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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.
Narrator (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 Maureen Testoni, the President and CEO of 340B Health. We had Maureen on the show a couple of months ago, and there have been some big 340B developments since then. So we wanted to get her back on to bring us up to speed, as the 340B community prepares to convene in the National Capital Region next month. So let's get right to it. Here's that conversation.
(00:48):
I am here with the President and CEO of 340B Health, Maureen Testoni. Maureen, great to have you back in the podcast booth again. Welcome to 340B Insight.
Maureen Testoni (00:59):
Thank you so much, David. It's great to be back.
David Glendinning (01:01):
We last spoke with you back in April. What are some key 340B developments that have happened since then?
Maureen Testoni (01:09):
There's been several since April. We had a really important federal court decision on 340B contract pharmacies that we had been waiting for, for some time. We've seen a lot more activity in the state about protecting 340B, especially for contract pharmacies. More recently we saw a bill introduced in Congress in the House of Representatives, that's backed by pharma and has significant restrictions for hospital participation in 340B. And we also saw a subcommittee hearing in the House of Representatives about 340B.
David Glendinning (01:46):
So you mentioned at the top we have another federal court decision on 340B. Can you walk us through that?
Maureen Testoni (01:53):
Yeah, so just as background, HRSA tried to enforce against manufacturers to make them stop imposing restrictions, those that the manufacturer sued, it went to four district courts and then were eventually appealed to three federal appeals courts. One issued a decision over a year ago, and the second one just issued a decision. This is DC Circuit court, decided that similar to the Third Circuit Appellate Court, that the 340B statute, does not prohibit manufacturers from imposing conditions on 340B. The court said that the statute is silent on that, and if it's silent, that means that manufacturers can do it. But what's really interesting here, they made it very clear that even if though manufacturers may impose conditions, they may not impose a condition that effectively prevents a covered entity from purchasing one or more of their drugs at the 340B price.
(02:54):
They reinforce the whole purpose of the statute, as requiring that manufacturers offer their drugs to covered entities at the 340B price. And concern that these restrictions could go too far and essentially result in covered entities either paying more than the 340B price, or just not being able to access 340B pricing at all. And we have definitely heard from covered entities that feel that they were not able to access one or more of a manufacturer's drugs when a 40-mile limit is imposed, because some of those drugs are specialty and those are for many hospitals going to be very far away from the hospital, because that's how specialty drugs are made. And then the court also noted that with things like claims data sharing, the government really hadn't submitted anything about the burden that would be imposed there. So all that the court heard from the manufacturer side is that the burden isn't very significant.
(03:53):
However, showing burden could really make a difference and they would consider taking action if in fact the burden was high. We're still waiting for the decision from the Seventh Circuit Appeals Court in Chicago. If that court reaches a different outcome, that would mean there'd be a split among the appellate court circuits, which could make it more likely that the Supreme Court would take up an appeal. Since that decision, we have seen more manufacturers impose restrictions and some of them tighten restrictions that they already had. It's possible that this type of a decision could result in potentially more litigation in the future, as we gather the data that we need to be able to show that some of these restrictions are essentially blocking access to 340B pricing for drugs.
David Glendinning (04:42):
Okay, so two down and one to go on that round of contract pharmacy litigation, at least the existing cases focusing on federal enforcement of the 340B law. What's the latest word from the states?
Maureen Testoni (04:57):
Well, David, those are some very interesting developments. As you know, Arkansas and Louisiana have enacted laws to prohibit these restrictions in their states around contract pharmacy, and those have been challenged, and so far have survived those challenges. And we've seen manufacturers lift many of the restriction in those states. But since then, we have seen more states enact those laws. For example, this year so far, Kansas, Maryland, Minnesota, Mississippi and West Virginia have already enacted laws, and they're already starting to see in some of those states, restrictions being lifted and immediate benefit to covered entities.
(05:41):
Now another interesting development is that we are seeing industry get very, very active in opposing these legislative efforts in states, flying people in, really blanketing the state capitals. And we're also seeing something that we have never seen in the past, and I've been involved with 340B for a long time. We actually saw TV ads against 340B, funded by what's referred to as a dark money group. Dark money groups are interest groups that do not disclose their funding sources. And what those ads did ... They're really shocking to watch. They accuse hospitals of laundering 340B money, which they describe as taxpayer money to fund care for undocumented immigrants. It's a really over-the-top and inaccurate ad, and we saw it played extensively in many of the states that were considering contract pharmacy legislation.
David Glendinning (06:44):
We plan to have an episode soon that drills down more on all that state activity and what it might mean for covered entities in those states. But for now briefly, what's next on the state front in the debate over 340B?
Maureen Testoni (06:58):
So drug companies are still challenging the state laws in federal courts. The new lawsuits for the most part are challenging using different legal theories, and it remains to be seen how those theories are evaluated by the courts. 340B Health is participating in all these lawsuits. We are filing front of the court briefs along with our partner, the American Hospital Association, really trying to ensure that there is specific information and data that is put in front of the court about the impact that these kinds of restrictions have. So we'll just have to keep working through the litigation, to be able to persuade the courts that the states may continue to enforce those laws.
David Glendinning (07:44):
I think that just about covers all the state and court news on the contract pharmacy dispute. What has Congress been up to lately on 340B, and how has 340B Health been advocating on Capitol Hill?
Maureen Testoni (07:58):
Most recently what we saw was legislation introduced that is backed by pharma, is called the 340B Access Act. And it's backed by a coalition that is led by pharma also with the National Association of Community Health Centers. And this legislation would impose very, very significant restrictions on participation by hospitals in 340B. For example, it would restrict 340B for insured patients, and that restriction is one that would apply to the private non-profit hospitals, it would not apply to the public hospitals. But when you restrict 340B, so you cannot use it for insured patients, that really changes the whole nature of how 340B is supposed to work, and what financial support it can provide to hospitals that treat a lot of low-income patients. It would also tie participation in 340B directly to your levels of charity care, which is another very restrictive measure.
(09:08):
Charity care does not include underpayments by public programs. It doesn't include bad debt. It's a very restrictive measure that does not cover all the many financial losses that 340B hospitals incur, by focusing so much of their care on populations that are covered by public insurance or are uninsured. The way that industry talks about this legislation, is they believe that 340B is just too large. And of course when we look at the profits of the manufacturers, comparing it to operating margins of 340B hospitals, we strongly refute that concept, because the pharmaceutical companies seem to be doing just fine, whereas 340B, the operating margins for 340B hospitals are razor-thin, or definitely in the red. We are also seeing them talk about that there are too many hospitals qualifying for the program, and that some will have child sites or country pharmacies that operate in wealthy areas.
(10:12):
And what was interesting about this, is right when this legislation was wrapped, 340B Health had just released a report on characteristics of Medicare Part D patients that are treated in 340B hospitals, and are written prescriptions in 340B hospitals. And we compared Medicare Part D patients from 340B hospital to those that are treated in non-340B hospitals and doctor's offices. We'd done a similar analysis for Medicare Part B data, and the results of the Medicare Part D data is the same, that 340B hospitals serve higher percentages of historically underserved patients. So patients that have low incomes, patients that have disabilities, which then make them much more expensive to treat.
(10:58):
We also see that 340B hospitals are much more likely to treat people of color such as black and Hispanic patients. We're looking at the claims data for the individual. We're not just looking at some big region where a clinic might be located, or a child site might be located. We're looking at who really goes to those clinics, and being able to measure it that way. So it was just interesting that we saw this legislation to cut out many, many, many 340B hospitals on the basis that they aren't really treating lower income or other underserved populations, because we have a report that shows in fact that they absolutely do.
David Glendinning (11:42):
You mentioned a hearing in Congress focusing on 340B. I know it's not the first time we've had 340B hearings on Capitol Hill, certainly won't be the last. But how did this latest hearing play out?
Maureen Testoni (11:54):
So this was interesting. It was a hearing by the Oversight and Investigation Subcommittee of the House Energy and Commerce Committees. And it was interesting, because it was about oversight in theory, but they talked about a lot of different 340B issues. We saw discussions of 340B growth, contract pharmacy, patient definition, and others. We were very pleased that the committee invited Matt Perry, who is a 340B hospital CEO, and a member of the 340B Health Board. So he was a fantastic representative, to be able to answer members' questions with real substance about 340B.
David Glendinning (12:34):
And I will note that Matt is not only a member of our board but also a good friend of the podcast. We had him on the show just over a year ago to give some advice to his fellow 340B Hospital CEOs. So what did Matt speak about during this hearing?
Maureen Testoni (12:48):
So Matt is the CEO of Genesis HealthCare System, serving a region in southeastern Ohio. It's actually a six-county region in southeastern Ohio. One in five of the residents of that region live below the poverty line, and one in three rely on Medicaid for coverage. And as we all know, Medicaid chronically underpays providers. So Matt was really able to talk in detail about what 340B means for his hospitals and for the community, and for the low-income populations that he serves. He explained that 340B really fills in gaps left by the underpayments, by Medicaid and other government programs. It allows Matt to provide specialty care that had not been in the region before, because of 340B. They can use that to make sure that these services are available. Services for cancer, services for trauma, services for mental health issues. He also talked about 340B really being the difference between his razor-thin positive margin and going in the red, deeply in the red.
(13:58):
As he stated in his opening remarks, "Without 340B savings, Genesis would close." And if Genesis HealthCare System goes away, that means the patients would need to travel far to get this type of care. Matt just does not believe many would be able to make that trip. He explained the need also for contract pharmacies. We hear these stories about contract pharmacies being hundreds of miles away from hospitals as if the hospitals are somehow doing something inappropriate, but in fact, the way specialty drugs work, they're so specialized, that they are only made in certain areas of the country. So he explained, if you're going to be using specialty drugs, you're going to be getting those potentially a hundred or more miles away from his hospital. Same thing with mail order type drugs, mail order pharmacies. He also really strongly countered the idea that charity care is appropriate as the sole measure of how hospitals should be spending their 340B dollars.
(15:01):
He explained that charity care is just a small measure of everything they do. He also strongly supports transparency. His system completes the 340B Health Impact Profile, that shares what their 340B savings are, and discusses how those savings allow them to provide services. So big supporter of that type of transparency, but he also made clear that transparency that focuses on the measures like charity care, that really are not the right measure for 340B, are just too narrow, would not be a type of transparency that he thinks should be imposed on 340B. He really did a great job on behalf of the 340B covered entity community. I would strongly encourage anybody to watch.
David Glendinning (15:54):
Yes, I would say Congress very thoughtfully post the videos of all these hearings to watch both live and on demand. So we'll be sure to include the link in the show notes for this episode. Are there any non-contract pharmacy issues on your mind lately?
Maureen Testoni (16:09):
Yeah, and I think I talked about this on the last podcast as well. It's the implementation of the Inflation Reduction Act. Under that Act, which we refer to as the IRA, one of the many things that Act does, is it basically sets what's referred to as a maximum fair price for selected drugs starting in 2026. And what's been very complicated is how the government's proposal for implementing this price, is going to interact with 340B. 340B Health and others have been actively working with CMS to make sure that 340B is part of this process. But recent proposed guidance that CMS release, raises major concerns about what the impact is going to be on 340B.
(16:58):
We're very concerned that 340B hospitals will face many, many hurdles in order to be able to use 340B pricing for many of these drugs. We held a webinar on this a couple of weeks ago for our members, and we will be submitting comments on this and sharing a template with our members to also submit comments. We think it's vital that hospitals get involved in this now before something goes into place. It's very difficult to change something after the fact.
David Glendinning (17:29):
And I believe the deadline for that comment letter is just at the beginning of July. And if we're within range of a submission deadline that's in July, then we're also within range of the 340B Coalition Summer Conference. So Maureen, what are you most excited about for this next conference?
Maureen Testoni (17:47):
This is going to be a really great conference. There's just so much going on in 340B, and we have sessions to cover everything. We're going to have a session that will focus, for example, just on the state action. We're going to be hearing from the Deputy HRSA Administrator, Jordan Grossman, who will be updating us on government oversight and their plans for 340B in the coming year. So we're hoping that he will be addressing some of those issues as well. We're also very excited to have Anna Palmer address the 340B Coalition audience this year. Anna Palmer is one of the founders of Punchbowl News. They are on top of all of the election politics, and this is a great year to be able to get updated on where things stand with the coming elections.
(18:41):
We have sessions on the IRA that I just spoke about. We have sessions on child sites, on contract pharmacy. There's just a wealth of information that people who are working hard to implement and stay compliant with 340B, will be able to get from attending this conference. So I strongly encourage if you haven't registered, to please do so soon. And I'm definitely looking forward to seeing you there.
David Glendinning (19:07):
And we will be there as well, aiming to get as many podcast recordings in as we can while we have all the experts in the house. Thank you Maureen. We appreciate you coming on the show, as we're right in the middle of this busy pre-conference period. We look forward to speaking with you again after the summer.
Maureen Testoni (19:24):
Thank you so much, David.
David Glendinning (19:26):
Our thanks as always to Maureen Testoni for taking the time to cover some of these big 340B topics. Maureen mentioned the 340B Coalition Summer Conference. The pre-registration deadline to sign up for the conference is Wednesday, July 3rd. So please sign up right now if you haven't already. Again, you can find all the details at 340bsummerconference.org. And we will see you in National Harbor in just a few weeks. And we will be back also in a few weeks with our next episode. In the meantime, as always, thanks for listening and be well.
Speaker 1 (20:09):
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.
Narrator (20:42):
Voxtopica.