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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)
Welcome to 340B Insight from 340B Health.
David Glendinning (00:08)
Hello from Washington DC and welcome back to 340B Insight, the premier podcast about the 340B drug pricing program. I'm your host David Glendinning with 340B Health. Around this time every year, we like to do something a little different and a little bit more interactive, our annual listener mailbag episode. This is where we take questions submitted by you, our listeners, and bring in answers from the experts we're lucky to have right here.
on the 340B Health staff. With a new year underway and no shortage of developments affecting 340B hospitals, we reached into the mailbag again. And to help track down answers from across our policy, legal, pharmacy, and government relations teams, I'm joined today by Alyssa Jones from our communications team. Alyssa, welcome to 340B Insight.
Alyssa Jones (00:59)
Thank you, David. Happy to be here.
David Glendinning (01:02)
And I'm happy to report that the mailbag was very full this year, which is never a surprise, but let's jump right in. first listener question is one we've been hearing a lot about lately. Hospitals are asking, what is the latest on the CMS survey asking hospitals to report their drug acquisition costs? Do hospitals have to respond to this survey? And what should they be thinking about right now? Alyssa, who did you go off to for this one?
Alyssa Jones (01:29)
So for this question, I spoke with Amanda Nagrotsky, one of our vice presidents and attorneys here at 340B Health. At a high level, the issue is that CMS launched a new survey focused on hospitals' outpatient drug acquisition costs tied to how the agency sets Medicare outpatient payment rates for Medicare Part B drugs. The data CMS collects will come from all hospitals paid under the outpatient prospective payment system, but could be used to justify future Medicare pay cuts to hospitals specifically for 340B drugs.
which is a major concern. Some hospitals recently saw materials suggesting that they are required to complete the survey, and that raised a lot of concern as well. What Amanda emphasized is that under the Medicare statute, there's no specific penalties for hospitals that choose not to respond. CMS itself acknowledged that in the final outpatient payment rule. Despite that, a CMS contractor published guidance saying hospitals, quote, are to respond, which created confusion because it contradicted what CMS had said in the rule.
That's why 340B Health and several other hospital and pharmacy groups recently sent a joint letter asking the contractor to correct their language. We believe it's confusing to suggest participation is mandatory when CMS hasn't identified any legal consequences for not responding. Amanda also wanted me to stress that the survey is extremely burdensome from hospitals and hospitals should carefully weigh that burden when they decide how to proceed.
David Glendinning (02:52)
Yes, that clarity is critical, especially when hospitals are, as we know, already stretched thin. And as always, we'll keep members posted if CMS provides any additional guidance or corrections in this case, or the contractor that CMS is using. Our next question takes us out of Washington and into state capitals. A listener asked, are states starting to move new 340B bills in their legislative sessions this year? Alyssa, what did you hear about that?
Alyssa Jones (03:21)
So I went to Tom O'Donnell, Senior Vice President of Government Relations. Tom told me that state legislatures are once again shaping up to be major battlegrounds for 340B in 2026. Even early in the year, we're seeing a steady stream of bills introduced that would affect 340B hospitals and other covered entities. Broadly speaking, the bills tend to fall into two categories or a combination of the two. First are bills that protect access to 340B pricing, including protections for contract pharmacy arrangements.
and bans on discriminatory practices by PBMs or health plans. We generally continue to support these efforts and they've proven effective in states that haven't acted them. The second category is state-level reporting mandates. These bills often require hospitals to submit extensive financial and utilization data related to 340B. While proponents frame them as transparency measures, Tom noted that they can be misleading, burdensome, and sometimes modeled on frameworks promoted by drug companies.
Several of these reporting proposals closely mirror laws passed in recent years in states like Minnesota, and we're watching similar bills in multiple states right now. Tom wanted me to emphasize that 340B Health is actively working with hospital partners in these states, providing tools, messaging, and analysis to help members engage effectively with lawmakers as these bills move.
David Glendinning (04:38)
State activity really does remain a constant in 340B. It's good to hear we're staying on top of it. That brings us nicely to our next question, which focuses on state legislation, but also on the courts. A listener wrote in asking, how have things been going in the courts on all the lawsuits over state contract pharmacy protection laws?
Alyssa Jones (04:59)
I spoke with Alicia Kimme, one of our attorneys, to get the latest on this. So the short answer is that states are continuing to perform well in these cases. Federal courts across the country have repeatedly declined to block state laws that protect covered entity access to 340B pricing through contract pharmacies. A recent example comes out from Maine, where a federal district court rejected the drug industry's request to block the state's contract pharmacy law.
The court found that the industry hadn't shown a likelihood of success on its claims, including arguments that federal law preempts the state statute. Alicia also pointed out that two appellate courts have now weighed in as well, including a federal appeals court decision upholding Arkansas's first in the nation contract pharmacy protection law. Much of the litigation is still pending in district and appeals courts, but the overall trend continues to favor states. And that's an encouraging sign for hospitals relying on contract pharmacy arrangements to serve patients.
David Glendinning (05:55)
Yes, that is an important backdrop also as more states consider similar laws going forward, I imagine. Next up, we received several questions about Medicare drug price caps. One listener asked, I saw something about new drugs being selected for Medicare price caps. What is that all about? And how does it relate to 340B? Alyssa?
Alyssa Jones (06:17)
Yeah, this is a great question. For this one, I connected with Gilda Yaboa, who focuses on pharmacy policy issues here at 340B Health. Gilda explained to me that under the Inflation Reduction Act, Medicare is phasing in maximum fare pricing, or MFPs, for high-spending drugs. CMS recently announced the next group of 15 drugs that will be subject to these price caps starting in 2028, expanding on the earlier list of drugs selected for 2026 and 2027.
What's new and particularly important for 340B hospitals is that starting in 2028, these price caps will apply not only to Medicare Part D drugs, but also to Part B drugs, including those played through Medicare Advantage. As Medicare prices move closer to 340B ceiling prices, hospitals may see reduced 340B savings on certain high-cost drugs. The exact impact will vary widely depending on a hospital's patient mix, payer mix, drug mix, and purchasing patterns.
as well as likely drug maker price adjustments. Gilda stressed that this is a complex and evolving issue. We at 340B Health is actively analyzing how the price caps intersect with 340B and is engaging with federal agencies on operational concerns, including how 340B purchases are identified and treated under the new system.
David Glendinning (07:35)
Definitely an area we'll be talking about a lot more in future episodes. The MFP certainly is not going away anytime soon. Now for question that seems to come up every year. A listener asked, now that we're in a new year, how many times did drug companies say they overcharged 340B hospitals in 2025? Alyssa, what did you find?
Alyssa Jones (07:57)
So for this one, I spoke with Rebecca Swartz, who works on policy and compliance issues. Rebecca said that in 2025, drug companies issued 48 refund notices acknowledging that they had overcharged covered entities for 340b drugs. That's a notably high number and continues a trend we've seen over the past several years. What's especially important, Rebecca emphasized, is why we're seeing so many overcharge acknowledgments. This increase is largely due to HRSA's collection of quarterly pricing data.
and the operation of the 340B ceiling price website, tools that make it possible to identify discrepancies between what hospitals paid and what the ceiling price should have been. 340B Health played a major role along with hospital and pharmacy partners in pushing for these transparency measures after Congress authorized them more than a decade ago. Once HRSA began collecting and analyzing pricing data, overcharges that previously went undetected started coming to light.
Rebecca also reminded me to tell listeners that hospitals should continue to monitor pricing and report suspected overcharges to HRSA. These reports are an important element of the enforcement mechanism in 340B.
David Glendinning (09:04)
Yeah, that's a great example of transparency working the way Congress intended in this case. Our next question is about something that recently generated some headlines in the press. A listener asked, there were some news reports about new government data on 340B spending. Can you explain what those numbers really mean? Alyssa?
Alyssa Jones (09:26)
Yeah, so I took this question to Kayla Sembley from our policy team. Kayla explained to me that HRSA recently released updated data showing total purchases of drugs through the 340B program. The top line number reflects the amount drug companies received from covered entities for 340B purchases, not the amount of savings hospitals received. This distinction is crucial.
The data often gets mischaracterized as 340B profits or hospital revenue, when in reality, it's simply gross purchase volume. HRSA itself noted that growth in 340B purchasing mirrors broader trends in the healthcare system, including increased use of high cost specialty drugs and the continued shift from inpatient to outpatient care, which is the area of care where 340B applies. Kayla emphasized that the data does not account for how much hospitals lose
due to drug company restrictions or how hospitals use 340B savings to support patient care. That context is often missing for media coverage, and it's something 340B Health is continuing to push policymakers to understand.
David Glendinning (10:30)
Yeah, context really is everything with those numbers. Our final listener question for this year at any rate is another good one. What were the results of HRSA's audits of drug companies last year? Alyssa, what did you hear about that?
Alyssa Jones (10:47)
So our Vice President of Pharmacy Services, Steve Miller, talked to me on this issue. Many on the 340B provider side know that HRSA audits 200 covered entities per year. But it's also important to note that the agency audits five drug companies as well. Of the five drug makers that were on that list in the most recent audit cycle for fiscal year 2025, four received findings. These findings included
charging covered entities more than the 340b ceiling price and other compliance issues. Three of the findings required repayments to covered entities for the overcharges. That continues a pattern we've seen since HRSA began collecting quarterly pricing data. Prior to that, audit findings against drug companies were extremely rare. Since the data collection began, audit findings and required repayments and corrective action plans have become much more common.
Steve noted that these audits underscore the importance of transparency and oversight on the drug company side of the program, just as hospitals are routinely audited for compliance.
David Glendinning (11:51)
A strong reminder that program integrity applies to all participants in 340B. Well, Alyssa, that was quite a mailbag and quite a lot of ground covered. Thank you for tracking down answers from across our bench of expertise here at 340B Health.
Alyssa Jones (12:07)
Yes, thank you for having me.
David Glendinning (12:09)
And our thanks also to Amanda, Tom, Alicia, Gilda, Rebecca, Kayla, and Steve for sharing that expertise with all of us. As always, we'll include links in the show notes ⁓ to more detailed member-only resources on the topics we cover. And we always encourage listeners to keep those questions coming by emailing us at podcast at 340bhealth.org.
And if you are listening to this episode while attending the 340B Coalition Winter Conference in San Diego, please stop by the exhibit hall to say hi. We plan to be interviewing guests while many in the 340B community are all in one place. We'll be back in a few weeks with our next episode. Until then, thanks for listening and be well.
Narration (12:59)
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 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.