Subscribe
Share
Share
Embed
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 David Glendinning with 340B Health. Our guest today is 340B Health Vice President of Legal and Policy, Amanda Nagrotsky. We have some important court developments on 340B rebates since our President and CEO Maureen Testoni discussed that issue on the show recently. So it is a good time to have Amanda back on with us to go over those developments, which include a big decision coming out of a federal court here in Washington, D.C. here's that conversation. I am speaking with Amanda Nikratsky, vice president of Legal and policy here at 340B Health.
David Glendinning [00:01:02]:
Amanda, it's been a little while since we've had you on the program, so we're glad to see you again. Welcome back to 340B Insight.
Amanda Nagrotsky [00:01:10]:
Thank you, David. Thanks for having me back.
David Glendinning [00:01:12]:
When you last joined us back in October, that's when the 340B rebate issue was really starting to heat up. Our CEO Maureen Testoni was on the show more recently to discuss oral arguments that that occurred in some of the lawsuits that have come out since then over the rebate issue. And since she joined us, we've had a big decision come out from the judge who held that hearing, and that's what we're here to discuss today. But before we get to that, please remind our viewers about the cases that actually led to this decision.
Amanda Nagrotsky [00:01:49]:
Sure. So the plaintiffs in these cases are four drug companies. So it's Bristol Myers Squibb and Eli Lilly, Novartis and Sanofi, and the drug industry consultant Calderos, who has created a rebate platform that Eli Lilly has said that it would use to implement its rebate model. The drug companies and Calderos all filed individual lawsuits against HHS and HRSA in a federal district court in Washington, D.C. to challenge the agency's position that manufacturers cannot unilaterally implement rebate models for 340B. So in other words, HRSA argued that the 340B law gives the agency effectively preapproval authority over rebates and asked the court to deny relief to the drug companies on Calderos who were looking for the court to say that their rebate models are lawful and that HRSA can't block their implementation. 340B Health intervened in these lawsuits with two of our member hospitals, Genesis Healthcare System and UMass Memorial Medical Center. And we are defendants in the case.
Amanda Nagrotsky [00:03:00]:
And like hrsa, we also asked the court to deny relief to the company seeking to implement rebate models. But unlike HRSA, we argued that the 340B law categorically prohibits rebates, meaning that HRSA cannot approve them. So we took a different legal position than HRSA on that, and the judge consolidated these five cases and issued one decision.
David Glendinning [00:03:24]:
Thank you for that background. As I know, there are a good number of moving parts in all this litigation, and in these cases that this judge oversaw, what did the judge decide?
Amanda Nagrotsky [00:03:37]:
So the judge, her name is Judge Dabney Friedrich. She ruled in favor of the government and found that the 340B statute allows HRSA to require that drug makers obtain agency approval before implementing 340B rebate models. The judge evaluated the text of the 340B law and found that it does give HRSA the authority to regulate how drug companies meet their pricing obligations under 340B, whether that be through upfront discounts or rebates. Now, the manufacturers had argued that if HRSA had any discretion to regulate rebates versus discounts, that that would need to be spelled out in the manufacturer's pharmaceutical pricing agreements. But the judge rejected that argument. And the decision is a blow to the drug companies and calderos because it stops them from unilaterally implementing 340B rebate models without federal approval. This judge, David, really seemed to understand and just grasp the harms that would befall 340B providers under rebate models imposed by manufacturers without government approval. And we provided that information to the court in our briefs as interveners in the case.
Amanda Nagrotsky [00:04:59]:
The court's decision in a couple of places cited preliminary results from a survey that 340B Health conducted to better understand the financial and operational impacts of rebate models. And the information from hospitals that intervened in the cases with us was very helpful in demonstrating how shifting to rebate models under 340B would divert significant hospital resources away from patient care.
David Glendinning [00:05:27]:
So it sounds like there certainly was much to like in this decision. From the perspective of 340B hospitals. Was there anything in the decision that was in favor of the drug companies that brought these lawsuits?
Amanda Nagrotsky [00:05:40]:
This decision was largely a loss for the drug companies, but there are a few bright spots in the decision for them. One being that the judge didn't rule the three that the 340B statute categorically prohibits rebates. So the judge disagreed with our position as intervenors on that and found that while manufacturers can't just go out and unilaterally implement rebate models. The statute doesn't prohibit rebates entirely. Another positive for manufacturers pertains to what the judge said about what HRSA needs to consider before issuing final decisions on the manufacturer's proposed rebate models. The manufacturers have asserted in these lawsuits that their rebate models would help address diversion and duplicate discounts in 340B, which they claim are widespread. The companies also argued that the rebate models are the only way that they can comply with their upcoming obligations under the Inflation Reduction act, which pertains to manufacturers needing to to provide the lower of the Medicare negotiated price and the 340B price on the 10 Medicare Part D drugs that are subject to negotiation beginning January 1st of next year. The manufacturers have also touted their rebate models as bringing transparency to 340B in terms of the data that they get from covered entities.
Amanda Nagrotsky [00:07:09]:
The companies told the court that they currently don't have access to the data that they need to meaningfully exercise their own rights to audit 340B providers under the statute for diversion and duplicate discounts. And they essentially blame replenishment models used by 340B covered entities on that data, sort of being opaque and undermining their access manufacturers access to meaningful data. So back to the positive for manufacturers is the court agreed that with the manufacturers that HRSA should consider how requiring covered entities to share data could allow the manufacturers to pursue more audits of covered entities. So effectively, the judge said that in making final decisions on the manufacturer's rebate models, HRSA needs to consider the manufacturer's positions on the benefits of their rebate models.
David Glendinning [00:08:05]:
Sounds like from that perspective that this judge is still awaiting final agency decisions, which as even as a non attorney I know is often a a threshold for courts to be able to consider the merits of certain government actions. So does this mean that HRSA has not said for sure that it would stop all rebates from proceeding?
Amanda Nagrotsky [00:08:28]:
Yeah, this is a really good question. So HHS's position in the lawsuits has been that HRSA has not yet made final decisions with respect to the manufacturer's proposed rebate models. Essentially that HRSA hasn't said never to rebate models, but just not right now. And the judge, Judge Friedrich, found that to be the case for three of the manufacturers in these cases. So for Lilly, Novartis and bms, the court said HRSA had not yet issued final decisions. So it would be essentially premature for the court to conclude that the agency had failed to take into account the the benefits that manufacturers have put forth for their rebate models. But the judge came to a different conclusion for one drug maker, for Sanofi, and ruled that HRSA's letter pertaining to Sanofi's rebate model could be interpreted as a final decision rejecting Sanofi's model. Folks might be sort of wondering why it's significant that the judge found that Hearsa's letter constituted a final decision with respect to Sanofi's rebate model.
Amanda Nagrotsky [00:09:34]:
The reason why that's significant is because the judge also found that HRSA did not adequately explain the legal basis for rejecting Sanofi's model. And as a result, the judge ordered HRSA to reconsider its decision with respect to Sanofi and to explain whether and why Sanofi's proposed conditions, such as its patient definition condition, would would violate the 340B statute.
David Glendinning [00:10:01]:
Okay, so this decision certainly does not put the rebate issue to bed and does not end court activity related to it. What are the next steps, then, in the litigation over the rebate issue?
Amanda Nagrotsky [00:10:14]:
So BMS and Novartis have already appealed Judge Friedrich's ruling to the D.C. court of Appeals and are asking that court to consolidate their appeals and enter an accelerated briefing schedule. The other parties in the case have until mid July to decide if they'll appeal the ruling. Another development in litigation in these cases pertains to the administrative record in the case. The plaintiffs, the manufacturers, had asked the judge to place much of the administrative record for their cases under seal, which would prevent evidence and other documentation that the manufacturers and other parties had presented to HRSA from being made public. And we oppose that motion on the basis that information about the company's rebate models is necessary to understand the impact that rebate models would have on hospitals finances and operations. And that's information that the public needs access to. And the judge refused to seal all of the documents that the manufacturers had requested be sealed and recently released most of the administrative record in the case.
Amanda Nagrotsky [00:11:29]:
There's also another lawsuit by Johnson and Johnson. So that lawsuit is pending before another federal district court judge in D.C. and that judge also allowed 340B Health and Genesis and UMass Memorial Medical center to intervene in that case as defendants. And we just filed a brief in the J and J case last week where we maintain our position that rebates are categorically prohibited under the 340B statute. And our brief cites other elements of Judge Friedrich's opinion in the other cases, including that the court properly rejected arguments from the drug companies that any discretion by HRSA over rebate models would need to be exercised in the manufacturer's pharmaceutical pricing agreements. That's just an example, but we remain heavily involved in the litigation on behalf of our hospital members.
David Glendinning [00:12:27]:
If listeners go to the show notes, they can read more about that brief in the J and J case and where things might go with that court case. The initial decision in these other cases that we've been talking about is under appeal. In the meantime, where are we and I suppose the judge in that case? What are we waiting for HRSA to do?
Amanda Nagrotsky [00:12:50]:
So before Judge Friedrich issued her decision in the four drug company cases, HHS had filed a notice with the court that the department expects to issue guidance on 340B rebate models by June 1st. Remember, HHS's position in the lawsuits has been that HRSA hasn't made final decisions with respect to the manufacturer's rebate models. And again, Judge Friedrich accepted that with respect to the companies in the case, except for Sanofi. So HRSA sent its rebate guidance to the White House Office of Management and Budget earlier this month for approval. And this is the final stage before the agency can release the guidance to the public. And review by OMB can take weeks. And as of recording today, OMB has not yet concluded its review of this guidance, and OMB's approval is not guaranteed. The White House, for example, could decide to send the guidance back to HRSA to make changes.
Amanda Nagrotsky [00:13:57]:
But the guidance is a significant piece that we are waiting on.
David Glendinning [00:14:02]:
And I will also stress that this is still the case as of when we were speaking today. It's entirely possible we will know more by the time listeners are hearing this, in which case we'll be, of course, updating our members as soon as we can. But from where we stand today, does this rebate guidance indicate or mean that the government is going to allow rebates?
Amanda Nagrotsky [00:14:25]:
So not necessarily. The government has not indicated whether HHS will approve rebates, oppose rebate models, or will allow for some sort of limited rebate models. And we also don't know if this guidance will be proposed or final guidance or if the government will seek comments from the public. We do know that the guidance will take the form of a notice and not a regulation, which is sort of to be expected given that the rebate issue doesn't directly pertain to any of the three areas that HRSA has authority to issue regulations for.340B. The guidance will also come from HRSA, not from the Centers for Medicare and Medicaid Services. The White House, you know, recently confirmed its plans to move 340B oversight from HRSA to CMS. And the timing of that, the process for that move, those are not clear. And CMS's involvement in this rebate guidance is not clear either.
Amanda Nagrotsky [00:15:32]:
But the government's attorney and the rebate lawsuits during oral argument indicated that CMS is working with HRSA on issues pertaining to rebates, and we are, of course, monitoring closely for the guidance, as you said.
David Glendinning [00:15:49]:
David, I appreciate you laying out all the complexities that accompany this issue, not just with the rebate models themselves, but also in all the government and court responses to them. Let's talk bottom line, if we can, for a second. What does all this mean for 340B?
Amanda Nagrotsky [00:16:08]:
Whether rebates can and will replace upfront 340B discounts remains a central issue for 340B. So we have the appeals by Novartis and BMS and JNJ's pending lawsuit and district court in D.C. that means that the courts haven't yet had a final say over whether HRSA can block unilateral rebate schemes by drug companies. And again, we're waiting for HRSA's forthcoming guidance on rebates, which we, you know, have very little information about in terms of what that guidance says about rebates. But in the meantime, Judge Friedrich's decision largely maintains the status quo for rebates by prohibiting drug companies from imposing rebate models that HRSA hasn't approved. And 340B health remains in a good position to argue to the courts overseeing the manufacturer's lawsuits, to the administration and to Congress why rebates should be rejected.
David Glendinning [00:17:10]:
And you mentioned a couple times that 340B Health and our two member hospitals are they're in court as parties in these cases. Is there anything that 340B hospitals can be doing at this point besides waiting to see how these events unfold?
Amanda Nagrotsky [00:17:29]:
So, yes, there's an active role for 340B hospitals to play here. And I want to thank the hospitals that responded to 340B Health Survey and provided information about the financial and operational challenges that rebate models would create for their hospitals. That information is crucial and has been crucial for our legal efforts. It's really important for our advocacy efforts as well. And that information has helped keep unilateral rebates from moving forward. I would encourage every 340B hospital that hasn't yet assessed the impact of rebate models on their hospitals to do so. I also think it's important for hospitals to be having conversations with their vendors about operationalizing 340B rebate models and what that would look like. And I want to be clear, 340B rebates are by no means inevitable.
Amanda Nagrotsky [00:18:27]:
And 340B Health and our two hospital members that have intervened in these lawsuits with us are continuing our legal efforts to stop any rebate model for 340B. But the reality is, is that rebates are a possibility, and it's important for hospitals to be as prepared as they can be for that scenario.
David Glendinning [00:18:48]:
Amanda, we are very grateful to you for coming on today to walk through all these big moves on a very big issue for 340B hospitals. I will remind listeners again that because new developments tend to come up quickly in this area, you should visit the Show Notes to see if we have more updates. And if you are a 340B Health member, you have probably already received those updates in the form of a bulletin or alert. Amanda, thank you again for speaking with us today.
Amanda Nagrotsky [00:19:16]:
Thank you, David.
David Glendinning [00:19:18]:
Our thanks again to Amanda Noky. If you have not yet listened to Maureen Testoni's most recent episode with us, please do so to hear everything she said about rebates and other top 340B issues. And I will remind you that subscribing to the show is the best way to make sure you can hear these episodes the day we put them out. We will be back with our next episode in a few weeks. In the meantime, as always, thanks for listening and be well.
Narration [00:19:49]:
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.