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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.
Speaker 1:
Welcome to 340B Insight from 340B Health.
David Glendinning:
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. Our guest today is Maureen Testoni, the president and CEO of 340B Health. We wanted to have Maureen on the show one more time in 2023 to wrap up some of the big news for 340B in recent weeks.
Key developments include an influential decision on patient definition from a federal court, an administration notice on registration of new sites, and a significant payment that many 340B hospitals will be receiving soon. I recently sat down with her to discuss these items and more. Here's that conversation.
I'm here with Maureen Testoni, president and CEO of 340B Health. Maureen, welcome back to 340B Insight.
Maureen Testoni:
Thanks so much for having me, David. I'm excited to be back.
David Glendinning:
And you were a guest on the show back in September. What has been going on in the 340B world since then?
Maureen Testoni:
Really big developments. I think one of the biggest ones came very recently from a federal court in South Carolina, which overturned enforcement action taken by the agency in charge of overseeing 340B, the Health Resources and Service Administration or HRSA.
Also, we saw HRSA release a notice publicly, that limiting the use of 340B in new hospital locations or kind of reverting back to an older policy. We've also seen some additional drug company restrictions on 340B contract pharmacy. And in a very positive note, we saw a final CMS plan that will be repaying 340B hospitals lump sum amounts in order to make up for unlawful Medicare cuts that were in place for several years.
David Glendinning:
A lot to cover there. So let's dive right in. I will start with the court decision on patient definition. What happened in that case?
Maureen Testoni:
So a community health center in South Carolina called Genesis Healthcare sued HRSA over diversion findings made by HRSA following a 340B audit. HRSA described them as involving prescriptions that were written in private physician offices that were not approved service sites under a Genesis grant and that the scripts were written by physicians that were not contracted with nor employed by Genesis. Their final letter to Genesis said that only prescriptions that were initiated as a result of care received by Genesis, qualify for 340B under the statute.
So the court refused to uphold that interpretation of the word, patient, under the statute and that is a really, really big deal. Because HRSA had definitely been using that from 2012 until about 2019. And HRSA's initiation requirement had not been included in any final published guidance and that was something that the court really focused on. He was not willing to defer to HRSA's interpretation of the word, patient, to include initiation because it had just not been included in their guidance. But he also had a couple other reasons for not allowing HRSA to enforce this interpretation.
One of them was that he just thought initiation conflicted with the plain and ordinary meaning of the word, patient, in the 340B statute.
Second, he looked at the legislative history of the 340B statute and said that Congress intended for this statute to be interpreted broadly for providers. He said that Congress wanted to use 340B to help providers be financially stable, especially in the face of significant drug pricing increases, which he said are still occurring today. And he was very, very clear that the way 340B is supposed to work is that providers are allowed to receive drugs at a discount and then get paid by insurers at the non-discount price, thereby allowing for additional revenue that can be used for their patients.
And this really counters some of the people that are working to limit 340B. And they would argue that 340B can only be used for uninsured patients or can only be used to cover charity care. And this court was very clearly and definitively stating that is not the case.
Finally, he also made clear that HRSA has the authority to issue enforcement guidelines. There's been a lot of discussion over the past few years about whether HRSA has the legal authority they need to be able to issue what their enforcement stance is and act on it, or whether Congress would be required to give them special regulatory authority. And this judge made very clear, they absolutely, they like all government agencies do all the time, have the authority to issue enforcement guidelines and those enforcement guidelines will be upheld in court provided that they meet the requirements that HRSA did not meet here.
David Glendinning:
Okay. That covers what the judge in this case has told HRSA and the administration in his decision. So what does all that mean for covered entities?
Maureen Testoni:
Right now that decision applies only to Genesis Healthcare, so it does not have what we call presidential value where everybody would have to follow it. HRSA has until January 2nd to appeal and I think that will give us some sense certainly of where they are going to go.
However, what we have already seen since Genesis filed their lawsuit is that HRSA has already stepped away from relying on this initiation standard, at least based on the audit results that we've seen since 2019. But it doesn't limit other actions by HRSA. Like for example, the 1996 guidance on who qualifies a patient is still enforced. This court got rid of the initiation standard, but that's all he did. He didn't go any broader in terms of what scripts covered entities can use for 340B.
And in fact, Genesis asked the court to say that providers are allowed to use 340B for scripts that are written for their patients from any source at all. And the court refused to do that and was very clear. "Look, that is way too broad. I am just speaking about initiation."
The judge agreed with HRSA that the 340B statute is written in a way that means that there is a present relationship between the provider and the patient. But I think that raises a lot of questions for us going forward. Does ongoing just before the time between the last encounter you've had with the provider or could it mean more? Like what type of encounter did you have with the provider? Was it something that was really intended to be just a one-off event, maybe one vaccine or maybe an X-ray at a hospital? And if so, would that really meet the standard of being an ongoing patient?
So if they do not go ahead and appeal this decision, I would expect additional enforcement guidelines on this issue because this really does, I think leave the 340B community unclear as to exactly what HRSA's expectations are around the definition of patient.
David Glendinning:
As you mentioned, we had some developments recently on the issue of registering new 340B child sites, which I know also involves HRSA. What is the latest on that?
Maureen Testoni:
So HRSA's had a policy and they've had enforcement guidelines in place since 1994 on the issue of what parts of a hospital really will qualify as being part of a covered entity hospital and indicate locations where you can use 340B or have 340B drugs delivered. Locations that are new locations to a hospital, HRSA has said it cannot use 340B until those locations appear on a filed Medicare cost report. And there can be sometimes close to two years before, between when you open a new location and when it appears on a filed cost report and then you're able to register it with 340B.
Now during the public health emergency, however, providers asked HRSA, "Can you waive this requirement?" And HRSA says, "No, we are not going to waive that requirement. We really can't waive that requirement. But we also note that if your patients qualify under the 1996 patient definition guidelines, then you may use 340B in those locations."
And their contractor, Apexus, also published FAQs on their website on this issue that were not at all related to the public health emergency. So it was a big surprise then when the public health emergency ended and HRSA decided to go back to their old rule. And they did not publish any specific notice about what their expectations were until recently, until October when HRSA published in the Federal Register a notice saying that in fact they were going back to their old requirement requiring registration of 340B new locations before using 340B drugs.
However, they recognized that not all providers understood that that was the requirement. So their notice provides a transition period for hospitals to be able to come into compliance with these new guidelines. And unfortunately though the transition period is in our view, fairly narrow and just does not apply adequately to all the hospitals that relied upon the notice that was in the Apexus FAQs and the fact that HRSA did not really clarify their position when the PHE ended.
David Glendinning:
Is there any additional advocacy that 340B hospitals are doing on this child site issue given the problems that you pointed out?
Maureen Testoni:
There are a number of hospital clinics as I mentioned, that will not be able to avail themselves of this requirement for reasons that seem arbitrary. For example, you could have clinics that are opened maybe a day apart from each other for different hospitals or even for the same hospital, and one could potentially qualify for 340B and qualify for this transition and another one would not. It's also just applying to hospitals that are currently using 340B in those locations. Of course, we're pleased that they are offering more clarity on this and at least offering a transition period. But we are certainly very concerned about how limited it is in the arbitrary nature of that, and we are sharing all of that with HRSA and asking for changes to the transition period.
In addition, a group of about 40 hospitals and health systems have since sued HRSA over this child site notice and are arguing that HRSA doesn't even have the authority and didn't back in 1994 even, to prohibit hospitals from using 340B in these new child site locations. So that is also an ongoing legal challenge.
David Glendinning:
The 340B contract pharmacy restrictions are a topic we cover often on this podcast. Where do things stand with those?
Maureen Testoni:
I think we're approaching 30 companies that have done that now, and we're continuing to see manufacturers that had had restrictions for a while try to limit those restrictions even further. Now, we are still waiting on two appellate court cases on this issue, which is surprising that they haven't been issued yet.
But in the meantime, really what these restrictions are doing is they're providing incentives to hospitals to do things like open their own in-house retail and special pharmacies. And there's other steps as well that they are engaging in so that they are making sure that their patients can obtain these drugs at the 340B price.
David Glendinning:
What has been happening to fight back against these manufacturer restrictions? And also to set the record straight on, as you mentioned before, 340B's true purpose and impact.
Maureen Testoni:
So it's been very interesting to see the states get directly involved on this contract pharmacy issues. And both Arkansas and Louisiana have passed laws to prohibit manufacturers from restricting contract pharmacy for 340B. We are going to file a friend of the court brief soon in litigation that pharma is doing with respect to the Louisiana law. We already participated in an amicus brief in the lawsuit that pharmaceutical manufacturers have against the Arkansas law.
What's really interesting about this is that the laws have resulted in many of the manufacturers walking back their restrictions in those states. And it's prompting other states to really look at this issue as well and try to pass their own laws. We have certainly worked with 340B providers in a number of states on legislation that could achieve those goals.
And also the other thing I wanted to note because you also asked me about setting the record straight on 340B's purpose and impact, and it's been very exciting to see a number of hospitals get engaged publicly on the purpose of 340B.
We saw two Op-Eds, one from our 340B Health board chair Karen Bowling in West Virginia, another one from 340B board member, Matt Perry in Ohio. Both of them are CEOs of 340B hospitals. We recently saw an Op-Ed by leaders of the Association Of Black Health System Pharmacists on this issue and the head of Holy Cross Health, Maryland region has also issued an Op-Ed.
And many of these Op-Eds are really focusing on how it allows hospitals to provide more services to their patients. And then some of these Op-Eds have really noted how crucial 340B is to advancing healthcare equity for underserved patients. These types of opinion pieces are crucial for 340B education. They are certainly read by members of the public, but also by policymakers at both the state and federal level and play a critical role in helping for policymakers to understand what 340B really is all about and how covered entities use their 340B savings.
David Glendinning:
We will be sure to link to those opinion pieces in the show notes for this episode. You mentioned the government plan for repaying hospitals for Medicare Part B cuts. What does that plan look like?
Maureen Testoni:
Well, that has been certainly a bright spot for the 340B hospital community. We are expecting in early 2024 that hospitals will receive a lump sum payment that's going to total about $9 billion. And that's to make up for unlawful cuts that CMS made in terms of reimbursing those hospitals for 340B drugs. So that is something that is a lawsuit again, that took years and ultimately went up to the Supreme Court. But we're very, very pleased to see that CMS is going to be making these lump sum payments to rectify that unlawful action.
David Glendinning:
Seems like this is nearing the end of a long road on this issue that started in 2018. At least when it comes to those repayments, are there any remaining issues to watch for when it comes to these Medicare remedies?
Maureen Testoni:
Yeah, there are a couple of issues that we are still concerned about. One of them is that CMS plans to cut what would otherwise be increases in payments for Part B services, and this would begin in 2026 and last for about 16 years. So when CMS cut the payments in prior years to 340B hospitals, the money that they were cutting, they actually moved into reimbursement for other non-drug Part B services.
So now that they are making these lump sum payments to rectify the unlawful cuts, CMS takes the position which we and others disagree with, that that route repayment has to be budget neutral and this is something that will hit all hospitals, 340B and non 340B. So we are concerned about that. I mean, the fact that non 340B hospitals are now going to see these future cuts when they had nothing to do with CMS's decision to make the cuts in the first place is just wrong in our opinion. But there is certainly time between now and 2026 for the community to continue to advocate for changes in that policy.
We're also concerned about Medicare Advantage plans. Many of them have not reimbursed hospitals for decreasing their own reimbursement of 340B drugs. But this most recent plan by CMS did not provide adequate direction to the Medicare Advantage plans that would require them to make these remedy payments.
But bottom line, David, I think the really important thing to keep in mind is that there are going to be lump sum payments made to 340B hospitals within weeks, and it's a substantial amount of money. I mean literally billions of dollars that will go into their budgets to help them care for patients now, and that's a really great thing.
David Glendinning:
So January is just around the corner, which of course means the next 340B Coalition Conference is coming just around the corner. What should listeners know about that?
Maureen Testoni:
Oh, I'm so excited about this event. The conference represents the largest gathering of 340B stakeholders in the country, and it's just a great opportunity to learn more about technical aspects of 340B as well as big policy changes in 340B and advocacy opportunities. And there's also plenty of time for networking with your peers, networking with others that are involved and helping you to maintain compliance in 340B. We're adding a couple of sessions to talk about the impact of the Genesis decision that I talked about earlier. And we will have points of view from hospitals, grantees, and even drug companies as to their views on that decision and what that could mean.
Admiral Krista Pedley will be presenting at the conference for HRSA. It's a really good time. I love it because I love 340B so much, and it's just a great opportunity for me to be able to talk to other people about 340B matters. Because my own family is just not as interested in talking to me about it as all of my friends at the conference. So I hope you'll be able to join us, and I look forward to seeing you.
David Glendinning:
Well, Maureen, we always appreciate having you on the show and I know our listeners do as well. So thank you again for being here.
Maureen Testoni:
Thank you so much, David. I really appreciate the opportunity.
David Glendinning:
Our thanks again to Maureen Testoni for wrapping up the year for us with her analysis of the latest 340B developments. And we also thank you, our listeners for being with us for another season of 340B Insight. This is our final episode of 2023, and we appreciate you joining us this year.
We are planning a full season of episodes for 2024, so this is a great time to send us your ideas for episodes and guests. You can email us at podcast@340bhealth.org.
We wish you and your loved ones a joyous holiday season and happy, healthy New Year. We will be back in January. In the meantime, as always, thanks for listening and to be well.
Speaker 1:
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.