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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.
Intro [00:00:04]:
Welcome to 340B Insight from 340B Health.
David Glendinning [00:00:13]:
Hello from Washington, D.C. and welcome back to 340B Insight, the podcast about the 340B drug pricing program. I'm your host, David Glendinning with 340B Health. Around this time every year, we put out our listener mailbag episode. This gives us a chance to take the questions that we received from you, the listeners, and provide the answers from the experts we have in House on 340B Health's government relations, legal and policy staff. So with a new year upon us, we reached into that mailbag again and tasked our own Monica Ferrero with chasing down the folks here in the office who could answer them. And she is with me now. So, Monica, thank you for being here and welcome back to 340B Insight.
Monica Forero [00:01:04]:
Thank you so much, David. I'm happy to be here.
David Glendinning [00:01:07]:
We will jump right into things with a question that we know is on the mind of many in the 340B community, and I dare say it might be the top issue for many of our listeners at this point. Several of our listeners want to know, where do things stand with drug companies attempting to impose 340 b rebates?
Monica Forero [00:01:30]:
Thank you, David. Yep, a super important question for our members and other providers alike. So I went to Amanda no Grodzky. She is a vice president here and one of the attorneys on our team, and I had her explain this to me in layman's terms. So just for some background, numerous drug companies want to replace upfront 340B discounts with backend rebates. And this would be a major change from how things have been done and very problematic for our 340B hospitals. It would significantly delay access to the 340B discount, causing hospitals to purchase drugs at much higher prices and then wait for 340B rebates. And there's also concerns that drug makers will deny timely and legitimate rebate claims by using their own criteria to determine if claims are eligible for the 340B rebate.
Monica Forero [00:02:22]:
And that's definitely an issue. So fortunately for providers, the Health Resources and Services Administration has so far rejected these rebate attempts. But now, and as we could have predicted, five companies have sued the government to strike down those rejections and proceed with the rebates. Those drug companies are Johnson and Johnson, Eli Lilly, Bristol Myers, Squibbling, Sanofi and Novartis, who filed a suit just a week or two ago. These lawsuits are all before a federal court in Washington, D.C. and we could see more such lawsuits come out. Before long, 340B Health will be requesting to intervene as defendants in the J and J lawsuit, which was the first one filed with the court. And if the court accepts that request, that would enable us to help defend the government's authority to block these rebates from taking effect, as we believe they're unlawful.
David Glendinning [00:03:18]:
Great. And I believe that's the US District Court for the District of Columbia, which I think we might as well call the 340B Court at this point, given all of the lawsuits involving 340B that are before it. And of course, we'll let our members and our listeners know when that request to intervene that you mentioned comes through and where the D.C. court might go from there. We will stay in the nation's capital for our next listener question, which is what are we watching for on 340B in Washington this year?
Monica Forero [00:03:51]:
So for this question, I sought our expertise from our senior vice president of government relations, that's Tom O'Donnell. And he let me know that, of course, the 119th Congress was seated last month and is officially underway, as is the second term for President Trump. Although we are just a few weeks into both, 340B has already come up for discussion in Washington. Because Republicans control Congress and the White House, they are looking for budget cuts to pay for tax cut extensions, border security and other priorities. And one of these cuts being floated would prohibit an employer sponsored health plan from paying full price for a 340B discounted drug. And while no budget savings are currently tied to such a move, it could have a tremendous impact on 340B hospitals if it's approved. And if Congress imposed Medicare Part B payment cuts on 340B hospitals on drugs they receive at a discount, that money could go towards such spending. One estimate states the size of such a Medicare cut could be more than $70 billion over 10 years, which obviously would be a major hit for 340B hospitals.
Monica Forero [00:05:00]:
The first Trump administration imposed a similar cut on its own without Congress, but the Supreme Court decided that was unlawful. So it's important to note that while these ideas are being floated as part of a long list of budget cut options, it is not yet clear how seriously lawmakers are considering them. It could very well be that neither of these ideas even come up for inclusion in a proposal, let alone debate and votes in both chambers. But either way, 340B Health is working with congressional offices to demonstrate how harmful it would be to reduce pay for 340B hospitals. And of course, we continue to engage with Capitol Hill on other potential 340B legislation, including bills that might include reporting mandates and possible changes to eligibility.
David Glendinning [00:05:46]:
Yes, keeping up with lawmakers and their staff is busy work, especially lately, and we are grateful to our whole GR team for all the shoe leather they're burning up on Capitol Hill. Some of our members around the country are also interested in how the 340B debate might be going a little closer to home. So are states considering more 340B legislation this year?
Monica Forero [00:06:11]:
Great question. So Greg Doggett, our Vice President of Legal and Policy, broke this all down for me. So states in recent years have been hotbeds of 340B legislative activity and so far 2025 looks like no exception. Already we have seen new bills in several state houses that would affect 340B hospitals and other covered entities. Let's start with the positive with more states that haven't introduced bills to protect covered entity access to contract pharmacies. These laws have been very effective in getting drug companies to suspend their restrictions in those states, and we hope to see them on the books in more states soon. The laws face court challenges, of course, but all but one lower court has ruled in favor of the states and an appeals court upheld the first in the nation, Arkansas law. Several additional states are considering 340B non discrimination legislation, which already are law in more than half of the states.
Monica Forero [00:07:05]:
So these laws would ban PBMs from paying hospitals less for drugs just because they're 340B providers. A couple states are also considering 340B reporting mandates for hospitals, which some worry could lead to more state Medicaid programs paying less for 340B drugs. We at 340B Health recently launched a member only State Policy and Advocacy Communications Resource center to help our members navigate 340B debates in their states. We will also be sending out more standalone state legislative updates to members over the course of the year so hospitals can stay informed.
David Glendinning [00:07:40]:
It sounds like a potentially long list of states to keep track of, so I'm glad to hear we're staying on top of those legislative debates. You mentioned contract pharmacy in the answer to the last question. The ongoing dispute over drug company contract pharmacy restrictions is now several years old, but we know it keeps evolving. So next question. What are the latest developments in those contract pharmacy policies from drug makers?
Monica Forero [00:08:10]:
Yes, we've definitely kept busy in this department and so here's what our Senior Manager of Pharmacy Services had to say. I spoke with Gilda Yabo on our team and she let me know that nearly 40 drug companies now impose restrictions and conditions on 340B pricing on drugs dispensed at contract pharmacies. And except for companies suspending restrictions in states that ban them, these policies tend to become more restrictive over time. And that's because drug makers add new drugs to their list or they impose geographic limits on contract pharmacies, require claims data reporting, expand restrictions to non hospital entities, and so on and so forth. So some of these recent policy changes appear to be focused on controlling how drugs are delivered to contract pharmacies. For instance, a Novartis policy change states an expectation that only contract pharmacies designated by the company will dispense Novartis drugs. And it goes on to state its expectation that these contract pharmacies will only dispense Novartis drugs if the company or an authorized distributor have delivered them directly. Other drug makers, including Abbvie and Sanofi, have included similar language in their policies.
Monica Forero [00:09:26]:
And 340B health is always communicating with members about company policy changes on the policy changes focused on drug delivery. We have not yet seen any HRSA policy statements or legal challenges related to this issue, so we continue to maintain our Member Only Manufacturer Updates resource page which describes all the drugmaker policies and their limited restrictions. We encourage hospitals to send us any policy change notices that they receive.
David Glendinning [00:09:56]:
Okay, thank you for that answer. We've now had a few episodes in which we have mentioned the Inflation Reduction act and how it relates to 340B, including one in which we just focused on what the implementation of the law might mean for 340B. One listener wants to know, is there anything new to say about the IRA as it relates to 340B?
Monica Forero [00:10:21]:
Yeah, so for this I went to our Research and Policy analytics manager Claudia Eskew for answers and I learned that the IRA will implement new price caps on Medicare drugs, and those definitely will affect the size of 340B savings. We have known for more than a year now what drugs will be the first 10 drugs subject to Medicare Part D caps starting in 2026. But we just recently learned the names of the next 15 drugs that will join that price cap list starting in 2027. These are based on what drugs Medicare spends the most money on, so it really wasn't surprising to see popular weight loss and diabe drugs like Ozempic and Wegovy make the list. We're tracking how all these price caps might lower 340b savings amounts on those drugs. We also remain engaged with the administration on how these IRA requirements to accurately identify 340B purchases will affect hospitals. In this vein, we've submitted numerous comment letters representing 340B Hospital concerns about this, and there will definitely be much more to say when Medicare officials finalize more rules on IRA implementation.
David Glendinning [00:11:31]:
This is a repeat question from a previous listener mailbag episode, so maybe we'll have to make it a regular feature of this annual episode. The question is, how many drug manufacturers had to provide refunds for overcharging covered entities last year?
Monica Forero [00:11:50]:
Yeah, so our vice President of Pharmacy Services, Steve Miller, is in full 340B coalition conference mode, but I managed to pry him from his desk and get some much needed answers. When a drug maker charges too much for 340B drugs, they post a notice on the HRSA website. And we can say at this point that drug companies posted 31 such notices in 2024. That's down from the 41 notices that drug makers posted in 2023. And just about even with the 33 notices they filed in 2022, 340B Health played a big role in getting the process in place that finds all these overcharges. And we helped push HRSA to start collecting quarterly pricing data from drug makers and putting that information up on its 340B ceiling price website. When agency officials compare pricing information they receive from drug companies to their own pricing calculations, they sometimes find discrepancies between the 340B ceiling price and what hospitals paid. So when HRSA informs the companies about those discrepancies, this is what leads to the overcharged notices and the refunds to affected covered entities.
David Glendinning [00:13:03]:
Okay, thank you for giving us the annual update on that on the overcharges we sometimes hear from listeners who are new to the 340B world and just starting to get their heads around how 340B works at health systems and hospitals that they might be working at. So this is a general question, but it's certainly a big one for those 340B rookies. One of them asks, what can hospitals do to protect against 340B audit finding?
Monica Forero [00:13:35]:
Yep, these audits are super important for our member hospitals. And so I went to Rebecca Swartz, our senior manager of policy and compliance, for some insight. 340B health is always providing technical assistance and other guidance on 340B compliance. One piece of advice that we've been giving hospitals recently is about timely updates of records. Anytime a hospital files a new Medicare cost report, they have new information to file in their record on the Office of Pharmacy Affairs Information System, or what we call opace. At the very least, they will update their MCR filing data and cost reporting period. But they also might need to update items like their dish adjustment, percentage control, type or ownership. And hospitals used to do this when recertifying, but since early 2023, OpenE allows updates at any time.
Monica Forero [00:14:30]:
So it's crucial and we're recommending that hospitals make it a practice to update OPACE as soon as possible after filing a new mcr. This will help avoid database error findings when hospitals undergo these important 340B audits.
David Glendinning [00:14:47]:
Yes, and of course, avoiding those findings, that is the name of the game. Okay, well Monica, that was a pretty full mailbag and some pretty detailed answers. So thank you for hustling all over the office to track down our resident experts amid everything that is going on in 340B. We all appreciate the great intel.
Monica Forero [00:15:10]:
Thank you David, and thanks to 340B team for helping us out with this.
David Glendinning [00:15:15]:
And we thank Amanda, Tom, Greg, Gilda, Claudia, Steve and Rebecca for giving us all the benefits of their expertise. You can meet with and learn from all these folks yourself. All you have to do is sign up to attend the 340B Coalition Winter Conference, which this year is occurring February 24th to 26th in San Diego. Check out the show notes for the registration link. Or you can visit 340bwinterconference.org for more details about the agenda. And please keep those questions coming by emailing podcast40bhealth.org we will be back in a few weeks with our next episode. In the meantime, as always, thanks for listening and be well.
Outro [00:16:07]:
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 podcast40bhealth.org. Voxtopica.