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This week we are joined by Amanda Sellers Smith, legal counsel for 340B Health. Amanda is responsible for tracking and responding to 340B state legislative and regulatory actions. She discusses what listeners need to know about recent 340B activity in the states.
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 (00:05):
Welcome to 340B Insight from 340B Health.
David Glendinning (00:13):
Hello from Washington D.C., and welcome back to 340B Insight, the podcast about the 340B Drug Pricing Program. I'm David Glendinning with 340B Health. We are thrilled to be bringing you the 50th episode of our podcast. Since we launched 340B Insight two years ago, we have worked hard to cover key topics and feature compelling interviews. Over that time, we have been pleased to see our audience grow, to hear your good reviews, and to win our first award. And we look forward to continuing to bring you the 340B information you need for the next 50 episodes and beyond. Thank you for listening and subscribing.
Our guest today is Amanda Sellers Smith, Legal Counsel at 340B Health. Part of the work Amanda does for our members includes keeping track of and responding to 340B legislative and regulatory actions at the state level. 340B is a federal program, but it's close relationship with state Medicaid programs means that it often comes up on the agendas of state lawmakers and health officials throughout the US. We wanted to hear about the latest developments on that front. But before we go to that interview, let's take a minute to cover some of the latest news about 340B.
Federal appeals courts are considering several lower court decisions on the 340B contract pharmacy dispute. As part of that process, both sides have been starting to file opening briefs laying out their positions to the judges who will be deciding the cases. The federal government recently did so with appeals courts in Philadelphia and Washington, D.C. In those briefs the Department of Justice states that Congress set up 340B in a way that did not permit drug companies to place unilateral conditions on 340B discounts, which would've been "akin to letting the fox guard the henhouse."
340B Health and our allied hospital and pharmacist organizations also filed the first of what will be several friend-of-the-court briefs urging the judges to affirm the government's authority to require that drug companies offer discounted pricing on eligible drugs dispensed at contract pharmacies. You can find links to the briefs in the show notes.
The drug company, Merck, has become the eighth company to receive a violation letter from the government for its restrictions on 340B pricing. The letter from the Health Resources & Services Administration informs Merck that the conditions the company has placed on 340B pricing are unlawful and instructs the drug maker to restore the discounts to covered entities. This marks the eighth time HRSA has issued such an enforcement letter. It has also referred seven drug makers to the Health and Human Services Office of Inspector General for possible large fines. You can read the letter to Merck by visiting the show notes.
And now for our feature interview with Amanda Sellers Smith. With several statehouses wrapping up their regular legislative sessions for 2022, this is a good time to check in on how 340B has come up in the agenda. Myles Goldman is away, so I sat down with Amanda to catch up on the latest from the states. Here's our conversation. I am here with Amanda Sellers Smith, Legal Counsel here at 340B Health, return guest to the podcast. Amanda, welcome back to 340B Insight.
Amanda Sellers Smith (03:57):
Thank you for having me. I'm glad that I get to return and talk to you this time because I believe I spoke with Myles the last time I was on your podcast.
David Glendinning (04:04):
You did speak with Myles. He's taking some well-deserved vacation right now, so I'm playing him for this episode. This is a very special episode. You may not know it, but it is episode number 50 of 340B Insight, which I guess makes it our golden episode.
Amanda Sellers Smith (04:20):
Yeah. Congratulations on 50 episodes. That's big.
David Glendinning (04:24):
So what has been going on for you since we last spoke I believe last spring, a year ago?
Amanda Sellers Smith (04:30):
A lot's been going on with 340B since last spring, especially at the state level. But for me personally there's also been a lot going on in that my household welcomed a baby boy. My son Owen entered the world in November, so if you haven't heard from me in a couple months, I've been a little busy.
David Glendinning (04:46):
Well, congratulations. I have had the opportunity to meet Owen, and he is quite possibly the cutest little kid I've ever met. And what has been going on at the state level on 340B since we spoke last spring?
Amanda Sellers Smith (05:01):
A lot has happened at the state level. More states have been passing 340B nondiscrimination legislation, which is a really exciting development. It continues to gain momentum. And then we've also seen some statehouses in the nondiscrimination legislation enter in protections related to the contract pharmacy dispute. Because of that, we've also seen a bit of an increase in drug companies lobbying state legislatures on 340B.
David Glendinning (05:30):
You mentioned 340B nondiscrimination legislation. Can you remind our listeners why some states are passing these 340B nondiscrimination laws?
Amanda Sellers Smith (05:41):
One thing that has come up for 340B hospitals over the years is that sometimes PBMs, or pharmacy benefit managers, and other payers pay 340B covered entities less for 340B claims because the PBMs or payers want to shift the 340B benefit away from the safety net into their coffers. Obviously we have an issue with this. We think that the value of 340B savings is designed to go to safety-net providers. Starting in 2019, a couple of states introduced these laws, passed these laws, enacted these laws, and now we have 17 and rising. The Supreme Court confirmed that states can regulate pharmacy benefit managers in December 2020, so we've seen more states comfortable that they do actually have authority to regulate pharmacy benefit managers in this way.
David Glendinning (06:32):
Okay, so 17 and rising. That's clearly a lot of state interest in nondiscrimination there on the 340B side. Are all of these laws pretty much the same or do they vary from state to state?
Amanda Sellers Smith (06:45):
They definitely vary from state to state in terms of what practices they actually ban. The most obvious is the lower reimbursement. You know, you can't lower reimbursement for 340B providers or for 340B claims. But there's other ways that providers have feared or been approached with contracts that discriminate that aren't typical reimbursement such as, "We don't want you in our network because you're 340B," or "We're going to require modifiers because you're 340B." That's one way. Varies from state to state. Another way is, who the bills apply to.
Unfortunately, since we spoke last, two of the states that passed nondiscrimination bills excluded hospitals from those protections. Those two states only apply the 340B protections to the covered entities that participate as grantees. That's a sad development. But a happy development, as I mentioned, that we've seen two states get into nondiscrimination practices not just against payers and PBMs, but against drug manufacturers. Arkansas and Michigan are two states that included in their nondiscrimination packages things that prohibit manufacturers also from discriminating against covered entities in certain ways.
David Glendinning (08:01):
I do want to talk a little bit more specifically about those two states. Can you tell us first of all, what's happening with Arkansas, because we understand there's a legal challenge to that nondiscrimination law.
Amanda Sellers Smith (08:12):
Yes. So Arkansas's bill protects covered entities that use contract pharmacy or community pharmacies in the state and prohibits the drug manufacturers from interrupting the ability to use Arkansas community pharmacies to dispense your 340B drugs. And because of this, the Pharmaceutical Research and Manufacturers of America, or known as PhRMA, the drug manufacturer association, they've sued the Arkansas administration, and specifically the attorney general and the state commissioner of insurance over the law saying, "You don't have authority to do this at the state level."
As of right now, it appears the arguments will be in January of next year. So it's something we're watching, but we might not have answers on for a while. But then in the meantime, the insurance commissioner has a law that he has to implement. And there's also been some concerns with that process, in that implementation process that 340B Health has commented on and supporting our hospitals to make sure it is a safety net provider-friendly implementation process.
David Glendinning (09:16):
And how about Michigan? I understand that law is a little bit newer. Can you tell us what form that takes?
Amanda Sellers Smith (09:21):
This is a newer law, February of this year was signed into law and effective immediately. The Michigan law does not allow third parties to require 340B claim identification. Many of the manufacturers that are restricting access to 340B pricing for drugs dispensed to community pharmacies have required these really burdensome data submission requirements. So the Michigan language appears to offer protection against the data submission that some manufacturers are trying to require in order for 340B providers to access that 340B pricing.
David Glendinning (09:59):
On the 340B nondiscrimination front, what is 340B Health and member hospitals doing to help encourage state lawmakers, state legislatures, to pass these protections?
Amanda Sellers Smith (10:12):
One really exciting development is that we have developed model legislation that hospitals can use in states that have not passed a nondiscrimination bill. Now, to my knowledge we have never introduced a state-level model legislation. So it's a really exciting development, and it's something that we've as an organization presented to other associations. One in particular is the National Council of Insurance Legislatures, or NCOIL, N-C-O-I-L. NCOIL is a group of elected officials that are state-level elected officials that work on insurance, and so we have presented to that organization twice on this. They're an organization that considers model legislation. Fingers crossed hoping they'll adopt ours.
We also, just on a regular basis, we work with our member hospitals to inform them on what's happened in other states, things for them to consider in their own states. Inform them of bills that they might not know about that we learn of. So working with our allies, creating resources and tools for members, and then also weighing in when members ask us to in different states. For example, I mentioned there's some challenges with the Arkansas proposed rule. 340B Health submitted comments on that. So that's one other way that we've been able to offer support to hospitals in different ways is contacting the folks who are going to enforce this and encouraging them to help support the safety net when they're able to.
David Glendinning (11:38):
I know we're here primarily to talk about state lawmakers and state legislatures, but Congress could solve this problem, the US Congress, by approving a federal ban on discriminatory payments to covered entities. Correct?
Amanda Sellers Smith (11:54):
Yeah, there is the PROTECT 340B Act, and that would create a federal floor on 340B nondiscrimination. The bill has over 80 co-sponsors from both parties, so it's a bipartisan bill with a lot of support. So if your member of Congress is not somebody who's currently on that list of 80, we continue to raise awareness of this, encourage our members to speak with their members of Congress about this to pass that federal protection.
David Glendinning (12:20):
Okay. So I think we've covered the ground pretty well on nondiscrimination issues that are before the states. Any other state 340B items that you're keeping an eye on?
Amanda Sellers Smith (12:32):
State legislatures, state agencies, are always really interested in Medicaid because it's a really important program for states. It's oftentimes the number one or number two most expensive things states work on. Either K through 12 education or Medicaid, the vast majority of states that's where the bulk of their funding goes to. So obviously there's always activity related to Medicaid, and we continue to tell hospitals to keep an eye out for any Medicaid policies that could harm safety-net providers.
David Glendinning (13:02):
So what are some of the ways in which these state Medicaid agencies can implement policies that might be problematic for a 340B?
Amanda Sellers Smith (13:10):
One big way is through something referred to as a pharmacy benefit transfer. You have Medicaid fee-for-service and Medicaid managed care, and they both have different rules, different policies. Medicaid managed care reimbursement tends to be better for providers. Some states, for this and other reasons, have looked to take the pharmacy benefit out of Medicaid managed care and move it back to fee-for-service. What this really results in is a reimbursement cut in most places, because reimbursement is then based on actual acquisition costs.
So it's a way for the state to transfer the 340B benefit to the state, and so two states that are moving this direction are California and New York. The New York pharmacy benefit transfer has been postponed, and advocates there are still looking for a full repeal. California was recently implemented, and we have heard that implementation has not been smooth. So on top of operational challenges, yeah there's also just the reimbursement cut that's concerning.
David Glendinning (14:12):
So clearly a significant amount of state legislative and I would say regulatory activity on 340B as well. How can those in the 340B community become more involved themselves in advocating in this arena?
Amanda Sellers Smith (14:28):
First, contact us and let us know you're interested, and then we can have a discussion about how we can help. Speaking with your folks that do state government relations or your state associations to see if they're able to promote positive 340B legislation. And it's also just really important to keep good relationships with your state lawmakers and regulators. Not only because, as we've seen, states can do things that impact 340B providers both positively and negatively. But also a lot of times these folks the statehouse is the first step on their way to the federal House, and some of these names may come up to be able to be folks that can help us on federal advocacy in the future.
David Glendinning (15:13):
So for 340B hospital that the folks there might be actually used to advocating on the federal level and might be contemplating advocacy at the state level for the first time, what are some of the differences that you'd want to tell them about advocating at the state level versus the federal level?
Amanda Sellers Smith (15:33):
Your state lawmaker is much less likely to know about 340B. A federal congressperson, that is almost certainly their only job, that they are a 24/7 federal lawmaker. At the state level it is almost certain the opposite. A lot of part-time jobs, only part of the year, so they are likely to run a car dealership, or be a local banker, just have actual day jobs. So 340B does not come across your desk when you are at the car dealership. Right? So being able to do that level of education that this is a federal program and it's so important to our community, which those conversations are the same at the federal level. Use your 340B impact profile. This is why 340B matters.
Another big difference is that they're much more accessible. You know, they are people that are in and around your community, so you're much more likely to run into them at the PTO meeting or at your kids' soccer games. The other really big difference I think is that things at the state level can move very quickly. And that a lot of state legislatures are only in session for a couple of weeks or a couple of months out of the year. Sometimes that's every other year. So things can move very quickly, and being in those conversations, and being aware that something might be moving just becomes that much more important because time is of the essence a lot of times with anything that's going on in the state.
David Glendinning (16:59):
Okay. Well, hopefully we've sparked some excitement among 340B hospital listeners to get more involved on the state level.
Amanda Sellers Smith (17:07):
Yeah.
David Glendinning (17:08):
For those who are ready to make that jump, what resources does 340B Health provide our members so they can keep current on what's happening in their states?
Amanda Sellers Smith (17:19):
We do now have a state policy and advocacy center. This is a location on 340B Health's website that is entirely dedicated to state items. It includes just different talking points, again, that model legislation, a big important new resource. We've also added state-level reports. So your listeners have probably seen our federal data and research that shows 340Bs working as intended.
We've taken some of that data and converted it into where you don't have to look at just all 50 states. I just want to know what Minnesota hospitals are doing, and being able to go and just pull the data for your specific state. And as always, just communicating that we offer technical assistance, we offer that communication and that ability to get on the phone with me and talk about specifics of what's happening and what do we do next?
David Glendinning (18:14):
Okay. Well, we will be sure in the show notes to have a link to that brand new member-only state policy and advocacy center. And certainly would echo the encouragement to reach out to you and some of the colleagues on your team if you have any questions about this area or want to get more involved in the states. Amanda, always a pleasure to talk to you about all this. Congratulations again on Owen, and on being on our 50th episode. We look forward to talking to you again before too long.
Amanda Sellers Smith (18:45):
Yeah. I look forward to being invited back in the future, hopefully, so I'll keep an eye on my inbox for that.
David Glendinning (18:53):
Our thanks again to Amanda Sellers Smith for bringing us up to speed on the state activities affecting 340B providers. In a telling example of how quickly some state legislatures are moving on 340B, two additional states enacted 340B nondiscrimination laws in the days following our conversation. Illinois and Maryland became states number 18 and 19 to put their laws on the books.
And a few other statehouses might not be done yet for the year in this area. If you are a member hospital with questions or insights into what might be happening on 340B in your state, please be sure to connect with Amanda to discuss. As always, we welcome your feedback and episode ideas. You can email us at podcast@340bhealth.org. We will be back in a few weeks. As always, thanks for listening, and be well.
Speaker 1 (19:52):
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.