitals. These drug makers, they didn't suspend their policies when the federal government said they were a violation of the federal law. So it's just also very interesting that with these new state laws that you're seeing some drug companies, at least a few, at least a handful, decide that at least temporarily they're going to follow the state law.
Monica Forero (09:05):
That is fascinating. So does that mean 340B hospitals and their contract pharmacies are in the clear in Arkansas and Louisiana?
Amanda Sellers Smith (09:14):
Well, unfortunately it's not that simple in that both laws are facing court challenges from drug makers. So there's the drug industry group, so it's PhRMA, the Pharmaceutical Research Manufacturers of America. They're the association that represents a lot of drug companies and they've sued in both states, both Arkansas and Louisiana, challenging those state laws. And then we have two drug companies that have individually outside of the trade association, have also sued in Louisiana to challenge the Louisiana law. So we definitely have legal challenges and with anything that is subject to a legal challenge, it just takes a lot of time to see whether or not courts are going to agree with the state here or agree with the drug industry over whether or not the state is permitted to offer this kind of protection to hospitals in the state. It could be a really, really slow process.
(10:10):
Louisiana were in very, very early stages. But Arkansas, because it's a little older of a law, we are a little further in the legal process with the Arkansas law. The drug industry lost at the first court level. So the district court level said that Arkansas is permitted to have this type of law and they've since appealed. So that is at the appellate court level. And we also have to keep in mind, we're still waiting for two big decisions from appellate court level for the federal law as well, the federal challenges. So that's the Seventh Circuit and the DC Circuit.
Monica Forero (10:44):
Yes, I know those of us in the 340B world are highly anticipating the results of these court cases. What are the drug companies arguing in the courts in these cases over the state laws?
Amanda Sellers Smith (10:57):
There's a couple different arguments, but the main argument is the same in both challenges, both the challenges to Arkansas and Louisiana. And it basically comes down to drug companies are saying that 340B is a federal program and there's no room for state laws to get involved in 340B. Now, again, a lower court rejected that argument in the Arkansas case, but that's under appeal and that's just one court. Earlier this year, 340B Health joined with the American Hospital Association and the Arkansas Hospital Association to file what's called a front of the court brief in support of the Arkansas law. So it will be really interesting to see where the court comes down on this, and it's just something that we're monitoring, and we'll keep 340B Health members up to date as different things play out in the judicial process.
Monica Forero (11:47):
Well, thank you Amanda for walking us through that, and I know our members appreciate your updates on all of the action. So let's turn to the hospital reporting issue. What have state legislators done in this area?
Amanda Sellers Smith (12:03):
We've seen states over the last couple of years get interested in imposing reporting requirements on 340B providers. So Connecticut, Indiana, and Virginia all considered reporting requirements during the 2023 sessions. Those three states ultimately did not approve 340B reporting requirements for hospitals in the state, but we saw Maine and Minnesota did put reporting laws on the books this year. That requires some pretty detailed information from hospitals. We're still talking to hospitals about how they are going to do this reporting because it's very confusing and complicated and we're concerned that mandated reportings can place burdens on hospitals, they're confusing to understand, how do you comply with the law? There's a lot of unanswered questions, so it's just really unfortunate that these reporting requirements were enacted.
Monica Forero (12:57):
We mentioned state legislators are largely done for the year, so what should 340B hospitals be thinking about for 2024 in the states?
Amanda Sellers Smith (13:07):
Sessions are mostly done, but as I think I mentioned earlier, states are ramping up to prepare for 2024. Some states have what are called pre-filing deadlines, which are by state law, if you want a bill to be considered, you have to get it in by that certain deadline. And that could be coming up by end of 2023. And so the conversations that could impact developing that agenda are happening now as we speak. So what that kind of means is it's a good time for hospital state government relations folks and their teams to really be thinking about what advocacy they might want to do on 340B next year. So some of these 340B protections at the state level, those type of bills might make your priority list. And that's a good conversation to be having of, if that's a route you want to go, who do you need to talk to? What do you need to do to really build up a successful campaign for that?
(14:05):
Or if you're worried that there might be some of this negative reporting language or something similar coming up at the state level, preparing to address that in case you have to fight off something bad. And the whole priority list is not going to be 340B specific. The hospital will have a lot of other wants or needs or things that they might need to defend it against. So just making sure that whoever has that role within your organization is aware how 340B can come up both in a positive way and in a negative way is something that will help them as they're preparing to do their job in early 2024.
Monica Forero (14:43):
So lots of exciting and important stuff to look forward to next year. Tell me about how 340B Health engages on these state issues and what should hospitals be looking for from us?
Amanda Sellers Smith (14:56):
340B Health, we are not state level lobbyists, but what we do work really hard to do is to support the people who do that state level lobbying because they might not be as tied into the bigger picture 340B issues that can come up in the state houses. So we often work with our member hospitals, state hospital associations to really help educate on how 340B can come up in the states, what different states have done, how regulation, legislation, other policies have been developed in the states, help connect them with folks who have had similar experiences in other states to see how opposition might try to influence lawmakers and work against you. And really just making sure that we're developing those educational tools and resources that make it to where the folks that are doing the day-to-day lobbying have the information they need in order to support and protect 340B.
(15:55):
We did design a model 340B non-discrimination bill to help in states that are looking for those protections against PBMs. We do obviously monitor legal actions on state laws and make sure that we're supporting states where necessary there, by sometimes getting involved with filing the front of the court briefs in support of our hospitals in those states. If members of 340B Health have questions, concerns about 340B developments in their states or about 340B developments in other states, we're always happy to schedule time to talk and really speak through the implications and really help support what they want to do within their own state as it comes to 340B and how they can best support hospitals and the program within the state.
Monica Forero (16:43):
Well, thank you Amanda. It's been great having you on again, and I wish you the best with everything going on.
Amanda Sellers Smith (16:50):
Yeah, thank you for having me.
David Glendinning (16:53):
Our thanks again to Amanda Seller Smith for getting us caught up on the legislative and legal developments affecting 340B hospitals on the state level. If your member hospital or health system has questions on 340B issues occurring in your state, or if you have some insights on those developments to share with us, please reach out to Amanda to discuss further. And please reach out to us if you have feedback or episode ideas for the podcast. You can email us at podcast@340bhealth.org. We will be back in a few weeks. As always, thanks for listening and be well.
Speaker 1 (17:35):
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 at 340B Health and submit a question or idea to the show by emailing us at podcast@340bhealth.org.