Speaker 1 (00:04):
Welcome to 340B Insight from 340B Health.

 Myles Goldman (00:13):
Hello from Washington DC. And welcome back to 340B Insight, the podcast about the 340B Drug Pricing Program. I'm Myles Goldman with 340B Health filling in for David Glendinning. Our guest today is Maureen Testoni, the president and CEO of 340B Health. Maureen joins us at least once a quarter to help keep you informed about the latest developments in 340B. With Washington's cherry blossoms and blue, it must be spring, and we thought it was a good time to catch up with Maureen on everything that happened during the first few months of the year. I sat down with Maureen recently to hear her analysis on all the latest 340B news. Here's our conversation. Hi Maureen. It's good to have you back on 340B Insight. Thank you for taking the time to speak with us today.

Maureen Testoni (01:04):
Thanks Myles it's great to be back.

 Myles Goldman (01:05):
Well, the days are getting longer in terms of sunlight and I'm hoping you can provide some clarity for our listeners on several 340B topics during this conversation, as we enter the spring months. Can you start by summarizing for us with the issues in 340B have been during the first quarter of 2022?

Maureen Testoni (01:26):
Sure. Happy to do that. There's a lot going on as always in 340B, but honestly I think the biggest issue right now remains the one that we spent a lot of time on last time, which is the contract pharmacy restrictions. It's about 16 companies now with Johnson and Johnson announcing their to restrict 340B discounts for contract pharmacy. There has been some movement in the litigation on this issue around the government's attempt to enforce the statute against these companies and make them start providing the 340B discounts again. Another big thing that happened that was a bright spot in some ways, was that Congress approved legislation protecting 340B hospitals from losing eligibility due to the impacts of the COVID pandemic. And then another bright spot was we recently had our first in-person conference in two years, which was so exciting. And I'd like to just share a little bit about that as well.

 Myles Goldman (02:22):
I'd like to hear more about where things stand in the contract pharmacy dispute. Can you tell us about some of the new additions to the list of companies restricting 340B discounts? And I'd also like to hear about the trends you're seeing in their policies.

Maureen Testoni (02:36):
So we have about 16 drug companies that are not providing, or that are restricting the 340B discount through contract pharmacies in violation of 340B. The new ones are AbbVie, Bristol Myers Squibbs, Pfizer, GlaxoSmithKline, Gilead, and Johnson and Johnson. And these are very large companies with a lot of top selling drugs. Now, when you're asking about trends, I think there are two things that are really important to understand about the manufacturer's actions. First and many people don't know this, but the 340B program is set up to act as a limit on manufacturers, raising their prices. What Congress has in there is something that's called an inflationary penalty. And they set it up so that manufacturers have to give a discount on 340B drugs. It's about 23% for a lot of the drugs. And what the inflationary penalty does is it says every time you increase your prices faster than the rate of inflation.

Maureen Testoni (03:35):
And when you do this over and over that 23% is going to go up. It's going to be 25%, 30%, 50%, and it can go all the way up to a 100%. And when that happens, that means manufacturers have to sell the drugs to 340B providers for a penny. That is the penalty that they have to pay for raising their prices so high. And what we know is that from research that was published in the journal of the American Medical Association, these penalties have really worked. They have helped keep prices on drugs from going up as quickly as the prices for drugs that are not subject to these penalties. So what we're seeing in terms of trends is about 21% of the drugs being restricted are penny price drugs, and the volume that those 21% represent is about half. So it's a huge percentage of the drug company's sales of 340B drugs that they're restricting that are penny priced.

Maureen Testoni (04:34):
So to me, it seems that they are intentionally trying to get around the consequences of the inflationary penalty. And what that's going to mean is if they're allowed to get away from this is we will see higher prices for drugs. They will be able to then continue to back up the prices year after year, without having to worry as much about the impact of this inflationary penalty. So that's one thing. The second thing that we're seeing being restricted are what's called specialty pharmacy drugs. And specialty pharmacy means that the drugs aren't sold at like your regular neighborhood, Walgreens or CVS or something, they go through specialty pharmacies.

Maureen Testoni (05:16):
They can be located anywhere in the country. And a lot of the PBMs have purchased up these specialty pharmacies. And so they are only reimbursing for specialty drugs that go through their own specialty pharmacy. So the only way that hospitals can now access those drugs is through a contract pharmacy arrangement with the specialty pharmacy. And with the manufacturers limiting the contract pharmacy arrangements, that means hospitals cannot use these drugs at all. They cannot get the 340B discount at all for these patients. And that makes a big, big difference in terms of how 340B is supposed to work. It absolutely undermines the way Congress intended the program to work, when manufacturers are able to wall off whole categories of drugs from having to be provided at a 340B discount.

 Myles Goldman (06:06):
Another issue I wanted to bring up is more companies seem to be tying their 340B contract pharmacy restrictions to a demand for submission of claims data. I know that concerns you can you explain why?

Maureen Testoni (06:17):
Yeah. We do have a lot of concerns about conditioning compliance with a law on the provision of, millions of lines of a patient's private claims data. Let me just start with the fact that the reason why manufacturers want this data is to help them enforce their own private arrangements with PBMs. So PBMs will require a payment of rebate for manufactures drugs. And manufacturers are saying, well, we don't want to pay you a rebate on 340B. So what the manufacturers want is all of this claim data from 340B providers, so they can enforce that requirement against the PBMs. They can make sure that if the PBMs request rebates on a whole list of drugs, the manufacturers can then go through and identify which ones are 340B and then not have to pay the PBM rebate.

Maureen Testoni (07:15):
But this is a purely voluntary arrangement that the manufacturers have entered into with the PBMs. It's not part of the 340 statute. It's not required. There's nothing in the statute that says that, providers are going to have to protect manufacturers against potential impacts from their own voluntary arrangements. So it's a big concern to us that the manufactures would be able to get away with imposing this kind of a burden, just because this is how they want to do their arrangements. And it isn't a burden that should be placed on hospitals. And speaking of burden, that's the other big reason that we are concerned about this. Sharing the data, involves millions of lines of claims data. And is a burden, not just in my administratively, but also legally, because this is data that is protected under state and federal privacy laws, such as HIPAA.

Maureen Testoni (08:07):
So obligating them to share this data, requires them to spend a lot of time monitoring and making sure and putting things in place to make sure that this data does not leaked in a way that would violate those laws. And if some kind of error is made by the company that is receiving this data, that could really impose liability on hospitals as well. So even with that, as background, we do know that hospitals with all of these new companies coming out, since we last spoke, they're under a lot of financial pressure. And this kind of financial duress is definitely forcing some hospitals to say, we can't absorb these kinds of losses. We are going to have to share the data because otherwise our patient care could be at risk. So we understand that is a dilemma that a lot of hospitals are struggling with.

Maureen Testoni (09:01):
And we're recommending that if in fact, you are going to share the data, you send a letter to HRSA letting them know, that you're sharing it, why you're sharing it and what your concerns are about it. Because a lot of hospitals have told us they don't want HRSA to see that they're sharing data and think, oh, well then maybe we don't have to keep trying to prevent manufacturers from imposing conditions. Even if they're sharing the data, they want HRSA to know that this is very burdensome. They would never otherwise do it if they didn't feel they were being under enormous financial duress. I also want to mention that if you are going to be sharing data, please make sure that you are running everything past your legal counsel. Again, you have to sign things and even just using the platform is sort of a legal signature that binds you to a lot of terms and conditions. So please make sure that you are having everything reviewed by legal counsel so you just understand what the risks are that you'll be taking on.

 Myles Goldman (10:03):
We've spoken before about how this fight is playing out in courts. What has happened in the courts over the last few months?

Maureen Testoni (10:11):
As we've discussed, HRSA sent a letter to manufacturers saying, you have to start providing the discounts basically. And several of those manufacturers have sued HRSA. And those lawsuits wound up in four different courts. As of today, all four courts have reached a decision. Two of those courts said very clearly HRSA absolutely can enforce these contract pharmacy rules on manufacturers. And they have said that manufacturers may not impose conditions in order to guarantee access to 340B discounts. Now those courts, even with those decisions, they did say they were not deciding on whether unlimited contract pharmacy arrangements is authorized under the statute, but they were very clearly saying contract pharmacy absolutely, a person, says that is what's under the statute, they can absolutely enforce that. The third court said that drug companies can impose conditions. That judge did not read the 340B statute as saying manufacturers could never impose conditions.

Maureen Testoni (11:11):
But she was very careful in saying that she was specifically not deciding whether the condition that the manufacturers were imposing were permissible under 340B. So it's very possible that even though she said in theory, manufacturers can impose conditions, that was not intended to mean that exactly what the manufacturers were imposing. In other words, sharing of this claims data was the kind of thing that she would find permissible under the statute. And then the fourth court, which came up most recently, that judge decided that HRSA hadn't sufficiently justified its authority to take enforcement action against these manufacturers on contract pharmacy. And that judge just didn't really believe that HRSA had done enough leading up to the enforcement action to really justify HRSA's ability to move forward.

Maureen Testoni (12:02):
So the first three courts, those decisions are being appealed by both the government and the manufacturers. And we are urging HRSA and the administration to appeal the fourth decision. They still have some time to submit their appeal. They have come out publicly saying that they very much disagree with the position that, that judge took. So all of these are expected to get to the appellate courts, hopefully this year and get a decision this year, but it could it take a long time. I mean, there's no question. Once you're in litigation, it can take a long time, but there's also no question that there will be a decision. There is an end in sight and the courts will make a decision on this matter.

 Myles Goldman (12:45):
Well, thank you for walking us through those different court decisions Maureen. And I want to look at the ways 340B Health comes into all this in terms of a response to these recent developments.

Maureen Testoni (12:58):
We have played a role in litigation and we've played a role in the advocacy that helped to lead up to litigation. So right now we are preparing to file what's referred to as a friend of the court brief in all of these different appellate decisions, and we're doing that with a number of other hospital associations. And what we do there is we gather information from our members about the impact of 340B. We'll talk about the things I mentioned earlier around the fact that manufacturers are avoiding the inflationary penalty. And they're really focusing on these specialty drugs that limit access to hospitals. And we'll submit that to the court in these front of the court briefs. Now in the prior litigation, we did the same thing and HRSA used our data that we submitted. And in some of them, the judges actually cited to our data.

Maureen Testoni (13:52):
So we know that the data that we can and provide, because we focus so much on 340B hospitals, is something that is impactful and that the judges feel is worth them looking at and relying on in their decisions. So in addition to that, we want to strongly encourage hospitals to continue submitting to HRSA overcharge reports for any of these new companies. HRSA really relies on those overcharge reports in order to move forward with enforcement. And they included thousands of pages of overcharge reports in the initial litigation against these companies, which also were cited to, by several of the judges.

Maureen Testoni (14:33):
I would also mention that we are very active of in advocacy with Congress. Congress played a very key role in urging HHS to move forward with enforcement and urging them to take on the litigation. And we are going to need Congress to continue to push on this, to continue to make sure there's so many things the government can focus on. And we need Congress to make sure that this stays way up there. We're also going to be urging Congress to put pressure on the manufacturers to stop doing what they're doing. Congress can be very helpful there as well.

 Myles Goldman (15:06):
Well, I think that's a great segue, Maureen, for us to walk up Pennsylvania avenue metaphorically speaking from where our office is in downtown DC and go to Capitol Hill, 340B recently was included in legislation that became law. Can you tell us about that?

Maureen Testoni (15:25):
That was very exciting Myles. Yeah, this is the first time since 2010, that there has been legislation passed and signed by the president on 340B. So it was a provision that was included in a much bigger package on a much larger government spending bill. And what it does is it includes language to protect 340B eligibility for some of the hospitals that COVID hit in a way that impacted their patient mix. So to be in 340B, you have to have a specific patient mix in order to show that you are treating a lot of patients that are on Medicaid or are low income Medicare. And what COVID did is because you had to, close some of your departments, like maternity wards, and you also ended up having to keep people in your inpatient units for very, very extended periods of time, which is very unusual for an inpatient unit.

Maureen Testoni (16:21):
It could really change your payer mix. So as a result, you might not have met the eligibility that you are used to meeting to be in 340B. And this legislation is intended to address that. I really want to thank our members for all the advocacy work that they did on this and to my team that worked on this just round the clock in trying to get this passed. And I really want to thank our bipartisan sponsors of the legislation, Senator John Thune, representative, Doris Matsui, and many others. And of course, I really thank the president and the administration for signing this into law and starting the implementation process.

 Myles Goldman (16:59):
Are there steps hospitals need to take if they have lost access to the program or lose access in the coming months?

Maureen Testoni (17:07):
Yes, there definitely are. So for hospitals that have already lost eligibility. They need to submit an attestation form to HRSA no later than April 14th. So you can find that attestation form on, the 340B Health website. You can call a prime vendor to get a copy of it, but you really have to fill that out and you have to put in there, how COVID impacted you in a way that meant that you did not meet the eligibility requirement. So that's really important to get in there. There are probably some hospitals that are getting ready to file a cost report and know that they are going to not be able to meet their eligibility requirements. And the legislation is intended to help them as well. HRSA has not yet come out with the definitive dates by which you would have to submit your attestation, but if you think you're going to be in that position, I would get that attestation and start preparing to submit that now. I think HRSA will be coming out with that soon.

Maureen Testoni (18:07):
There are some unanswered question questions though, that people should be aware of. It's not clear exactly how long the relief that you get from this will last. There is some language in the bill that talks about, this relief applying at least through December of 2022, but it's not definitive in terms of what that means. Does that mean that everybody's cut off from that time? Will it extend in a 2023 for cost reports? That may extend into that period. It's just not really clear yet exactly what is meant by that. And it's also not clear exactly where the cutoff is for people to be able to request relief. If the end date it's December of 2022, and that's when you file your cost report, what does that mean that you do not get any relief or do you get relief for the prior period? Or do you get relief going into 2023, which is how 340B usually works. That is not clear. We are doing advocacy on that. And we are expecting HRSA to come out with some additional guidance on that shortly.

 Myles Goldman (19:10):
Speaking of HRSA, there's been some new leadership there and at the office of pharmacy affairs, which oversees 340B what do these appointments over the last few months mean for 340B?

Maureen Testoni (19:23):
Carole Johnson is the new HRSA administrator. And she has a deep background in healthcare and a real understanding of the importance of 340B. And Emeka Egwim will head Office of Pharmacy Affairs. And he has plenty of expertise in working with programs, serving healthcare needs of people with low incomes. And he also has experience 340B. So the bottom line is HRSA and OPA are in good hands, but I also want to thank Michelle Herzog and Krista Petley and Krista Pedley, who we have all worked with for years and years on 340B. Michelle Herzog stepped in as the acting director of OPA when Krista Pedley was promoted to her current senior position within HRSA. And we look forward to continuing our work with them as well on 340B.

 Myles Goldman (20:09):
We saw them speak at the 340B coalition conference. And I'm hoping you can tell us more about how the conference went, besides it being sunny in San Diego.

Maureen Testoni (20:19):
It was really, really great to see so many friends and colleagues at our conference. There were many people that said this was the first event that they had attended since COVID. We were careful, we were vaccinations and testings and people wore masks, but we had nearly 1500 people on the ground at that conference. And we had another 300 that were participating virtually. So it was a fantastic attendance. We had great presentations and great information, and it was a really nice way for people to really start the networking process again, that I know we have all missed over the past couple of years. So we're looking forward to our summer conference, which we will be holding in early August, August first through third in Washington, DC.

 Myles Goldman (21:06):
It really was great to see so many familiar faces and also to see, people I hadn't met before either there. Thank you Maureen, for taking the time again, to speak with us and give us this quarterly check in on what was new in 340B.

Maureen Testoni (21:23):
Thank you Myles. Thanks for having me back.

 Myles Goldman (21:25):
Thanks again to Maureen Testoni for providing us analysis on the busy winter for 340B developments and what might be ahead for the second quarter of 2022. Are there questions you have about the topics Maureen covered or an issue you wished we had discussed? As always, we welcome you to send that feedback to us. And any other episode ideas you have, you can email us @podcast340Bthbhealth.org. 340B Health has several webinars for members scheduled this spring, including on key operations and compliance topics. We invite you to learn more in the show notes and register. We will be back in a couple of weeks to celebrate the most important regulator developments for 340B in recent years, the 340B ceiling price website. As always thanks for listening and be well.

Speaker 1 (22:23):
Thanks for listening to 340B Insight. Subscribe and rate us on Apple Podcast, Google play, Spotify, or wherever you listen to podcasts. For more information, visit our website @340Bpodcast.org. You can also follow us on twitter @340Bheath, and submit a question or idea to the show by emailing us @podcast340Bhealth.org.