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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. Our guest today is 340B Health Senior Manager of Policy and Compliance, Rebecca Swartz. It's been a couple of months since we had our president and CEO Maureen Testoni on the show to give us a recap of all the top developments in the 340B world and with 2025 coming to a close.
We wanted to have Rebecca on the show to give us a year end wrap up of all the developments that have happened since then. So here's that conversation. Today I am speaking with Rebecca Schwartz, a key member of our legal and policy team here at 340B Health and also as luck would have it, my next door neighbor in the DC office. So Rebecca, it's nice as always to be seeing you and speaking with you and welcome back to 340B Insight.
Rebecca Swartz (01:08)
Thank you so much for having me, David.
David Glendinning (01:11)
I feel like we might say this every year, but 2025 has been an especially eventful year for 340B. We'll get into some of the specifics in a bit, but first, would you please summarize the biggest developments as you've seen them since we last spoke with our CEO Maureen on the show back in October?
Rebecca Swartz (01:32)
It's true. I do feel like we say that every year, but I think it's warranted. And I think 2025 will go down as the year in 340B that rebates shifted from a mere concept to this fully developed model with implementation criteria. And really what I mean is that HRSA approved plans submitted by manufacturers for a 340B rebate model that's set to begin on January 1st, 2026.
And this is such a big deal because hospitals will face major financial and operational pressures tied to rebates and the Inflation Reduction Act, which we'll of course be talking about. We've already observed intensified manufacturer activities through WAC price changes. And then there's been the introduction of a new data submission platform that will be used for rebate processing. And it's easy for rebates to take up so much of the conversation right now, but they're
were several other federal policy developments at CMS, HRSA, and Congress that had significant impacts on 340B this past year and moving forward as well.
David Glendinning (02:41)
And you're right, lately it has felt like rebates are really the main event around here. So let's buy into that and start digging into that issue. Just for a little bit of a refresher, what happened this year to really bring rebates to the forefront, as you mentioned?
Rebecca Swartz (02:57)
That's a great question, David, because manufacturers have been pushing for years to shift 340B from an upfront discount to a backend rebate program. But in 2022, the Inflation Reduction Act entered the chat, as the kids say, and that sort of changed how manufacturers talked about the utility of rebates in 340B. And what I mean is that the IRA's Maximum Fair Price, or MFP rules,
gave manufacturers these new incentives to push for converting 340V to a rebate model. ⁓ We saw several manufacturers attempt to do this in a sort of unilateral way, and HRSA moved to block them from doing so. The issue ended up going to court, and this year two decisions affirmed HRSA's authority to require pre-approval for any 340V rebate models.
And HRSA responded by launching a limited rebate pilot that is set to take effect on January 1st, 2026.
David Glendinning (04:00)
Yes, when we last spoke with Maureen, knew at that point back in October that the pilot was coming, but we did not really know many of the details yet. So where did HRSA ultimately land on this rebate pilot? What will this program look like starting January 1st?
Rebecca Swartz (04:18)
So for a bit of background, HRSA invited the nine manufacturers of the 10 drugs subject to the 2026 maximum fare prices to apply for participation in the rebate pilot program. And HRSA ultimately approved all nine proposals. The start date, as we've said, is January 1st, 2026. But that's for nine of the 10 drugs.
So the exception is Entresto, which will become subject to the rebate pilot on April 1st, 2026. And the rebates will apply to all outpatient uses of the drugs and all payers. So that's kind of important because there's the connection to the IRA, but it is all payers it applies to. And the way it'll work is that covered entities will be purchasing these drugs at wholesale acquisition costs upfront and then seek a back end rebate.
and we might see HRSA move to expand the pilot after evaluating its effectiveness.
David Glendinning (05:18)
So this is a big deal, obviously, a big change for 340B. What has the response been from groups like 340B Health and the broader hospital and pharmacy communities? What have their responses been to the pilot program?
Rebecca Swartz (05:33)
We've done a lot of work and we really have our hospital members to thank for being so helpful in helping us articulate our serious concerns about it. But actually, this is a really timely question, David, because we just sent a letter to Congress and filed an amicus brief in federal court warning the 340B rebate pilot program would upend.
more than three decades of established 340B operations and imposed significant financial and administrative burdens on safety net hospitals. we've done a lot of work over the years, but we're really upping the ante in terms of, you know, trying to do everything we can to urge Congress to act to stop. we're also, you know, doing things in federal court.
David Glendinning (06:21)
we see any immediate actions on Capitol Hill or in the courts, of course, we will update our members directly and in our next news update for our podcast listeners. January 1st is fast approaching and that's also a key date, as you mentioned, for the IRA implementation. So how did the IRA's maximum fair price provisions fit into everything else happening with rebates?
Rebecca Swartz (06:48)
Yes, so the short and sweet of it is that starting January 1st, manufacturers must offer the lower of 340B or MFP for these selected drugs. And for non-340B dispenses of these drugs to Medicare beneficiaries, manufacturers are required to provide the MFP. And we have one IT platform called Beacon that is processing both 340B rebates
and MFP refunds.
David Glendinning (07:19)
And as hospitals prepare for the rebate pilot, I'm wondering what ripple effects we might already be seeing. So how have drug companies and pharmacies been responding to this development?
Rebecca Swartz (07:33)
Yes, so Walgreens announced a carve out for the 10 rebate pilot drugs beginning December 23rd. And there's a potential for other contract pharmacies to adopt similar policies. We're also already seeing manufacturers cut whack to MFP, and that'll decrease the difference between the drugs price and the 340B price. And then there's some other key actions manufacturers have taken that I just want to highlight here.
we saw the adoption of a new claims data submission platform called Truzo. So ESP is no longer the only game in town. There is this additional platform that two manufacturers have adopted so far, and they're using that to administer their restrictive contract pharmacy policies. Manufacturers have also included language in their policies that appears to target distribution and accumulations more aggressively.
David Glendinning (08:32)
So, Rebecca, D.C., as you know, is a federal town, so we should speak about how federal policy on 340B has also been extremely active this year. What do you see as the biggest federal policy developments we're tracking right now?
Rebecca Swartz (08:48)
So for one, the pressures of the safety net are increasing, and 340B hospitals are going to especially feel reductions in Medicaid that could lead to disenrollments. And that could mean hospitals no longer qualify for 340B because of the way the calculation is partially based on Medicaid patients. And then the hospitals that do continue to meet the requirements will be subsidizing even more care.
as they continue to care for newly uninsured patients. So that's very concerning to us. As we discussed, IRA implementation and the overlap with the implementation of the rebate pilot, and that could lead to shrinking margins on those MFP drugs. Congressionally, we saw the help committee have a hearing on 340B. It featured some great support, but there were also calls for reform.
And then there's renewed attention on 340B from the Senate gang of six. And there will be potentially a house parallel to that. We're watching for additional drug pricing models from CMS that could involve most favored nation-like features. And in general, we're just in this policy environment right now where 340B is high profile and significant implications could be ahead as more spotlight is on the program.
So we here at 340B Health are continuing to just educate policymakers on the role of 340B and the risk of undermining it.
David Glendinning (10:21)
Let's turn now to compliance and audits. So now we're in your wheelhouse, Rebecca. I know there's a particular area focus for the work you do here. What has the Health Resources and Services Administration been focusing on more heavily this year in the audit area?
Rebecca Swartz (10:40)
So I'd like to highlight two areas we've identified as more of a focus for HRSA this year. And we picked up on these areas through an information collection request that HRSA published in August of this year, the audit data request list that it's using for fiscal year 2026 audits, and then just general trends and audit findings. So that first area is expanded scrutiny of the trial balance for both offsite and onsite locations. And there's
language that's being proposed that we're concerned about and we've pushed back on. And then the other area of apparent increase in focus is shipping addresses. So we see language, again, that information collection requests we're seeing it in and then the audit data request list as well. And then just audit findings regarding the way that entities list shipping addresses. And so we submit a comments on that information collection request. That's sort of how we push back on.
some of these areas to highlight the increased burden and then just, want to hear her to clarify its statutory authority to make some of these changes.
David Glendinning (11:43)
Let's talk a little bit more about those audit results. I know you often dig pretty deeply into many of the 200 covered entity audits that HRSA conducts every year. Are we seeing any signs from those recent audits and appeals of those that might have findings on where HRSA is focusing its compliance activities recently?
Rebecca Swartz (12:06)
So 340B Health is aware of about a dozen hospitals that are waiting for a response from HRSA to their appealed diversion finding. And I know those hospitals, and really I imagine anyone in the 340B audit and compliance phase is very eager for HRSA to issue responses to those appeals because those diversion findings deal with several key questions about HRSA's position.
on 340B patient definition. And I'm referring specifically to documentation related to referrals that occur outside of the hospital, and then qualifying 340B in connection with medication therapy management. So we're still waiting for those outcomes, but there have also been a few recently reversed diversion findings. And though they didn't necessarily tell us anything new about HRSA's position on patient definition, they reinforced the value of CHAP.
of finding.
David Glendinning (13:03)
Moving on from HRSA, the Centers for Medicare and Medicaid Services, CMS, also a major administration player on 340B. And we know that agency also has issued several policy decisions this year that intersect with 340B. What should hospitals be watching most closely about those CMS decisions?
Rebecca Swartz (13:24)
So CMS plans to survey outpatient perspective payment system or ops, OPPS hospitals on actual acquisition costs by NDC for separately payable drugs over a one year period. And we here at 340B Health oppose the survey. We believe it will be used to propose cuts to 340B drug payments, potentially down to actual acquisition cost. And that would just pretty much obliterate 340B savings, right?
Separately, the IRA created Part D rebates for certain drugs and biologicals with prices increasing faster than the rate of inflation. And to remove the 340B units from rebate calculations for Part B, CMS finalized a voluntary 340B Part D claims repository with possible future mandates. And then there are also new Medicare and Medicaid drug pricing model or pilots.
that could have indirect effects on 340B that we're watching.
David Glendinning (14:27)
Okay. Certainly a lot to keep track of there and keep an eye on. We always like to wrap up these types of discussions by speaking about what hospitals can be doing in this shifting three, four to be policy landscape. So as hospitals prepare for what looks like it's going to be a big 2026, what do you see as the most important steps they should take?
Rebecca Swartz (14:49)
So if we start at your hospitals specifically, I think 340B recently has relied more on an interdepartmental strategy. So we recommend that you begin and maintain cross-functional planning. getting your pharmacy, finance, members from your TPA, compliance, everybody should be involved. As it relates to rebates specifically, you want to make sure that you're tracking denials,
delays, system burden, administrative cost. All of those are really important data points for evaluating whether or not the model is working. You also want to make sure that you're monitoring whack changes and any contract pharmacy developments like we mentioned with Walgreens. And then it seems like anytime I'm talking to a hospital, it's great. They're just getting off a webinar about the rebate pilot. I think...
Hospitals are really engaged. They're absorbing any piece of information they can get their hands on about it. as it relates to rebates and really anything, as you have time and brain space, engage in those webinars, resource centers, and federal policy updates to stay up to date as we get into 2026.
David Glendinning (16:04)
And I know one of those webinars was the year in review webinar that you recently conducted for three, four to be health. So we'll be sure to include that link in the show notes for our members, for those who might have missed it or just want to see it again, Rebecca, I know some policy shops might tend to slow down a bit around the holidays, but I also know that is most certainly not the case here, at least this year. So
Thank you so much for taking the time out of all of that work you do to get us up to speed today.
Rebecca Swartz (16:35)
Thank you so much, David. Really appreciate it.
David Glendinning (16:38)
We thank Rebecca Swartz again for giving us the year end recap and helping set us up for what is sure to be an eventful 2026. This is our final episode of 2025 and we will be taking a short pause while we prepare for a full season of episodes for next year. You can email us your episode ideas at podcast at three 40 B health.org. We wish you peace and joy this holiday season and good health in the new year.
We'll be back in January. In the meantime, as always, thanks for listening and be well.
Narration (17:17)
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.