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. This episode is sponsored by Macro Helix. Macro Helix is industry-leading technology used by hundreds of 340B-covered entities, can help you navigate the complicated operational, financial, and regulatory challenges of today's 340B program, but how they do it is what really sets them apart. With their team of trusted experts by your side, you're getting more than a resource. You're getting a partner. Learn more at macrohelix.com.

David Glendinning (00:54):
Our guest today is Maureen Testoni, our president and CEO. We last had Maureen on the show back in April to discuss all the top developments for 340B in the first quarter of 2021. As you know, there has been some major news on the 340B contract pharmacy issues since then, and we wanted to provide our listeners with Maureen's analysis on those events.

David Glendinning (01:17):
Before we have that conversation, we urge you to check out the newest addition to the growing body of research demonstrating the value of 340B for patients in need, a study that 340B Health released earlier this month, examined care related to 27 different chronic health conditions. Using Medicare data, the report found that 340B hospital patients with these conditions are more likely to be Black, to live with disabilities, or to have low incomes than those treated at non-340B hospitals or private physician offices. The study is the latest to document how 340B hospitals are treating larger percentages of patients who are often underserved by the broader healthcare system. Please go to the episode's show notes to read the study and see briefs that break down the numbers by selected health conditions.

David Glendinning (02:08):
And now for our feature interview with Maureen Testoni, Myles Goldman is on assignment this week so I sat down with Maureen to get up to speed on the 340B contract pharmacy issue. Here is that conversation.

David Glendinning (02:21):
I'm joined today by Maureen Testoni. Maureen, thank you for taking the time to be with us again and welcome back to 340B Insight.

Maureen Testoni (02:30):
Thank you, David. It's great to be here.

David Glendinning (02:32):
We last had you on the show not too long ago but quite a lot has happened since then, especially on the 340B contract pharmacy dispute. For those who don't track this daily, like we do, what's the latest news on that issue?

Maureen Testoni (02:47):
Well, David, there's always a lot going on in this issue and there's two things that I would want to mention. One is a piece of really good news that we got just a couple of weeks ago versus the entity that oversees the operation of 340B. They announced that they were going to move forward with enforcement of the 340B law against contract pharmacies. On May 17th, they sent letters to the six drug companies that have been refusing to provide discounts on 340B drugs dispensed through a contract pharmacy. And they are Eli Lilly, AstraZeneca, Sanofi, Novo Nordisk, Novartis, and United Therapeutics. And the letters were really, really clear in saying that the companies absolutely have to restore the discounted pricing for contract pharmacies and it even goes further to say that they have to credit and repay all the overcharges.

Maureen Testoni (03:46):
As you might remember, this whole thing started last summer. So at this point, there's a lot of overcharges that have accrued. And it also says that they have to work with their distributors and wholesalers to contact all of the covered entities that were impacted by their actions. Very clear that HRSA is expecting action on this and very clear, moving forward. So we're really happy to see.

Maureen Testoni (04:11):
Then, there was another development just last week. A lot of these drug companies went to federal court already to challenge depths that HRSA had already started to take on the contract pharmacy issue. And the main depth they were challenging is an advisory opinion that the HHS General Counsel had put out right at the end of December, and that was an advisory opinion that was very, very strong on this issue, very clear saying that the manufacturers absolutely had to provide discounts for drugs dispensed through contract pharmacy. There was simply no other way to read the statute. That's what the law required.

Maureen Testoni (04:50):
So the drug companies have all been challenging this in federal court but in different states. And one of the justices came out and said last week that he did not support the advisory opinion, not because he thinks that it's wrong and that drug companies aren't necessarily required to provide discounts, but he thought that the General Counsel went too far in saying there was no other way to read the statute. And he thought that HHS' opinion on the statute was absolutely a reasonable interpretation, which is a big deal that the court found that. But for the advisory opinion to say there was no other way to come out with a different decision or interpretation, that's the piece of it that he did not agree with.

Maureen Testoni (05:34):
So following that decision, HHS came out and said, "You know what, we're just going to withdraw the whole advisory opinion. We don't need to have that advisory opinion, and it does not mean we're not going to move forward with enforcement." So that's really the latest as of right now that has happened on this contract pharmacy issue.

David Glendinning (05:53):
The enforcement steps outlined in those HRSA letters that you mentioned are precisely the steps that 340B Health had been asking the administration to take, correct?

Maureen Testoni (06:04):
Yes, David, that's correct. We have been saying that for nearly a year now, it was really great to see that they actually move forward with this. Especially when you consider that when this all happened starting last summer or so, Lilly was the first one and they told her, "This is what we're going to do. We're not going to be providing discounts on one of our drugs." HRSA actually posted their statement up on their website, so it really looked to us like maybe this was going to go through. But then after a lot of advocacy, then the Trump administration came out and said, "Wait a minute. No, it's not okay for you to do this," and the General Counsel wrote a letter and said, "It's not okay for you to do this. We have decided whether or not you can go forward." The Trump administration also said that you can do this all through an administrative dispute resolution process.

Maureen Testoni (06:56):
We, at 340B Health, we're very concerned about that because it was a process that had just been proposed and not been set up yet. So we really didn't want it to go through the administrative dispute resolution process. We thought HRSA should just go ahead and enforce. So seeing those letters come out was huge. It was really great to see that they were going to enforce. They actually even set a deadline of June 1st and they said the drug companies have to come out with a report on how they're going to repay the covered entities. Now, we did see some action in the courts where they have a little bit more time, but the point is that HRSA is really moving forward with this.

Maureen Testoni (07:35):
Now, the other point I want to make is that's just the first part in an enforcement process. So for the government to be able to enforce something, knowing that it's probably going to be litigated, they have to really make sure that they have a very, very detailed administrative record, that they have dotted all their I's, crossed all their T's. So sending a letter is the first step that drug companies have to respond. The government has to review all of their responses. OIG, that would be the entity that would have to move forward with the enforcement. And so, that will really be the next step. And then, if it gets referred to the OIG, which I expect that it ultimately will, it would be the OIG that would then take the enforcement process. And the key enforcement process here is the issuance of civil money penalties on the drug manufacturers, and that's a really big deal.

David Glendinning (08:25):
How did we get to this point where we are now speaking about these enforcement efforts?

Maureen Testoni (08:31):
I give a lot of credit to HRSA and also a lot of credit to Secretary Becerra. Once he was appointed, we really did see HHS move pretty quickly on this. It wasn't that long after he was appointed until when we saw the enforcement letters, so that has been fantastic. But there was also a lot of advocacy before he was even appointed that I think also helped move the dial here. Advocacy is important even with this kind of a legal issue because it really reminds everybody when they're deciding how many resources to put towards defending something. It reminds everybody how critical the 340B program is for Cigna providers and for their low income and rural patients.

Maureen Testoni (09:17):
So what we saw was a lot of advocacy from many different groups. More than half the members of the U.S. House sent a letter to HHS on this as a bipartisan group of U.S. senators, more than half of the state's attorney general, of which Becerra was a part of, more than 1,100 individual 340 hospitals signed a letter to HHS about this as well as a wide array of national hospital and pharmacy organizations, and finally, more than 60 organizations dedicated to patients, consumers, civil rights, and social justice sent letters to HHS on this issue. And the goal was to make clear and call attention to this in a loud and unified voice that this is a real problem and the drug companies need to be held accountable and they need to follow the law.

David Glendinning (10:10):
What are the implications for enforcement now that the HHS advisory opinion you mentioned before from December 2020 has been withdrawn?

Maureen Testoni (10:21):
I think the implications are that the enforcement that HHS is doing will continue. They don't need the advisory opinion to be able to take the enforcement steps that they are taking. They were never relying on that advisory opinion. It does not show up in the May 17th letter at all. It's really helpful because in their notice, when they said they are withdrawing the advisory opinion, they make it very clear that this does not impact their ongoing efforts to enforce the obligations that the 340B statutes impose on drug manufacturers, including their May 17th, 2021 violation letters concerning the restrictions on the contract pharmacy arrangements.

David Glendinning (11:04):
You had mentioned before the possibility of civil money penalties on these drug companies. Why are those important for enforcement of the law here?

Maureen Testoni (11:15):
The civil money penalties are really important. They're basically the stick that the government has to require enforcement. You see this in a lot of different government programs, for example. And for 340B, they were added in 2010 and it allows the government to impose penalties when drug companies knowingly and intentionally overcharge covered entities. And what's really interesting here is that the penalty can be $6,000 for each claim, and there are millions and millions and millions of claims that have been involved in this whole process over the past year. So the fines could be really, really huge. And in fact, in one of the many lawsuits that is going on about this issue, one of the drug companies was very clear that they could be subject to hundreds of millions of dollars in penalties per month if HHS was allowed to move forward with imposing civil money penalties.

David Glendinning (12:13):
So the June 1st deadline, you referenced earlier, has come and gone. What have the companies done?

Maureen Testoni (12:20):
That's a really good question, and it does go back to what I said earlier about the fact that these letters are really a first step in the enforcement process. So the June 1st deadline came and went. And as soon as those letters went out, there are several of the drug companies that went into court. So they had already filed a lawsuit a few months ago, challenging HHS' ability to try to enforce the statute, and what they did when HHS came out with these letters is they went back to court and said, "Hey, judge, they're taking this action even though we have this court case here and they've been posing this deadline.' And so because of that, a couple of the judges, they refuse to stop and they didn't do what the drug company said, and said, "Well, we're going to stop HHS." They didn't do that. Instead though, they did say, "We're going to ask HHS to give you a little bit more time to submit those letters."

Maureen Testoni (13:11):
We've seen several of the letters that have been submitted so far, and the drug companies are not backing down. They're making it very clear that they do not believe that the 340B statute requires that they offer discounts to drugs that are dispensed through contract pharmacies and they make it clear that they're going to continue to fight this. They say they should not be subject to civil money penalty fines because they believe that they are acting in good faith with the law. Now that the judges come out and say no, that HHS has absolutely can enforce this, I think there's a real question there as to whether the drug companies would succeed in saying that they couldn't be subject to civil money penalties.

Maureen Testoni (13:51):
It's not okay to just say, "I'm not going to follow the law because I don't like it. I don't think it applies." They could have challenged this law and continue to provide the discounts if they wanted to. So just because they're making that argument, I don't know that they're going to succeed, but I do want to make sure that people understand that this is complicated and the drug companies are putting up a really big fight.

David Glendinning (14:13):
Clearly, that fight has moved squarely into the courts. What does all that mean for 340B hospitals and other providers that are waiting to be repaid what they're owed?

Maureen Testoni (14:24):
They're waiting to be repaid what they're owed. They're waiting to start even getting the discounts now. We hear from so many of our hospital members about what a significant impact this is having on them and how much this is really limiting their ability to provide services to a lot of their low income or a lot of their rural patients. It's a big problem that this is going on for a long time. And unfortunately, all of this litigation that is going on by many of the companies right now in the courts means it could take a while before we finally see that the discounts are restored.

Maureen Testoni (14:58):
I'm an attorney. I've worked on lawsuits and they can take weeks, they can take months, sometimes they can even take years. If HHS wins in the lower court and then the case is appealed, sometimes the judge will stay his or her decision until the appellate court makes their decision. So I certainly can't pretend that this is going to be turned around during the summer or anything like that. We're really going to have to wait and see.

David Glendinning (15:23):
How is 340B Health keeping up the pressure while all of that is going on?

Maureen Testoni (15:29):
We're certainly not waiting on the sidelines at all. We are part of a group, six hospital and pharmacy associations that had filed our own lawsuit on this issue in federal court last December, where we were really making the argument that HHS should not require people to go through the administrative dispute resolution process. And now, fortunately, that tactic has been put aside, but we're going to continue being active in these litigations.

Maureen Testoni (15:52):
So many of the drug companies have filed litigation in various states against HHS moving forward and where we'll be filing a friend-of-the-court briefs as well to make sure that we are sharing with the judges, with the court, what the real impact is on covered entities and what this means for patients. We're also countering a lot of what we're seeing in the briefs by the drug companies' descriptions of how the contract pharmacy system works that is just not how the contract pharmacy system works. So we're trying to clarify that as well so that the judge has all of the facts that they need in front of them to make this decision.

Maureen Testoni (16:30):
Now, I can't predict obviously for sure how it's going to go, but I really do feel competent saying that we're fighting a really, really good fight that this is all the information is being put in front of the judges. The Department of Justice has been really, really strong in supporting providers and in supporting the fact that they believe the statute does require the manufacturers to pay these discounts. So I'm hopeful that we actually will prevail because I do really believe that the law is on our side.

David Glendinning (17:00):
And what would you recommend 340B hospitals and other covered entities, many of whom listen to this podcast, do in the meantime?

Maureen Testoni (17:09):
I think there's several things that hospitals can do. They really need to stay aware of what's going on on this issue. Hospitals were so involved in the earlier months of this, and that's why we had so much advocacy that I think really resulted in these May 17th letters with HRSA enforcing the statute. And so, we needed to stay up to speed with that. We need to continue to show the damage that is being caused by the loss of the discounts through these contract pharmacies.

Maureen Testoni (17:40):
Patient stories are really helpful. We've had a number of hospitals that have told us stories of patients that couldn't get insulin, for example, or could only get insulin at a really, really high price that they couldn't really afford because they couldn't get the discounts through the contract pharmacy anymore. Those kinds of stories are really helpful for us. We share them with members of Congress, we share them with HHS, and it gets out there. The fact that we really need to keep up the fight.

Maureen Testoni (18:06):
Another way to stay informed and involved would be to attend the 340B Coalition Summer Conference that's coming up in July. There, you would hear from the nation's top 340B experts and key administration officials, and we have a number of sessions that are focused specifically on contract pharmacy. In that way, you can also hear and learn from your colleagues around the country.

David Glendinning (18:28):
We always appreciate getting the chance to talk to you about all things 340B and I know our listeners appreciate hearing what you have to say. Thank you again for joining us today.

Maureen Testoni (18:39):
Thank you very much, David.

David Glendinning (18:41):
Our thanks again to Maureen Testoni for giving us her perspective on the latest round of the contract pharmacy dispute. We welcome your questions, episode ideas, and feedback. You can email us at podcast@340bhealth.org. We'll be back after the July 4th holiday, and we wish you a safe and happy independence day. As always, thanks for listening and be well.

Speaker 1 (19:11):
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 at 340BHealth and submit a question or idea to the show by emailing us at podcast@340bhealth.org.