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This week we are joined by Maureen Testoni, 340B Health’s president and CEO. Maureen provides her expert analysis on the top 340B developments from the first quarter of 2021. The conversation includes the latest on drug manufacturers denying 340B discounts on drugs dispensed at community pharmacies, attempts to turn 340B into a rebate program, and payers and pharmacy benefit managers making mandatory changes to their claims processes. Maureen also shares positive recent developments on advocating for 340B.
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 (00:05):
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 David Glendenning with 340B health. Our guest today is Maureen Testoni, our president and CEO. We last had Maureen on the show just before new year's to recap what might have been the busiest year in 340B history. Already 2021 is shaping up to be quite eventful as well so we wanted to hear Maureen's take on the latest developments and challenges for 340B hospitals and their patients. But before we get to that conversation, we have a development to share for those of you who are in New York state.
David Glendinning (00:51):
In our late March episode, you heard our assistant counsel, Amanda Sellers Smith, discuss an upcoming transfer of the Medicaid pharmacy benefit from managed care to fee for service. Under New York's recently finalized 2021 budget that change won't take effect for at least another two years. That gives covered entities in the state more time to advocate against the loss of access to 340B discounts that would accompany such a pharmacy benefit transfer. Check out the show notes for more. And now for our feature interview with Maureen Testoni. Here's Miles Goldman with that conversation.
Miles Goldman (01:28):
Thank you, David. I'm joined by Maureen Testoni, the president and CEO of 340B health. Maureen it's good to have you back on 340B Insight.
Maureen Testoni (01:38):
Thanks miles. It's great to be here.
Miles Goldman (01:40):
It has been a busy first quarter of 2021 since we last had you on the podcast. Before we move into a deeper conversation, I wanted to see if you could provide our listeners with a quick overview of the major issues facing 340B hospitals.
Maureen Testoni (01:57):
I'll start with some of the things that we are concerned about and we're keeping an eye on. And probably the biggest continues to be the contract pharmacy issue. That's the refusal by six drug manufacturers to provide 340B discounts for drugs dispensed through community pharmacies that contract with 340B providers. That's probably real harm for safety net providers and with patients. Another issue addresses a company called Calderas, which is a contractor that works for manufacturers. And Calderas has been trying to market a system that would really upend 340B by having manufacturers cease to provide an upfront discount and instead provide after the fact rebates. Which would put a lot of control over the provision of 340B savings to manufacturers.
Maureen Testoni (02:44):
Also a more recent issue that's come up involves Express Scripts, and they recently imposed an impossible to meet requirement that all 340B entities identify their claims as 340B by either using a claims modifier when a drug is dispensed or identifying the claim after the drug is dispensed using an information reporting transaction referred to as the N1.
Maureen Testoni (03:09):
In addition, we've seen due to the COVID pandemic that for some hospitals that has had the effect of really altering their patient mix could potentially put their 340B status in jeopardy. And if they lose their status, it can take up to two years to get back into 340B because of the various filing deadlines. A bill has been introduced in the Senate to allow such hospitals to stay in 340B and we expect one to be introduced in the house. In addition, many hospitals continue to be paid less by Medicare for 340B drugs, and these cuts have had an impact on their ability to provide services to their patients. So that is still an issue that is out there and is causing problems. And finally, I just want to note that several states are taking steps to prevent 340B providers from benefiting from 340B when it comes to Medicaid patients. Instead states are trying to keep that benefit for their state Medicaid programs.
Maureen Testoni (04:08):
So that's also an area that we're keeping an eye on. It's not in every state, but it's in a few states and it could potentially be a big change to how 340B works. So that's a lot of the negative things, the concerning things. But I think it's important Miles to also note that there's been a lot of positive over this past year as well. Comparing where we are now to where we were last year for example, hospitals have had a lot of success now at keeping people healthy because we know a lot more about treating COVID and with helping to ensure that people are getting vaccinated. Hospitals were hit really hard by the pandemic, but they're in the process of recovering, which is really great. And I know that we're going to be talking a little later about Congress and the new administration and 340B, but I do want to comment that we're seeing a lot of support there right now as well.
Miles Goldman (04:59):
Thank you for providing us with that recap Maureen. We're going to be touching on almost all of those challenges today. But first, Xavier Bacerra recently became HHS secretary. How does secretary Bacerra leading HHS affect 340B hospitals on the issues you've just summarized?
Maureen Testoni (05:18):
Secretary Bacerra has said a number of very positive things about 340B, very specific and very positive about 340B. So that's great to have heard that from him. During his confirmation hearings in the Senate he referred to 340B as indispensable and of course we certainly agree with that. And then even before being nominated by the Biden administration and when he was serving still as a California attorney general, he led a bipartisan effort with 29 state attorney generals sending a letter to his predecessor at HHS, the former secretary urging HHS to stop the actions of drug companies to violate the 340B statute.
Maureen Testoni (06:04):
So that is all really great to see. Now that said, obviously he's going into this new role and he will be very objective I'm sure in how he carries out his duty. So it will continue to be our job to do advocacy, to make sure that he and the staff at HHS have all the information they need about 340B, about its impact on hospitals, about how much it helps hospitals to do really good things for low income populations. But we're really excited to be working with him and to be working with somebody that has a positive view of 340B.
Miles Goldman (06:39):
Continuing the conversation around the community pharmacy issue, there's been a lot of discussion about the administrative dispute resolution known as ADR serving as the path to addressing drug manufacturers' actions. Where are we on this?
Maureen Testoni (06:55):
The ADR process comes up in the context of asking why hasn't this contract pharmacy issue been resolved? And I get asked this question a lot because since HHS came out in December, made very clear that they agree with us that the manufacturers should not be doing what they're doing it's contrary to law. The obvious question is, well, why are the manufacturers still being allowed to do it? And the answer revolves around this administrative dispute resolution process or EDR. And just a little history, the ADR was added to the 340B statute a long time ago back in 2010 to resolve disputes between covered entities and manufacturers. Things like was the covered entity overcharged by manufacturer for particular drug? That type of thing. And nothing happened after it was enacted in 2010 until just last year when HHS came out with rules and regulations to actually put the ADR process in place.
Maureen Testoni (08:00):
And that was again just a few months ago, so nobody has gone through this process yet. And in fact, the ADR panel that has to make the decisions on the disputes brought before the ADR hasn't even been appointed. So I'm very concerned about the decision by HHS to use the ADR process as a way to resolve this contract pharmacy dispute. The ADR process it's just supposed to be addressing disputes between manufacturers and covered entities. But this contract pharmacy issue I think is well outside a mere dispute between a manufacturer and a covered entity because HHS has said the manufacturers are violating the law. They are not doing what 340B requires them to do.
Maureen Testoni (08:44):
So in my view that takes it out of ADR. You don't have to resolve some things when HHS has already said what the decision has to be. Another reason I'm concerned about this is that because it hasn't been set up yet it's going to take a really, really long time I think for any of these petitions to make it through the process. And in the meantime hospitals are losing 340B discounts every single day. So that's a huge concern.
Miles Goldman (09:15):
While these challenges are proceeding, what should 340B hospitals do when they are denied a discount for drugs sold by the six companies?
Maureen Testoni (09:25):
Miles there are a couple of things that hospitals can do. One is to file overcharged notices with HERSA, the Health Resources Services Administration, to demonstrate the harm caused by the restriction and increase the case for making hospitals hold for the losses they have suffered. There's actually a form on the Texas website that you can fill out in order to say that you have been overcharged by a manufacturer or that a 340B price is not being made available. And both of those situations occur in the contract pharmacy issue. So we're strongly encouraging hospitals to do that.
Maureen Testoni (10:00):
Another thing we're encouraging hospitals to do is to work with a third-party administrator and their contract pharmacy partners to document the loss discounts. So they'll have a record, they'll be able to have a record to show the harm that they had suffered. And third, I strongly encourage hospitals to contact their members of Congress, their representatives and their senators to encourage them to reach out to the new administration on this issue. So I would encourage people to reach out to their members of Congress to encourage them to contact the new administration on this issue, because it's important to keep up our advocacy on this so that new administration really understands how big a problem this is.
Miles Goldman (10:44):
Switching gears, an issue we have previously discussed is attempts to turn 340B discounts into a rebate model. And you mentioned that earlier in your recap. Can you provide us with updates on this issue?
Maureen Testoni (10:57):
Yeah, sure. So, so far nothing has actually moved forward on that effort. So this company called [inaudible 00:11:05] by way of background and they're consultant for manufacturers has been trying to market this new system of 340B where the discounts wouldn't be given upfront. We have a lot of concerns about the process that they're proposing. There will be much, much higher upfront costs because you'd be paying a really high price in order to get the drugs initially. And you'd be counting on getting a rebate from the manufacturer to bring it down to the 340B price. But there is a risk that you don't get that rebate from the manufacturer that maybe they don't think that they should owe it to you for some reason or another. So it puts a lot of power back into the hands of the manufacturer.
Maureen Testoni (11:45):
Now, 340B has always operated as an upfront discount program at HHS's direction. So we have urged HHS to prevent this model from moving forward. And at the very least we've said there needs to be public notice and comment and guidance from the government on how this proposal would work. And as I mentioned earlier over half the members of Congress, both Democrats and Republicans, also sent letter to HHS asking them to prevent this proposal from moving forward. So, so far nothing has happened. And believe me, this is something we're keeping a very close eye on.
Miles Goldman (12:19):
I want to make sure we touch on one of the issues you brought up earlier, which is we're hearing about payers and pharmacy benefit managers making mandatory changes to their claims processes. Can you provide us more of an overview of these issues and how these changes could affect 340B hospitals?
Maureen Testoni (12:35):
Yes. This is a very troubling trend and we've seen it over the past few years. So there's a couple of companies I'm going to talk about right now. Things that have happened recently. One is with Express Scripts another one is with Humana. What Express Scripts has announced that they want to do is they want to have providers identify which claims are 340B when they are submitted to Express Scripts for payment. They're saying you can either put a modifier on the claim when you dispense the drug or if you don't know at the time that the drug is going to be 340B. You can identify it as 340B retroactively through this N1 reporting process. The N1 process has never been used by 340B and would be very, very costly for providers to try to implement.
Maureen Testoni (13:27):
So the concerning thing is why does Express Scripts want to do this? Why do they feel this need to identify 340B claims? They haven't really come out with an explicit reason. In the letter to us they said that they're not planning to reduce reimbursement to providers. Personally I don't understand why 340B drugs should be identified or should be treated any differently from non 340B drugs. This is a really big concern. And it's one that we have started to take to Congress and talk to members of Congress about in addition to the letters that we had sent to Express Scripts, and also working with the 340B coalition of coalition of associations that represent 340B providers have also sent a letter to Express Scripts. So there will be more on that. I do want to say that Express Scripts has responded to say that they are granting extensions.
Maureen Testoni (14:25):
Initially they gave a very short timeframe, very little notice of the new requirement, but they have said that they are willing to grant extensions. We are aware that of hospitals that have asked for extensions and have been told that yes you can have an extension just let us know when you are compliant. And I also understand that they are potentially looking at other ways of identifying claims after the fact, without using this N1 process. So those are great. They are trying to work with the provider community in that way, but the fundamental concern remains why. Why do we need to do this at all? What is the purpose of sharing this information and how ultimately is that going to affect the 340B program and the providers that work in it and the patients that rely on it.
Maureen Testoni (15:14):
Then another issue that has cropped up recently involves the payer Humana. Humana has contacted some hospitals to say that they want to pay those hospitals less for 340B drugs than for non 340B drugs. This is very similar to action we saw by CVS Caremark a few years ago. We have written to Humana. And again, we'll take other action as necessary on that. But that's another big concern. Certainly trying to have payers take some of the 340B benefit just seems completely to conflict with the purpose of the 340B program. 340B was set up to help safety net providers provide more care to their low income and rural populations. And in contrast, if a payer is taking some of those savings, these are for-profit payers taking these savings, companies that do not have any requirement whatsoever to have to serve low income and rural populations. So it's just sort of taking money out of the 340B program for purposes that don't relate to 340B at all. And so it's just a very concerning behavior that we're seeing.
Miles Goldman (16:31):
We've been making a number of references to communicating with the hill on all of these issues. And last month, 340B health had more than 300 of our members meet virtually with more than 250 congressional offices. What were your takeaways from the hill meetings?
Maureen Testoni (16:49):
It was such a great day. I mean it was just so impressive. We had so many members, as you say 300 members taking the time out of their schedules to participate in these meetings, prepare for these meetings, the record turnout for our lobby days. Usually before the pandemic we always did them in person, but the benefit of doing it virtually is it does allow more people the ability to participate. And it's just a great thing to do because the member of Congress or their staff is right there and everybody gets to talk to them and everybody gets to see them. And the lawmakers were for the most part very positive about 340B. Lawmakers tend to be very supportive of their hospitals, especially during a public health emergency. So we've really built up in these offices information about how 340B helps the hospitals in their districts to provide services.
Maureen Testoni (17:42):
In this particular lobby day, we focused on a range of advocacy issues many of which I've been talking today. So the contract pharmacy issue was front and center. Medicare part B cuts was definitely a part of it. Asking for a temporary protection for the [inaudible 00:18:00] hospitals that are at risk of losing their 340B status because of COVID. Also these discriminatory actions taken by PBM was also a big part of the discussion as well. But in addition to letting the members of Congress know about some of our concerns and asking for them to help, really the main focus of our lobby day is sharing with the members of Congress what 340B means for their district. And a big part of how we do that is we at 340B Health we have a document that we refer to as an impact profile.
Maureen Testoni (18:38):
And we ask our members to make sure that they complete that. It allows them to put on paper how much savings they get from 340B and then all the different things that they're doing for their low-income or rural populations because of their 340B status. For some hospitals like the majority of our critical access hospitals they'll put down there about how much 340B helps them to keep the doors open. And for a lot of our hospitals they'll talk about all the uncompensated and un-reimbursed care they provide and 340B plays a role in subsidizing that. But also just a lot of different services that they're able to provide. Homeless clinics, big discounts or free, insulin for example through the diabetes clinics, medication management. So there's a lot of different things that hospitals do and those impact profiles allow them to put that down. And then in these meetings they share all of that with their members of Congress. So it's a really important thing. And I strongly encourage all 340B hospitals to complete an impact profile.
Miles Goldman (19:45):
The weather is becoming nicer out, at least certainly where we are in DC. And before we let you go, 340B health is part of the 340B coalition. And that certainly makes me think about the 340B coalition summer conference. Can you give us a preview of what to expect?
Maureen Testoni (20:04):
Due to the pandemic we've had to have our last two conferences virtual. And sadly for me we are going to have to do that again in the summer. And I say sadly only because it's so nice to see everybody and I really miss that in-person interaction. With that said, the conference is going to be fantastic. And I think that's because we are doing our conference the same way we do it when we're in person. So we're having the same number of really, really high quality sessions. We focus very much on not only sort of the basics about operations and compliance and audits and inventory management, but also sort of the cutting edge issues.
Maureen Testoni (20:47):
So for example, we focus a lot of time on the Calderas issue. We focus a lot of time on the manufacturer issue with not offering contract pharmacies. So we plan to do that exact same thing going into our summer conference that we'll be holding in July. And I think it'll be another really fantastic conference and a great way to get up to speed on what's going on with 340B. So I'm really hoping everybody listening could attend.
Miles Goldman (21:15):
Maureen I know our listeners enjoy hearing all these updates on what is happening in the world of 340B policy. Thank you for taking the time again to join us.
Maureen Testoni (21:26):
Oh, you're welcome. It's my pleasure Miles. Thanks for having me.
David Glendinning (21:29):
Thanks again to Maureen Testoni for getting us up to speed on all things 340B. Although we cannot predict the future here at 340B Insight, we have a strong feeling that this year we'll have more developments that will bring Maureen back to the show before too long. For a sense of just how dedicated Maureen is to bringing our listeners the latest in 340B intelligence amid everything else that's going on, just listen to how she handled a tricky home office issue during her interview.
Maureen Testoni (21:59):
Are you hearing a lot of noise? My daughter, I don't know if she's building a new house upstairs. Is that coming through?
Miles Goldman (22:07):
I was hearing, I hadn't been hearing it too much before and then just as you were asking the question I heard it a little bit.
Maureen Testoni (22:14):
Okay. Hold on one second. Let me just run up there. I absolutely hate having to tell a child of mine to stop cleaning the room, but I did it. For 340B Health I've made that sacrifice.
Miles Goldman (22:31):
If we ever do an outtakes version of this Maureen that could be the [inaudible 00:22:35].
David Glendinning (22:38):
I'm sure all of you juggling work and family lives right now can relate. We welcome your episode ideas and feedback. You can email us podcast@340bhealth.org. As always, thanks for listening and be well.
Speaker 1 (22:59):
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 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.