Jen Laws, President & CEO Jen Laws, President & CEO

HIV Advocates Gather in Nashville for Health Fireside Chat

From April 27th through 29th, ADAP Advocacy Association (aaa+) hosted its first Health Fireside Chat of the year. The series was rebranded to encompass a broader focus on public health, changing from the HIV/AIDS Fireside Chat to the Health Fireside Chat. Unlike previous Fireside Chats, Nashville’s event added an “ice breaker” activity, themed in light of the hosting city – a line dancing lesson, as well as a town hall meeting convened in partnership with Positively Aware. The additional half day of activities - including the ice breaker, townhall meeting, and meet and greet - allowed attendees to settle into conversation expediently after having a solid hour of good laughs, encouragement, and bonding. Once down to business, policy discussions focused on Tennessee’s politically-motivated decision to decline HIV prevention funding, reforming the 340B Drug Discount Program to better meet patient needs, and the intersection between U=U (undetectable equals untransmittable) and reforming HIV criminalization laws.

The townhall meeting, which was facilitated by Rick Guasco, Acting Editor-in-Chief of Positively Aware, started with recognition that Nashville was explicitly chosen as a hosting city due to the state of Tennessee’s rejection of federal HIV prevention dollars. While a later discussion was specific to that issue, the town hall dug into underlying (and broader) concerns around systemic discrimination as a driver of today’s HIV epidemic. Digging into how racism, as an example, manifests can be a touchy subject in any group, even among those who generally align. Such a charged set of topics, especially among HIV’s thought-leadership, can and does lead to transformational moments, particularly because creating a space of “internal” advocacy provides a chance for us to experience, and navigate, conflict amongst ourselves. That conflict and navigation also provides us a chance to grow together and to break down silos of interest, work, and thought. And this townhall did exactly that.

The first policy session, “Tension in Tennessee: Is an HIV Access to Care & Treatment Crisis Looming?”, lead by the O’Neill Institute’s Jeff Crowley, invited local advocates to discuss their internal view of Tennessee’s “troubles” with some national advocacy representation. While much of the discussion focused on the details of local communication and national assumptions, some discussion on how the state may implement its newly allocated funding (will the state’s budget continue to fund prevention efforts next year?), much of the conversation that followed was explicitly about how local advocates can communicate and collaborate with national advocacy efforts. What became clear from that conversation is much of the national and state level advocacy we tend to reflect fondly of when speaking on decades past is relatively fragile and not well-coordinated. Planning bodies have diminished to largely being provider groups and some don’t even meet – despite a statutory requirement to do exist. An attendee with capacity building expertise pointed out the need for investment in this space. Many planning bodies have been weakened by atrophy, others have faced a demographic shift (and as a result a change in the barriers and assistance needed in order to appropriately activate affected community). The discussion as a whole highlighted the extreme silos working against a cohesive and collaborative advocacy network necessary to support ending the HIV epidemic.

340B remains an important issue for HIV advocates. As such, “340B Drug Discount Program: The Issues Spurring Discussion, Stakeholder Stances, and Possible Resolutions?“ was the focus of the second policy session. Some of the advocates in attendance knew little about the program, so the discussion provided an excellent educational opportunity on how the discount drug program works. Laser focused on issues of health equity, Kassy Perry of Perry Communications Group lead the group to dig in – and quickly. Advocates less familiar with 340B were readily able to identify the need for reform when assessing reductions in charity care and increases in medical debt. The group readily recognized 340B as a powerful tool toward addressing health disparities, especially economic consequences for patients, and where those consequences can and do negatively impact entire areas of patients’ lives. Attendees from industry partners listened intently as advocates described their concerns and the need for the program to better reflect the intent in which it was established.

Day two concluded with attendees enjoying a meal with one another, and a round of singing “happy birthday” to Brandon M. Macsata, the ADAP Advocacy Association’s CEO, who turned 50. This was truly a moment (many of them really) in which attendees got to buy into my desire to ensure our colleague felt loved and celebrated, since we were all together. All told, it is very likely Brandon heard the song “happy birthday” some two dozen times or more throughout the event (and I sincerely encourage ya’ll to do so again, if you find yourself in a meeting with him during the month of May).

The final policy session, “U=U: Is 'Undetectable Equals Untransmittable' Changing the Landscape for HIV Criminalization Laws?“, focused on the intersection of issues between U=U and reforming HIV Criminalization Laws with the conversation hosted by Mandisa Moore-O’Neal, executive director of the Center for HIV Law and Policy, and Murray Penner, executive director of U=U Plus. Mandisa shared with the group the exceptional nature of HIV criminalization laws, but also how general criminal codes are out of date, furthering the HIV epidemic, and nearly exclusively used against Black and Brown people living with HIV. Mandisa also discussed how these laws can and are leveraged to further domestic violence (and coercive control). Murray then discussed how laws which allow for “affirmative defenses” only help those people living with HIV which can readily access and maintain care. All of which emphasized that the design of these laws assume that because someone is living with HIV, they are necessarily presumed “guilty”. Advocates discussed how to break silos, including the potential to partner in prosecutor and public defender education efforts. Advocates focused on health or with strong relationships with their local health departments, for example, might wish to participate in education efforts alongside legal advocacy organizations or a state Bar.

The Health Fireside Chat series remain an exceptional retreat to advance thought-leadership, deep-dive policy conversations, as well as often-under appreciated advocacy collaboration. The ADAP Advocacy Association plans to host additional Health Fireside Chats later this year in Philadelphia, PA, and New Orleans, LA.

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Jen Laws, President & CEO Jen Laws, President & CEO

Advocates Gather to Discuss Pressing Healthcare Issues

The ADAP Advocacy Association held its second Fireside Chat retreat this year, assembling in Chicago to discuss a broad range of issues. The Fireside Chats are somewhat coveted for the nature of the space they provide, with representation of a variety of industry partners, advocacy and service organizations, and patient advocates who don’t necessarily hold any particular affiliations. CEO, Brandon M. Macsata, refers to the gathering as “a group therapy session” whereby the richness of the advocacy work is most frequently the result of conversations at the Fireside Chat, but not necessarily rooted in seeking specific solutions confined to the four walls of the meeting room. The meeting format frees attendees from needing to be the “problem solvers” and allows for a free flow of ideas and perspectives collaboratively that might not otherwise arise. Topics for this event included combatting counterfeit medications, reforming the 340B Discount Drug Program, and dissecting COVID-19’s impact on public health programs.

While many of the participants were familiar with the notion of counterfeit medications, few were necessarily familiar with the details of safeguards taken to ensure patients are indeed receiving the medications they expect to receive or how large recent instances of counterfeit HIV medications were possible. Shabbir Imber Safdar from the Partnership for Safe Medicines started the conversation by sharing the status of implementation of the Drug Quality and Security Act, and how packaging was sold and resold with fake product in containers as part of one of the counterfeit schemes in Florida. Participants asked about various aspects of enforcement and implementation, drivers of fake medicines and medication supplies, to learn that enforcement largely falls outside of criminal codes and to civil litigation on fraud, pushed by medication manufacturers – a cost not well appreciated when put under the lens of medication costs. Advocates also considered more overt impacts of counterfeit medications in the opioid crisis and how they might need to approach community education on the issue of counterfeits in order to further medical mistrust.

The 340B discussion proved to be particularly lively. While having to segregate the pointed and necessary reminder that much of public health program funding is largely dependent on 340B revenues because Congress refuses to adequately fund public health programs, within minutes, participants began asking where patients fell in the funding scheme. Issues of charity care as a measure of success of the program (and the fact that hospital charity care has fallen dramatically since the passage of the Affordable Care Act), the ever-expanding role of contract pharmacies, and how federal grantees are being “caught in the middle” were frequently mentioned. As advocates asked questions, one participant rightly and repeatedly reminded the audience “there are no requirements as to how those dollars are spent.” One participant asked pointedly, as the usual “sides” of the 340B debate began to settle in, “will you come to the table with those perspectives you disagree with to find solutions?”

The final discussion of the Fireside Chat returned to COVID-19’s impact on public health programs. Once again, yours truly facilitated the discussion, though this time it was less on policy issues and more on the state of patient advocacy and provider services as a response. With concentration on sustainability and succession planning, participants reflected how the crisis phase of the COVID-19 pandemic highlighted not just the weaknesses in public health programs, but also re-emphasized the need for HIV advocacy to consider appropriate succession planning and mentorship, as much as our service organization partners need to find room in their budgets to hire enough staff to not burn out their existing staff. Reminding the audience, I reflected, “Because eventually Bill Arnold dies.” The statement hit home for the room’s audience, referring to the empty seat draped in the fishing vest with the AIDS red ribbon on the lapel once worn by the Lion of HIV/AIDS advocacy. We have to plan better and we have to be willing to make these investments now, not later. I implored funders in the room to consider how they might incentivize funded organizations to begin succession planning and mentor investments.

After two years of most, if not all, in-person patient advocacy events being suspended, it was refreshing to convene with such a diverse group of public health stakeholders in Chicago. The ADAP Advocacy Association’s Fireside Chat retreats have filled a void in the patient advocacy space by the very nature of their uniqueness, and CANN remains committed to seeing them succeed. Chicago, like the one earlier this year in Wilmington, did just that.

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Jen Laws, President & CEO Jen Laws, President & CEO

Industry’s Changes to 340B Drug Discount Program

****The following is a joint statement by Jen Laws, President & CEO of the Community Access National Network, and Brandon M. Macsata, CEO of the ADAP Advocacy Association****

The Community Access National Network (CANN) and ADAP Advocacy Association, back in October 2020, issued a Dear Colleague letter to our industry partners in the pharmaceutical manufacturing space surrounding HIV therapies. We detailed our concerns regarding the 340B Discount Drug Program and the necessity to ensure safety-net public health programs do not “get caught in the crossfire between pharmaceutical companies and contract pharmacies.” Our efforts led to constructive conversation, as well as a commitment to protect patients access to timely, appropriate care and treatment. Essentially, we sought a “carve out” for certain Covered Entities, namely the Ryan White Grantees (“Grantees”) serving clients living with HIV/AIDS.

In the time since, considering our collective concerns for the sustainability, stability, and honest efforts to provide necessary services to PLWAHA, many of our industry partners have ensured additional efforts at transparency and accountability do not add to already existing reporting burdens of the Grantees. We still contend that the carve-out is essential to avoiding possible damaging effects on the safety-net programs crucial to the HIV-positive community.

Unfortunately, a few of our industry partners have express concerns about “bad actors” trying to encroach on the federal grantee carve-outs industry partners have thus far offered in requesting additional reporting of 340B Covered Entities. It has been our earnest position that solving the problems facing the 340B Drug Discount Program are achieved in a way that preserves benefit to patients and intent of the program while protecting against bad actors. However, any effort requires a scalpel, not a hatchet. The carve-out of these additional reporting requirements, in light of the oversight already offered by being federal grantees, has helped our industry partners align their values with their actions in working to ensure program integrity and minimize risks to patient benefit.

It is important to recognize the historical and current reality many Grantees face. Yet, should pharmaceutical manufacturers insist on blanket reporting requirements for all Covered Entities void of any carve-outs, it should be done by supporting these Grantees, and thus the services and medications their patients rely upon. We urge our industry partners to pair any new reporting requirements with funding for the following activities:

·        necessary expertise to navigate the establishment of third-party administrator and contract pharmacy agreements.

·        extend program initiation funding for the 3 years after qualification to meet the labor needs of fulfilling this reporting requirement.

·        develop other programming clinics specifically identify to work collaboratively.

Whereas our two organizations have long-supported reforms to the 340B Drug Pricing Program, because they are overdue and opportunities exist to ensure every single penny squeezed out of the program directly benefits patients, let’s not throw the baby out with the bathwater. Provided our industry partners are genuine in their expression and desire to preserve 340B’s intent to benefit patients, the aforementioned steps are modest and support appropriate transparency and accountability.

Respectfully, we believe any genuine effort to introduce added reporting burden on Grantees, of which are already most closely monitored in the 340B space, must also include support to meet these burdens. Any adjustments to Grantees’ reporting supported by funding and programming designed for Grantees to be “set up for success” on all accounts. We believe our industry partners are up to the task at hand and maintain the integrity to align actions and values.

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Jen Laws, President & CEO Jen Laws, President & CEO

A Patient’s Guide to 340B: Why Program Reform Matters to You

***This is the final report in a six-part series to educate patients about the 340B Drug Pricing Program***

The 340B Drug Pricing Program has no doubt added benefit for patients and providers, alike. The measure of this benefit, however, is shrouded by uncertainty over the lack of transparency and accountability, decline in hospital charity care, as well as the explosive middleman growth in contract pharmacies and pharmacy benefit managers. Twenty-nine years after the program’s inception, it is now unclear to both regulators and patients, both qualitatively and quantitatively, if the Congressional intent is being met.

With all the noise around whether rebate programs might encourage pharmaceutical manufacturers to raise the cost of their products, there is no conversation on how those rebate dollars are used. The lack of the requisite transparency reporting among non-federal grantee covered entities participating in the 340B program makes it impossible to distinguish between anecdotal claims of abuses versus legitimate use of these rebate dollars to the benefit of patients.

These combined situations place the future of the 340B program at exceptional risk, if only by politicization of the national conversation on medication affordability alone. That national conversation churns now, as Congress debates drug pricing legislation. Aside from notorious stump speeches about the prices other countries pay for their medications, nowhere in these discussions do we talk about payers (insurers) and the middleman dictating the at-the-counter prices of medications realized by patients. The ongoing political debate is absent of the larger impacts on safety-net programs benefitting from 340B revenue and the impact on the poorest patients among us. Without clear guidance, all patients can come to expect is more squabbling among covered entities, drug manufacturers, hospitals, and regulators. It is this type of environment in which an idealistic program finds itself at risk.

Lawmakers have reasonably argued federal regulators have not demonstrated a particular need for additional regulatory powers because the Health Services and Resources Administration (HRSA) has not adequately flexed their current oversight muscle (…much less that such would be exercised efficiently). Therefore, regulatory interpretation should be updated, specifically regarding the patient definition, and possibly with further defining “low-income” for more clarity on who the program should benefit most. To the extent of “cracking open the legislation”, there is a singular area in which lawmakers from both sides and the Biden Administration agree: the issue of transparency in reporting. Earlier this year, the Biden Administration’s discretionary budget included an ask of Congress to specifically fund greater oversight and administration of 340B, explicitly including requirements on reporting of how non-grantee entities use these dollars. In this space, where few agreements can be made found, this is one area where legislators can and should move swiftly. The data generated by transparent reporting on use of these dollars is invaluable in evaluating the efficacy of 340B in benefitting patients or otherwise meeting the intent of the program.

To the extent HRSA may need more room for rulemaking, legislators desperately need extend rulemaking authority to include allowable uses for 340B dollars and clarity on the intent of the program. Federal grantees already have to report use of these dollars while other covered entities aren’t. With executives reaping in millions of dollars, reasonable people can grow concerned these dollars are being used to prop up the profiteering and personal enrichment administrators may be enjoying at the expense of employees providing care and patients themselves. Employees of federal grantees don’t generally get to enjoy much in the way of raises and their pay is not on par with the private sector. Hardware and software systems lag in terms of keeping up with modern technology. Sustaining non-revenue generating or underfunded patient benefit programs is absolutely something many entities enjoy as a use of their 340B dollars. There is no doubt these dollars can be used to patient benefit beyond directly sharing the savings with patients, though sharing the savings is the most direct means patients benefit from 340B. Putting guardrails on allowable uses of these dollars would serve well everyone touched by the program. Frankly, anyone fighting this transparency as a suggested method of shoring up 340B in meeting its intended purpose has something to hide and deserves closer scrutiny.

As an additional area of critical need to consider, for non-grantee covered entity hospitals, records of charity care and minimum realized values in served communities should be determinative for qualification to participate as a covered entity. The current calculation of disproportionate share hospitals as 340B participants or non-340B participants by the Government Accountability Office has shown a steadier and steeper decline of charity care among 340B hospitals than among non-340B hospitals. Additionally, hospitals carry the highest issuance of medical debt in the United States, disproportionately affecting low-income patients. Part of ensuring low-income patients get the most benefit from the discount drug program was and remains the ability to extend no- and low-cost care, writing off costs of providing that care, without punishing patients for having a need. If hospitals are to receive the benefit of this program, that same benefit should be extended to patients.

Lastly, in addressing the sheer size of the 340B discount drug program, the most significant areas of growth with questionable benefit to patients are among contract pharmacies. HRSA’s recognized this potential in commentary with its 2010 final rule only to realize those cautionary concerns and integrate guidance curbing the use and growth of contract pharmacies in the no-shelved 2015 “mega-guidance”. While the mega-guidance has been shelved, the abuse of the program by contract pharmacies has not abated. Among reducing the number of contract pharmacies a covered entity may make agreements with, and other geographic requirements, lawmakers and regulators should consider establishing market appropriate flat fees associated with services and a database of fees charged by pharmacy benefits managers, contract pharmacies, and third-party administrators, similar to the 340B ceiling price database established under the Office of Pharmacy Affairs Information System. A similarly situated claims hub would also allow for greater clarity in audits, assessment of potential duplicate discounts, and (if appropriately structured and compliant with patient privacy laws) detect potential diversion.

340B is a massive program which, arguably, has not yet been realized by much of the patient population. Not doing anything in this case doesn’t mean “keeping things status quo”, rather it means leaving the program open to attack, inefficiency, ineffectiveness, and abuse.  We can and should do more to ensure patients are aware of the program, how the program is used by covered entities nearest to them, and how this critical support to federally funded health care programs might be impacted by additional health care policy reform efforts. If ensuring the health and well-being of the country is the priority of all players in this system, then its time patients know it.

For more information on the issues facing the 340B Program, you can access the Community Access National Network’s 340B Commission final report and reform recommendations here.

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Jen Laws, President & CEO Jen Laws, President & CEO

A Patient’s Guide to 340B: Why the Middlemen Matters to You

***This is the fifth report in a six-part series to educate patients about the 340B Drug Pricing Program***

When the 340B Drug Pricing Program was enacted in 1992, there were a few “gaps” between the law’s statutory language and the program’s practical application. Among them was the realization that some covered entities that couldn’t afford to operate their own pharmacy. The Health Resources and Services Administration (HRSA) issued guidance to address the gap. After all, what’s the use of a discount drug program if providers can’t realize those discounts simply because they don’t have a pharmacy?

In 1996, after the urging of some covered entities, HRSA issued guidance telling covered entities and manufacturers that covered entities could contract with a single, independent pharmacy to provide pharmacy services necessary to engage the discount program. The idea was simple: create an access pipeline to the program, so it could be accessed by small providers, but not abused. In 2001, HRSA began to allow a few pilot projects, for lack of a better term, wherein covered entities would have more than one contract pharmacy. In theory, it isn’t a bad idea. Different pharmacies have different distributors, and as such supply can sometimes be an issue (i.e., natural disasters).

Additionally, it allows industrious covered entities to open the door for competition on “value added” services from contract pharmacies – such as programmatic record keeping for the purposes of 340B and/or financial reporting for federal grantees. And since the pharmacy was the one handling the purchasing and distribution of the medications to patients, that’s one less labor task for smaller covered entities to fund. In 2010, HRSA would later expand these pilot project allowance for multiple contract pharmacies per covered entity.

Sounds great, right? More patients have access to discounted outpatient medications, right?

Right? Not exactly!

Under the 340B program, patients don’t always get their share of the savings from the rebates and discounts. Arguably, it would appear everyone is directly benefiting one way or another from the program and its lucrative revenue stream, except for patients.

Contract pharmacies all want their piece of this pie, too. For example, take the dispensing fees that a pharmacy charges to fill a prescription medication. Indeed, dispensing fees for 340B contact pharmacies are so wildly non-standard a Government Accountability Office (GAO) report from 2018 found dispensing fees ranging from $0 to almost $2000 per fill on 340B eligible drugs. Those fees come out of 340B revenue, which could be supporting a patient’s ability to pay copays or the cost of a drug and instead.

Can you imagine, if you will, you’re a person living with HIV or Hepatitis C, living at about 200% of the Federal Poverty Level (FPL; 200% in 2021 is approximately $25,760 per year for a single person), but thankfully receiving insurance coverage for your medical care. Yet, co-pays and deductibles drain your finances when you could be getting your medications at no cost if the pharmacy or covered entity was applying 340B dollars to your bill? How many Rx fills would that be?

If the payer wasn’t applying a co-pay accumulator or co-pay maximizer program, the dispensing fee of two fills could mean extending your ability to access care for an entire coverage year – not just for medications, but for all health care. If the intent behind the 340B program is to extend limited federal resources, ensuring those exorbitant dispensing fees weren’t so exorbitant would certainly be one way to do it. Ultimately, 340B is a pie – when there’s more taken out, hacked at along the payment pipeline of getting medications to patients, there’s fewer resources left for patients to benefit from.

What’s more concerning about the explosive growth in the number of contract pharmacies with their hands in the 340B cookie jar, is HRSA knew when the 2010 guidance was issued that diversion and duplicate discount increases, abuses of the program, would most certainly follow. In part, because the program would grow and at such a pace that HRSA couldn’t keep up. In fact, GAO included that warning in a 2011 report, stating “…increased use of the 340B Program by contract pharmacies and hospitals may result in a greater risk of drug diversion, further heightening concerns about HRSA’s reliance on participants’ self-policing to oversee the program.”

The best part? By the “best”, I mean the worst: contract pharmacies, like non-grantee hospital entities, don’t have to show any benefit to patients for any of the dollars. Clearly, it raises questions over the legislative intent of the program and whether it is being met?

Now, contract pharmacies, like hospitals, like to massage and carefully select data to pitch answers to these concerns (there are a great number of “concerns”) by saying “we served X many 340B eligible patients”. They get around having to say if those patients realized any of those savings and benefitted from the program, without defining what they mean by “eligible”, and without defining “patient”. Contract pharmacies and hospitals get away with not having to provide meaningful information because statutory language doesn’t define “low-income” or “eligible” and regulatory guidance has an outdated definition of “patient”. Regardless of the existing language in regulation, a bona fide relationship should exist in order to call a consumer a “patient”, otherwise this is all just pocketing dollars meant for extending medication access to needy people.

All this lack of transparency fees assessed against the program could easily be solved with merely requiring contract pharmacies to establish a “flat”, reasonable dispensing fee and to describe what those fees actually cover. If the contract pharmacy is providing an additional navigation benefit to patients or an in-house location for a federally qualified health center, reasonable people can see fees being slightly elevated to cover additional costs. However, those costs should be outlined like any other contractor would be expected to do in any other contract for service. Most hospitals already have their own in-house pharmacy, they shouldn’t be contracting that service out and thus giving room for inappropriate 340B related rebate claims. And if HRSA just does not have the capacity to meaningfully audit 340B claims and the use of these dollars, they could at the very least make more room for the other mechanism in the statute for audit: manufacturer-originated audits. That’s right. The statutory language of 340B anticipated HRSA wouldn’t be able to keep up if the program was successful or even particularly abused. So, legislators reasoned if manufacturers were taking a cut of their potential profits through discounts and rebates, manufacturers should be able to audit the claims seeking those discounts and rebates to make sure everything was in line. When a retailer offers a discount to veterans, they typically require proof of veteran status. Why would medication discounts be any different?

In the end, if contract pharmacies don’t have anything to hide, then they need to stop hiding so very much. There are enough hands in the 340B cookie jar that patients are being squeezed out and left with crumbs. When legislators ask “is the intent of the program being met?”, these are the questions on their minds. Patients should have them on their minds as well.

For more information on the issues facing the 340B Program, you can access the Community Access National Network’s 340B Commission final report and reform recommendations here.

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Jen Laws, President & CEO Jen Laws, President & CEO

A Patient’s Guide to 340B: Why the Decline in Charity Care Matters to You

***This is the fourth report in a six-part series to educate patients about the 340B Drug Pricing Program***

A cornerstone argument in favor of the 340B Drug Pricing Program centers on so-called charity care rates of the participating Disproportionate Share Hospitals (DSH). Those covered entities, specifically DSHs, should be able to leverage their 340B dollars to extend care and out-patient medications to offset losses from uncompensated care. In the ideal, offsetting the costs associated with charity care to provide more care to low-income patients is noble and moral and just, and one society should support. The problem occurs when charity care is wrapped up or conflated with all “uncompensated, unreimbursed care” because a significant portion of uncompensated care is written off as bad debt, and that debt all too often gets reported to patients’ credit reports. Whereas charity care is care provided at no cost or debt to the patient. Moving forward, we must not confuse, conflate, or combine generalized uncompensated care with charity care.

The argument from the American Hospital Association is narrowly focused to present the rosiest picture, touting the totality of charity care provided by 340B DSH covered entities ($64 billion in of 2017, the latest available data as of the AHA’s statement). It ignores 340B participating hospitals have seen a steady decline in both charity care and uncompensated care, according to the Government Accountability Office’s 2018 report. The AHA’s own data reveals the same thing, despite exponential growth of the 340B program, largely attributed to hospitals and contract pharmacies. Unlike Federally Qualified Health Centers (FQHCs, a type of federal grantee entity in the 340B program), which are required provide care “regardless of ability to pay”, hospital systems, in large part, have a much more extensive debt collection program; they are not necessarily beholden to rules regarding debt collection practices. FQHCs, as an example, may be required to seek debt payments from internal billing specialists, but don’t generally have contracts to sell the bad debt to collections companies or report to credit bureaus. Furthermore, they are prohibited from doing so in certain circumstances.

While the Affordable Care Act (ACA) prohibited certain types of hospital-originated debt from being reported to credit bureaus, it doesn’t stop the hospital from selling the debt and then the collection company reporting the debt. Indeed, hospitals are notorious for reporting medical debt and sending bills to collections. If 340B dollars are meant to offset some of these expenses, with program growing about 23% per year, why does the Census Bureau report that about 20% of Americans are under some form of medical debt? Why has that medical debt grown from $81 billion in 2016 to $140 billion in 2019?

The ACA required non-profit hospitals to offer charity care programs, and the vast majority of hospitals across the country are non-profit hospitals. Adding insult to injury, that tax designation and the requirement to offer charity care hasn’t stopped these “non-profit” hospitals from chasing after low-income patients and further impoverishing them. A recent Kaiser Health News “An Arm and a Leg” podcast dove into just one state’s effort to tackle an epidemic of “non-profit” hospitals suing patients as a result of medical debt. The effort found a massive coalition of 60 entities, including a nurses’ union, and startling data supporting the need for Maryland’s now-passed “Medical debt Protection Act.”

Data included notation of almost 150,000 lawsuits against patients over the last 10 years, making almost $60 million from patients who would otherwise automatically qualify for charity care, and hospitals negotiating with for state funds to support charity care taking in $119 million than they actually gave out in charity care. And that’s just in one state. Indeed, according to information behind this report, Johns Hopkins – a 340B hospital – alone raked in $36 million more from this state-funded charity care support than they spent. While Maryland already had certain patient protections from these predatory practices on the books, too few patients knew about those protections and the state awarded these dollars without ever investigating the existing status of bad debt to charity care ratios. All the paper in the world written into the law is meaningless if affected people and corporations are not made to be transparent and held accountable.

Access to care, and freedom to access care, are two different things. Access to care being an open door, and freedom to access care is the freedom to walk through that door without fearing a dire financial consequence. While some special interests may argue the program is critical to hospitals extending access to care, their rhetoric lacks practical application when patients don’t have the freedom to access that care without fear of acquiring life-altering debt. The fear of medical debt keeps people away from seeking care. In fact, one of the most immediate and meaningful ways to tackle the country’s medical debt crisis would be for 340B covered entities to share the savings with patients. A patient’s medical debt reported to their personal credit file can, and does, perpetuate cycles of poverty; it is harming patients’ wealth, health, and overall well-being. If 340B dollars are supposed to be aimed at ensuring access to care, then concerns over medical financial toxicity shouldn’t be discounted.

Hospitals, in large part, though not universally, have seen a significant decrease in uncompensated care due to the ACA’s expansion of Medicaid. With more patients qualifying for Medicaid, meaning an ability for providers to be reimbursed where none previously existed, hospitals should be able to shift their uncompensated care burden from bad debt to patient financial assistance and charity care programs.

On the other end of decreases in charity care provided by 340B hospitals, are truly magnificent non-profit hospital chief executive officer compensation.  In a 2019 hearing, CEOs admitted to having salaries in the millions of dollars per year range – that’s before bonuses. They also admitted to holding more money in reserves than they generally need in order to operate safely or not run the risk of running out of funding. Other instances of concern from this hearing include a hospital group using their 340B dollars to acquire a stand-alone oncology center. Typically, when these types of purchases are made, patients experience an increase in costs of care and sometimes experience a reduction in ability to access care due to an increase in patient load without subsequent staffing support or their provider’s office is physically moved as part of the consolidation effort, reducing a patient’s ability to physically get to and from office visits.

In addressing potential reforms that would benefit patient experiences, increase the sense of freedom patients feel to access care, and improve program efficacy, policy and law makers should both distinguish between generalized uncompensated care and charity care in annual financial reporting and 340B related audits and require a threshold of charity care for hospitals seeking to qualify for the 340B program. If hospitals are dissatisfied with their Medicare or Medicaid reimbursement rates and what that means for boosting their bottom line, they would do well to send their lobbyists after reimbursement dollars rather than disingenuously justifying their pilfer effort to rob 340B of its noble cause. Either way, it’s time these entities see requirements tied to their dollars, including rules around charging off debt against low-income patients.

For more information on the issues facing the 340B Program, you can access the Community Access National Network’s 340B Commission final report and reform recommendations here.

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Jen Laws, President & CEO Jen Laws, President & CEO

A Patient’s Guide to 340B: Why Accountability Matters to You

***This is the third report in a six-part series to educate patients about the 340B Drug Pricing Program***

The word accountable is defined as “being required or expect to justify actions or decisions.” Accountability is often broadly discussed on a variety of levels about governmental and social issues, and the 340B Drug Pricing Program is certainly no exception. The 340B program exists to address the health care needs of a segment of society – social needs. As such, program accountability is of paramount importance since patient health depends on it.

Accountability in use of 340B dollars follows the benchmarks of transparency in reporting: federal grantees are required by contract to demonstrate patient benefit in use of program dollars and non-grantee covered entities are held to no such standard. Without fiscal transparency, non-grantee entities cannot be held accountable for their use of these revenues. The Health Resources Services Administration (HRSA) largely selects covered entities for audit based on a selection of “risk” characteristics. While some criticism of manufacturers is warranted in terms of accountability, manufacturers have only one statutory requirement. That requirement is to provide discounts or rebates on qualifying medications to covered entities. HRSA selects manufacturers for audit based on complaints from covered entities. Areas of complaint about manufacturers typically consist of overcharging a covered entity, not making a particular medication available, or not being transparent about the “ceiling price” of a drug.

To be fair, the statutory accountability requirements of 340B program are…limited and…vague. However, according to a 2020 report by the Government Accountability Office (GAO-20-108), the Health Resources and Services Administration (HRSA) severely lacks meaningful oversight, uniform assessment and request standards, and, as with many other reports, finds HRSA’s administration of the program to be largely inadequate.

As an example, GAO identified HRSA audits from 2017 and 2018 reviewed less than 10% of all non-governmental hospitals enrolled in the program. HRSA primarily relies upon hospitals to self-attest their eligibility. Of the selected hospitals participating in the GAO review, 18 submitted documents that would constitute a government contract – any description of a community program – and when HRSA found these instances, allowed the hospitals to avoid getting in trouble by acquiring contracts with retroactive applicability. All of that meaning, these hospitals in question did not experience any reprimand for failing to provide programming to low-income people but they got to enjoy the perks of unaccountable 340B dollars until they got caught. At the rate HRSA reviews these entities, it’s possible for a non-compliant or otherwise non-qualifying entity could go an entire decade soaking up dollars meant for patients in needs.

While HRSA’s annual 340B audits are primarily targeted toward covered entities, drug manufacturers are also audited to ensure they’re not charging covered entities more than they should be for 340B medications, to ensure drug manufacturers are not discriminating against covered entities, and make sure drug manufacturers are making sure their products are made available in compliance with the 340B program. Manufacturers represent about ten percent of annual audits, while covered entities represent about 90 percent and there are about 900 drug manufacturers participating in the program (dramatically less than covered entities). To be fair, GAO concluded HRSA also needed to provide clearer guidance to drug manufacturers regarding what qualifies as an acceptable distribution restriction due to anticipated or actual supply shortages and to provide specific guidance as to what constitutes “discrimination” of covered entity participants.

This issue of defining discrimination is developing and playing out in “real-time”. In May of 2021, HRSA announced notification letters sent to 6 manufacturers regarding their new policies requiring additional reporting from covered entities with contract pharmacies (as opposed to in-house pharmacies). HRSA’s interpretation of statutory language (“…shall…each covered entity…”) as non-discretionary on the part of manufacturers. In essence, if an entity is registered with HRSA for the program, a manufacturer is required by law to offer medications at ceiling price or below to that entity, regardless of any potential for a covered entity to use program dollars outside of the intent of the program. While skepticism of non-grantee use of these dollars may be warranted due to lack of transparency in use of these dollars, diversion, or duplicate discount concerns, given that federal grantees are already required to report use of these dollars to their federal funders, a more narrowly tailored policy directed exclusively at non-grantee covered entities would be more appropriate to address the interest needs of manufacturers, the public, and program stability. However, given HRSA’s interpretation of the statutory language, even such a proposal might run the risk of rubbing regulators wrong. At the time of this writing, at least one of the manufacturers has sued the Department of Health and Human Services to prevent any monetary penalties related to these letters from being imposed. A judge has dismissed the government’s opposition to the suit in June of 2021. And on September 22, 2021 HRSA issued letters to the manufacturers in question, stating the issue had been referred to the Office of the Inspector General.

Lack of transparency means less accountability. Patients are better served when 340B-related dollars remain within the same geographic area they were generated by the covered entities. After all, if serving low-income patients means serving community and getting usable revenue required to be used on low-income patients, those dollars should be put back into the same community in which they were generated, right? But covered entities with large networks and multiple covered entity sites aren’t required to show those revenues are reinvested in the same area they were generated. For instance, monies made off the health and illness of an Atlanta community should not be spent to buy up profit generating imaging machines in a well-to-do suburban area outside of Los Angeles. But, without both transparency and accountability, 340B dollars can easily become a slush fund of revenues for any industrious non-grantee covered entity.

Indeed, many large contract pharmacies offer software programs to covered entities as a measure of their own “transparency” with internal reporting but the real goal is to show the covered entities “here’s how you can make more 340B dollars” – but at a cost of providing the service and without uniform assessment metrics. That means the contract pharmacy can tilt the experience of a patient by applying pressure to the covered entities very subtly through software programs telling the provider, “You can make more money off this patient by prescribing…”. Advocates have very good reason to be suspicious of contract pharmacies associated with (or even owning) pharmacy benefit managers who, then, can very easily provide programming that targets their profits over ensuring rebate dollars make it back to a patient.

Statutory clarification could greatly benefit the intended purpose of the 340B program – ensuring low-income patients get the care they need by taking a few, simple steps, specifying reporting requirements that mirror existing transparency and accountability found among grantees. Additional oversight is needed in numerous areas, all designed to further benefit patient access to care and medications. Among them, non-grantee entities should be required to report how 340B dollars are being used, by which payer source a claim is generated, how much charity care a non-grantee entity provides, and how much revenue is generated from pharmacy sales (and how much is generated from 340B sales). Patients might not understand the nuances behind the program complexities, but they do understand when they cannot access the care they need and deserve. If the purpose of the 340B program is to expand access to care and medications, then why not go that extra mile?

Congress could go a great deal further to ensure these billions of dollars serve patients, rather than the interests of shareholders in private hospital systems or propping-up senior management compensation packages, or other non-medically-related expenses. Congress could also opt to provide for additional minimum requirements in order to qualify as a covered entity – especially with regard to private hospitals providing a certain percentage of charity care.  

For more information on the issues facing the 340B Program, you can access the Community Access National Network’s 340B Commission final report and reform recommendations here.

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Jen Laws, President & CEO Jen Laws, President & CEO

A Patient’s Guide to 340B: Why Transparency Matters to You

***This is the second report in a six-part series to educate patients about the 340B Drug Pricing Program***

All public-private partnerships require transparency to instill confidence in program function, private business operations, and government accountability. Transparency is an essential part of the equation; it brings us more accountability and more effective programs. It helps to identify areas of improvement in operations or enforcement, as well as limiting waste, fraud, and abuse. The 340B Drug Discount Program is no exception because transparency ensures investments into patient access to medications for critically vulnerable populations are reaching patients. Transparency – in every programmatic aspect – serves the public interest and is, frankly, just good government. It builds confidence in the efficacy of the program and good will of the participating entities.

In general, under the 340B program, those entities receiving federal grant funding – known as “federal grantees” – under other programs (i.e., federally qualified health centers, Ryan White HIV/AIDS clinics, hemophilia centers, and others) receive a great deal over oversight on how they use their discounts and rebates from 340B, though that oversight comes as part of their fiscal reporting under those other programs. For non-grantee covered entities, oversight is primarily dependent on audits and self-attestation of compliance and corrections to issues. With non-grantee covered entities lacking dedicated oversight like federal grantees, there’s a lack of transparency in how those entities qualify under the program and how those entities are using 340B-generated revenues to benefit low-income patients.

Regardless of program, dollars meant to serve low-income patients are often scarce. As such, patients lose when the investments needed to support and expand services for vulnerable populations are directed elsewhere (outside of the community those dollars originated from or for-profit building purposes). Patients lose out on funding support that keeps programs stable, ensures access to critical health programs nearest to them, and ultimately threatens to destabilize a program relied upon by the federal government and community stakeholders to keep clinic and hospital doors open.

At the inception of the 340B program, legislation such as the Patient Protection and Affordable Care Act did not exist, and only 29 million people nationwide were enrolled in Medicaid. Fast forward to 2018, Medicaid rolls had grown to 72 million people – meaning in all but the hold-out “non-expansion states” nearly any hospital in the country might qualify as a “disproportionate share hospital” – a situation 340B never considered at inception. The development and growth of the program was analyzed in a 2018 report issued by the U.S. House of Representatives’ Committee on Energy & Commerce.

According to a Government Accountability Office report (GAO-21-107) about 80% of current covered entities are federal grantees and 20% of covered entities are hospitals. However, many of these entities, especially hospitals operate multiple sites – not all entities are created equal in terms of generating program revenue. Of the approximate 37,500 covered entity sites participating in the program, about 75% of those sites are hospital affiliated with hospitals, not federal grantees. Hospitals are able to qualify specifically because of the low threshold of “disproportionate share” of low-income patients who can now afford to seek care thanks to Medicaid expansion – even if the hospital entity is generally well off enough to not actually need those dollars in order to provide care. In order to better understand how these changes have impacted growth and qualification of the program, “disproportionate share” may not be the best formula to ensure 340B dollars are helping those who need it most. Particularly, given the decreasing share of charity care certain hospital entities have offered over the years, evaluating charity care percentages and qualifying patients by income and payer type (self-pay, Medicaid, private insurance, etc.) may be more accurate in ensuring entities are actually serving low-income communities.

To be clear, “charity care” is a specific type of “uncompensated care” – or when patients receive care but can’t pay their bills. Unlike other types of uncompensated care, whereby providers may send a patient’s bill to a collections company, charity care releases the patient from a portion or all of their financial responsibility. Typically, charity care is limited to those who have to choose between putting food on their table and seeking preventative care like mammograms or having to decide in what life-saving neonatal care a family might need. Given the intersection of race and poverty in this country, charity care is a critical, even if anecdotal measure of how much a hospital is invested in their local community and combating community health disparities like pregnancy-related mortality.

The 340B program’s statutory language is largely silent on how these revenues dollars may be spent and because of that, there’s little to ensure these dollars are actually going to benefit patients instead of hospital networks or pad executive pay. Patient advocates have long crowed about the need for non-grantee covered entities to meet the same transparency requirements federal grantees are required to meet. Indeed, one of the biggest challenges facing the 340B program is better understanding how these dollars are spent. Now, typically, where statute is vague, government agencies tasked with managing programs have the regulatory power to make rules and the man power to enforce them. That’s just not the case with 340B and the Health Resources and Services Administration (HRSA) has repeatedly stated a lack of surety in its ability to regulate beyond guidance and frequently cited an inability to expand auditing capacity due to lack of funding. So much so that President Biden included $17 million in his budget request to strengthen and expand oversight of the program specifically in terms of auditing how 340B revenues are generated and spent among on-grantee covered entities.

Given the program’s growth, there’s reason and need to further clarify the intent of the program, cemented into unambiguous statutory language to reflect the country’s health care landscape of today and ensure the revenues generated are actually helping patients and not padding executive pockets. In our next blog, we’ll discuss the accountability processes currently in play for covered entities and manufacturers and the glaring holes in that part of the oversight “net”.

For more information on the issues facing the 340B Program, you can access the Community Access National Network’s 340B Commission final report and reform recommendations here 2018 report.

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Jen Laws, President & CEO Jen Laws, President & CEO

A Patient’s Guide to 340B: Why the Program Matters to You

***This is the first report in a six-part series to educate patients about the 340B Drug Pricing Program***

In 1992, Congress struck a deal with pharmaceutical manufacturers to expand access to care and medication for more patients: If pharmaceutical manufacturers wanted to be included in Medicaid’s coverage, they’d have to offer their products to outpatient entities serving low-income patients at a discount. The idea was brilliantly simple; drug manufacturers could have a guaranteed income from participation in the Medicaid program, and “covered entities” could have guaranteed access to discounted medications. Congress set-up a payment system by way of rebates, affording healthcare providers a way to fund much-needed care to patients who could not otherwise afford it.

This payment program is little known but, now it is significantly large. It is the 340B Drug Pricing Program.

“At the inception [of the 340B program], these entities [Hemophilia Treatment Centers (caring for all patients with both bleeding and clotting disorders), Ryan White Clinics and FQHCs were specifically identified] were the prime targets to benefit from the  three major goals of the initial PHS pricing program: first, that pharmaceutical products would be purchased at markedly reduced 340B pricing; secondly, the discounts would be passed on to the payors and finally that a small, reasonable, percentage would go to the entity itself, to sustain Covered Entities to care and expand diagnostic and clinical services.”
– Dr. Diane Nugent, National Commission on 340B (2018)

Initially, covered entities were exceptionally restricted, including but not limited to federally qualified heath centers (FQHCs), Ryan White HIV/AIDS clinics, hemophilia treatment centers, and only one category of hospitals, so-called “disproportionate share hospitals” (DSH). DSH is a hospital entity that provides a “disproportionate” number of low-income patients, evaluated quarterly and calculated through a formula dictated by statute. Of these entities, those receiving federal grant dollars under any number of federally funded programs are called “federal grantees”.

Federal grantees are required by statutory language to certain transparency in how they spend their 340B-related revenue. In trade, participating drug manufacturers are also required to be transparent in their contributions to the program.

In addition, federal grantees are required to be transparent and accountable regarding their 340B-generated dollars by their federal grants, not by the statutory language of the 340B program. That means every dollar a federal grantee generates is held accountable to serving the needs of low-income patients. How these dollars may be used from grantee to grantee may look a little different but they’re still required to fit within the guardrails of the grant and, for many federal grantees, the most direct way of achieving this goal is sharing the savings with patients at the pharmacy counter. By its very nature, 340B’s purpose is to reduce the amount of tax dollars spent on these grants by providing an avenue of program revenue, and thus support existing efforts to provide care for the most vulnerable.

Over the years, covered entities have expanded to include contract pharmacies, family planning centers, children’s hospitals, critical access hospitals, rural referral centers, freestanding cancer centers, and sole community hospitals. From 1992 until about 2001, participation in the program by covered entities was fairly static – it didn’t grow or change in any massive quantity. After 2001, covered entities able to access the 340B program began to grow at an exceedingly fast pace, with even more growth among “covered entity sites” and the greatest amount of growth among contracted pharmacies. This was reflected in 340B sales, as well. According to the Drug Channels Institute, 340B purchases grew from about $2.4 billion in 2005 to more than $38 billion in 2020.

In general, 340B-related income looks like an insurer reimbursing the cost of a medication for a patient to a covered entity, a pharmacy filling the medication at the rebated cost with addition of a minor dispensing fee, and the covered entity keeping the excess as savings. Covered entities are allowed spend those excess funds in particular ways which qualify as “expanding access” to medication or care. For entities applying those funds directly to outpatient medications, this is known as “following the patient” or “sharing the savings”. Other uses may include anything that directly impacts access to or quality of care for low-income patients. Notable examples may include technology upgrades to be in-line with patient security and best practices in extending scarce human resources (i.e. how efficient care can be delivered to patients), acquiring new care technology to provide care not previously available (i.e. imaging and x-ray machines), and infrastructure like mobile medical units in order to bring care to patients rather than bringing patients to care or opening new locations in order to be more accessible to their served communities. 340B prohibits covered entities on double dipping on discounts or applying rebate dollars to inpatient medications or to a particular patient that does not qualify as low-income (“diversion”).

That patient getting their share of the savings makes a great deal of sense. Indeed, a Government Accountability Office report (GAO-18-480) of selected covered entities stated of 55 interviewees, 30 reported providing low-income, uninsured patients on 340B dispensed medications and all “30 covered entities providing patients with discounts reported providing discounts on the drug price for some or all 340B drugs dispensed at contract pharmacies. Federal grantees were more likely than hospitals to provide such discounts and to provide them at all contract pharmacies.” Patients realize the savings of the rebate program immediately. Benefits of the program which may be less recognizable to patients for a similar report from 2011 (GAO-11-836) included funding a non-revenue-generating case management program, patient and family education programs similar to guidance pharmacists provide on medication interactions, and transportation to and from care appointments. All of which are critically necessary in terms of creating a safety net of accessible care for vulnerable communities and patients.

For more information on the issues facing the 340B Drug Pricing Program, you can access the Community Access National Network’s 340B Commission final report and reform recommendations here 340B Drug Pricing Program.

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Jen Laws, President & CEO Jen Laws, President & CEO

340B Drug Discount Program: Here’s What Patient Advocates Need to Know

The 340B Drug Discount Program for years has had little attention, aside from a few Congressional Hearings. As we cited last month in a blog, 340B program purchases has more than quadrupled in the last decade, now exceeding Medicaid’s outpatient drug sales. This growth has disturbed the bargain made between manufacturers, providers, and lawmakers in 1992, often leaving patients out of the benefit meant to be gained by the program.

Because 340B is an exceedingly nuanced payment system design, lawmakers have been reluctant to touch the issue – fearing a need to “crack” into the legislation, lacking agreement on how to proceed, and having to balance interests that are often in conflict – preferring to leave the management of issues arising around 340B to the Health Services Resources Administration (HRSA), which then has the unfortunate duty to remind lawmakers, the agency’s statutory authority is limited, and their budget is not large enough for more meaningful oversight. As administrations change, so do the perspectives on how to ensure the intent of 340B, making sure poorer patients can afford and access outpatient medications and the care required to acquire those medications, is captured in how the programs actually operates. Leaving us with the current situation of competing interpretations and interests heading to the court system to find answers and settle disputes.

Part of this program growth is driven by hospitals as a type of “covered entity”; a 2015 analysis showed the program having grown from about 600 participating in 2005 to more than 2,100 hospitals in 2014. In fact, a 2018 Government Accountability Office report found “charity care” and uncompensated care provided by hospitals receiving 340B revenue had steadily been decreasing over the years. The Affordable Care Act has something to do with that – in extending Medicaid eligibility, the Medicaid qualified population grew and as enrollment grew, so did the amount if “disproportionate share” of Medicaid patients certain hospitals served. Ultimately, this meant more hospitals qualified for the 340B Drug Pricing Program than had prior to the ACA.

Another reason for program growth is an expansion of definition of “covered entities” to include contract pharmacies – which have grown as an industry – used by federal grantees like federally qualified health centers (FQHCs) and hemophiliac clinics. Tim Horn, director of the Health Care Access team at the National Alliance of State and Territorial AIDS Directors, described why it was necessary for this expansion, in particular to Ryan White clinics, serving communities affected by and vulnerable to HIV as opposed to limiting program qualification to those pharmacies run and owned by clinics themselves, “340B contract pharmacies are vital to Ryan White and other safety net providers for a couple of important reasons: they help ensure equitable access to affordable medications by uninsured clients, including patients who might live too far from a program's in-house pharmacy, and they help programs maximize their ability to generate essential revenue on prescription fills for insured clients.”

Regardless of entity type, most patients access care through a “payer” (health care insurance provider, be they public – like Medicaid managed care organizations – or private), who play a central role in the 340B payment system design. In turn, this means “pharmacy benefit managers” (PBMs - who sometimes also own the contract pharmacies in question) also play a central role, by designating schemes for how providers are reimbursed for care they’ve provided or medications that have already been dispensed. Jeffrey Lewis, a board member of Community Access National Network and President & CEO of Legacy Health Endowment, described how some PBMs engage in discriminatory practices by paying for 340B drugs at lower rates than non-340B drugs, reducing the benefit Congress intended to give 340B hospitals and clinics:

“340B providers receive less revenue than if 340B drugs are reimbursed at normal non-340B rates. That loss of revenue results in 340B providers having less money to underwrite the cost of providing uncompensated care, including serving uninsured or underinsured patients or providing services that insurers do not reimburse. PBMs, on the other hand, retain the difference between the 340B and non-340B payment rates for themselves. This program "benefit", which was intended to go to non-profit safety net providers, ends up going to for-profit PBMs instead. In this manner, PBMs' payment policies prioritize PBMs’ for-profit interests over 340B providers' non-profit missions to support public health.”

The center of one of the most pressing actions to date is “who’s job is it to make sure the rules are being followed?” with manufacturers being the first to move – by way of seeking the ability to require entities wishing to participate in 340B to provide additional claims data. Lewis points out that in a unanimous Supreme Court decision in 2011, courts had previously interpreted covered entities as lacking authority to seek enforcement against manufacturers, so the same must be true in reverse, requiring all parties to use a dispute resolution process dictated by HRSA. Indeed, the ruling even goes so far to cite the ACA’s directive for HRSA to issue a formal “alternative dispute resolution” process. However, HRSA failed to formalize this process in a final rule until December 2020. That rule is now part of a patch work of suits from manufacturers looking to the courts for clarity, with manufacturers arguing that statutory enforcement can’t be one-sided – if manufacturers must provide these discounts, someone should be ensuring the entities receiving these discounts are actually using them for patients and HRSA, by their own admission, doesn’t have the capacity to do so. Of note, Justice Ginsburg, who pinned the 2011 ruling in Astra USA, Inc., noted HRSA’s failure to bilaterally enforce the rules did not necessarily provide for a right of action by 340B actors.

Nonetheless, 340B remains a critical source of revenue for Ryan White clinics and other federal grantees already meeting the legislative intent of the program, at least generally better than other payer and provider actors in this scheme. As a result of sustainable federal funding and legislators prioritizing public health funding, federal grantees are scrambling – and manufacturers should consider how best to not harm the “good guys” in what ever actions taken next. Indeed, NASTAD’s Tim Horn stated:

“340B program revenue will always be an important – and dynamic – supplemental funding source for our HIV care programs, particularly where Medicaid has not been expanded and where federal and state funding is both limited and inflexible. A number of factors that have real or potential impacts on 340B…are now requiring serious discussions regarding the sustainability of program revenue generation. Simply put, we're not going to end HIV as an epidemic without significant and nimble funding required to support the myriad medical and support services associated with the best possible health outcomes. 340B revenue is a substantial part of this and, absent alternative funding streams to ensure that these programs remain whole, will remain the lifeblood of HIV service delivery in the United States.” 

Legacy Health Endowment’s Jeffrey Lewis agreed:

“The value and importance of the 340B program are well known. However, where there is ambiguity, it impacts both covered entities and patients. With the positive growth of covered entities to serve more people in need, Congress must take a thorough look at why 340B was created, its absolute value and tackle the tough questions where ambiguity may exist. Clarity is needed now more than ever to stop pharmaceutical companies from indiscriminately deciding whether and how to participate and prevent jeopardizing patients' lives. Similarly, Congress has an obligation to evaluate the role of PBMs and Third-Party Administrators (TPAs) operating in the 340B space and set a specific rule regarding revenue sharing. The 340B program was created to aid covered entities in serving more people in need. Unfortunately, every dollar taken by PBMs or TPAs reduces the ability of covered entities to care for more and more patients.

Clear legislative intent and rules are critical to ensuring program stability and, ultimately, safety net provider stability. Ryan White Centers, Hemophilia Centers, FQHCs, and rural hospitals as particularly vulnerable to Congressional, HRSA, and OPA ambiguity. The current and future failure to clarify the uncertainty of the 340B program jeopardizes patients and the financial stability of covered entities.”

While the finger-pointing on “who’s at fault” for an unsustainable program growth rages on and works its way through both the courts and the minds of lawmakers or who is responsible for drawing the lines in which manufacturers, providers, and payers can color inside of, the only thing clear is the population this program is meant to serve is not receiving as much benefit from the program as it should. We could say “patients” here, but that word apparently needs to be defined with regard to 340B. In the end, all stakeholders, outside of lawyered language, know exactly who has been harmed by bad actors in the 340B landscape. Everyone with power in this minefield would do well to remember that.

We invite you to download the 340B Final Report, issued by the Community Access National Network’s 340B Commission.

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