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340B Discounts Apply to Contract Pharmacies, Too, HHS Says

Drug companies must provide 340B discounts on covered outpatient drugs even when 340B-eligible providers use contract pharmacies, the Department of Health and Human Services has said in an advisory opinion.

Among other observations, the advisory opinion notes that the requirement that drug companies participate in the 340B program “…is not qualified, restricted, or dependent on how the covered entity chooses to distribute the covered outpatient drugs;” that “The notion that the legitimate transfer of drugs to contract pharmacies so that they can be dispensed to patients of the covered entity constitutes diversion not only ignores the realities of accounting, but also that the covered entity and contract pharmacy are not distinct, but function as principal-agent;” and that “…the argument that use of contract pharmacies constitutes an illicit ‘transfer’ leads to absurd results.”

HHS advisory opinions do not carry the force of law.

The 340B program, which enables hospitals that serve especially large numbers of low-income patients to purchase prescription drugs at a discount to dispense to such patients on an outpatient basis, has long been a vital tool in the ability of private safety-net hospitals to serve their community.  NASH has long supported the program, doing so most recently in a September letter to members of Congress.

For more information about HHS’s response to the attempts of pharmaceutical companies to avoid providing 340B discounts, see HHS’s news release on its advisory opinion and read the advisory opinion itself.

 

HHS Chief Says 340B Changes are Coming

Health care providers and drug manufacturers should expect changes in the section 340B prescription drug discount program in the near future.

That was the message conveyed by Health and Human Services Secretary Alex Azar during a recent conference held by the 340B Coalition.

The 340B program, which provides discounts on the prescription drugs dispensed on an outpatient basis by eligible providers to their low-income patients, has become increasing controversial in recent years as it has expanded and pharmaceutical companies have objected to the discounts they must provide.

Among the changes Azar suggested are coming are greater accountability among participating hospitals for how they use the savings they derive from the discounts and a narrowing of the difference between the prices hospitals pay for the drugs and their average sales price, which Azar said is currently too great.  CMS recently imposed a 28 percent reduction of Medicare payments to participating providers for drugs dispensed to 340B-qualified patients.

To qualify for participation in the program, providers must serve especially high proportions of low-income patients.  Most private safety-net hospitals participate in the program.

Learn more about Secretary Azar’s comments from this Healthcare Dive article.

 

Energy and Commerce to Look at 340B Today

The Health Subcommittee of the House Energy and Commerce Committee will hold a hearing today to review various proposals to alter the 340B prescription drug discount program.

That program enables hospitals that care for especially large numbers of low-income patients to receive discounts on prescription drugs that they dispense on an outpatient basis to low-income patients.

Among the issues the Health Subcommittee is expected to consider are whether hospitals are using these discounts to benefit their low-income patients and whether the extent of the discounts the pharmaceutical industry is required to provide result in increased prescription drug costs for others.

The subcommittee has already held two hearings on the 340B program this year and is currently considering more than a dozen proposals to change the program in some way.

Private safety-net hospitals typically participate in the 340B program and consider it an essential tool in their efforts to serve the residents of the low-income communities in which they are located.

Learn more about the 340B program and the various proposals to change it currently before Congress in this Roll Call article.

340B Program Getting the Job Done

The oft-scrutinized section 340B prescription drug discount program is doing what the program is supposed to do, according to a new analysis published on the Health Affairs Blog.

According to the report,

340B DSHs treat significantly more low-income patients than non-340B hospitals, provide a disproportionate amount of the nation’s uncompensated and unreimbursed care, and are more likely to provide specialized services that are critical to low-income patients but which are often underpaid.

In addition, 340B

…has saved billions in drug costs while providing free or discounted care to millions of patients who might otherwise be unable to get needed care. This is accomplished at no cost to taxpayers.

In addition, the report concludes that 340B-eligible hospitals:

  • care for significantly more low-income patients
  • provide the majority of uncompensated care unreimbursed care
  • are more likely to offer specialized and community services

NAUH has long been a staunch supporter of the 340B program, including in this January 2018 letter to members of Congress and this fall 2017 letter to the administration expressing opposition to proposed changes in the program.

Learn more about the facts and the data underlying these assertions in the Health Affairs Blog post “The 340B Drug Discount Program Is Fulfilling Its Original Purpose,” which can be found here.

Senate Committee Looks at 340B Program

The Senate Health, Education, Labor, and Pensions Committee (HELP) held a hearing last week on the 340B prescription drug discount program.

The hearing was prompted by complaints from pharmaceutical companies about the discounts they are required to provide to eligible providers and by concern that hospitals are insufficiently accountable for how they use the savings they derive from those discounts to serve their low-income patients.  In addition, the Centers for Medicare & Medicaid Services recently reduced its Medicare payments to participating hospitals.

During the hearing, Senate Republicans expressed support for the program but spoke of the need for greater transparency in the use of the savings the 340B program generates for hospitals and a clearer sense of how those savings benefit low-income payments.  Committee Democrats expressed similar concern but with less urgency.

Hospital industry representatives expressed concern that any new requirements could weaken the program and rejected the idea that savings are misused.  Committee members pushed back against these contentions.

Most private safety-net hospitals participate in the 340B program and it is a vital tool in their efforts to serve their low-income communities.

The Senate HELP Committee intends to hold additional hearings about the 340B program.

Learn more about the 340B hearing and the concerns that led to in this Healthcare Dive article.

Bill Seeks to Block 340B Cut

Legislation introduced in Congress would block the attempt by the Centers for Medicare & Medicaid Services to slash $1.6 billion in annual payments to hospitals for prescription drugs for outpatients prescribed through the federal section 340B prescription drug discount program.

Earlier this month CMS finalized its plan to reduce controversial 340B payments and shift $1.6 billion in savings into Medicare provider payments.  If adopted, the bipartisan legislation co-sponsored by Representatives David McKinley (R-WV) and Mike Thompson (D-CA) would prevent the reduction of 340B payments, which are made to hospitals that care for especially large proportions of low-income patients.

The 340B program is an essential source of resources for the nation’s private safety-net hospitals and many stand to lose hundreds of thousands of dollars, or even millions of dollars a year, if the payment cut is not reversed.

Go here to see Rep. McKinley’s news release on the bill and here to see the bill itself, which is H.R. 4392, “To provide that the provision of the Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs final regulation relating to changes in the payment amount for certain drugs and biologicals purchased under the 340B drug discount program shall have no force or effect, and for other purposes.”

House Committee Looks at 340B

Are hospitals using the savings generated by their participation in the section 340B prescription drug discount program to help their low-income and uninsured patients?

That’s what the House Energy and Commerce Committee’s Health Subcommittee is asking.

Earlier this year the committee requested such information from the Health Services and Resources Administration, which runs the 340B program, and now it’s asking hospitals as well.

Specifically, the subcommittee sent five-page letters to 19 providers that participate in the 340B program asking them about:

  • the quantity of 340B-purchased drugs they dispense to Medicare beneficiaries, Medicaid beneficiaries, and those with private insurance
  • the quantity of 340B-purchased drugs they dispense to uninsured patients
  • their savings from the 340B program and how they calculate those savings
  • how much charity care they provide
  • how they use 340B savings to serve vulnerable populations

The letters address many other 340B-related issues as well.

Most private safety-net hospitals participate in the 340B program and view it as a critical tool in their ability to meet the needs of their many low-income patients.

Learn more about the Health Subcommittee’s letter by reading this press release describing this initiative and go here to view the letters the subcommittee sent to selected 340B providers.

NAUH Urges Congress to Support Withdrawal of 340B Regulation

Ask the Centers for Medicare & Medicaid Services to withdraw its proposed regulation to reduce Medicare payments for prescription drugs covered by the section 340B prescription drug discount program.

That’s the message in a bipartisan letter being circulated among members of Congress, to be sent to CMS administrator Seema Verma, and last week the National Association of Urban Hospitals wrote to every member of the House of Representatives asking them to sign that letter before it is sent to CMS.

The 340B program provides discounts on prescription drugs to safety-net hospitals and other selected safety-net providers that serve especially large numbers of low-income patients.  The purpose of the program is to help put additional resources in the hands of the providers that care for the most low-income patients.  Over the years the program has enabled such providers to deliver additional services to such patients and undertake additional outreach into low-income communities as well.

Most private safety-net hospitals participate in the 340B program.

The discounts come from pharmaceutical companies, not the federal government, at no cost to taxpayers.  CMS proposes greatly reducing the discounts and sharing the program’s savings with providers that care for fewer low-income patients.

Go here to see NAUH’s message to Congress.

NAUH Urges Medicare to Withdraw 340B Proposal

The National Association of Urban Hospitals has urged the Centers for Medicare & Medicaid Services to withdraw its proposal to significantly reduce Medicare payments for prescription drugs to hospitals that qualify for the federal section 340B prescription drug discount program.

The plan, part of Medicare’s proposed outpatient prospective payment system for outpatient services for 2018, would reduce 340B payments to qualified hospitals approximately 28 percent.

 In its formal comment letter to CMS, NAUH argues that the 340B program is appropriately serving the purpose for which it was created – putting additional resources in the hands of hospitals that serve especially large numbers of low-income patients – and that the proposed changes would detract from the ability of urban safety-net hospitals and other safety-net providers to continue delivering many of the services the residents of their low-income communities need that are currently made possible only through savings derived from the 340B program.

Most private safety-net hospitals participate in the 340B program.

See NAUH’s letter to CMS here.

Don’t Slash Medicare Drug Payments, NAUH Asks CMS

The federal government should withdraw its proposal to drastically reduce Medicare payments for prescription drugs covered by the section 340B prescription drug discount program, NAUH has told the Centers for Medicare & Medicaid Services.

CMS has proposed a 28 percent cut in those payments beginning in 2018.

According to NAUH, the savings hospitals enjoy from 340B discounts enable them to expand the scope of the services they offer to their low-income patients and engage in additional community outreach.  This was the very reason Congress created the program, NAUH told CMS, and reducing 340B payments now would reduce those savings, undermine the purpose of the program, redistribute the savings among hospitals serving patients with fewer needs, and not save taxpayers any money while also not doing anything to reduce the cost of prescription drugs.

Most private safety-net hospitals participate in and benefit from the 340B program.

Go here to see NAUH’s letter to CMS presenting these arguments.