Patients with behavioral health and substance use disorders often struggle with accessing and staying on the daily oral medications they need to keep their disorders controlled. That’s why SSM Health uses some of its 340B savings to run long-acting injectable (LAI) clinics in the St. Louis area to help these patients achieve better health. We speak with SSM Health Vice President of Pharmacy Financial Operations Michelle Schmitt to learn how much of a role 340B plays in that patient care mission.
LAI clinics offer comprehensive services
SSM Health’s three LAI clinics offer injections for patients with conditions such as bipolar disorder, schizophrenia, and alcohol and opioid use disorders that might last as long as three to six months. Clinic visits also give the patients access to a full team of pharmacists, psychiatrists, nurses, therapists, and others to help them navigate treatment and stay healthy.
340B funds are key to patient access
Because behavioral health is often a subsidized service, 340B savings are crucial to the operations of the clinics. They also enable SSM Health to offer financial assistance to patients living up to 400% of the poverty level so they can afford the treatments they need to stay on the road to recovery.
Cuts to 340B would be detrimental to patients
Schmitt says losing access to 340B pricing could mean a 60-70% price increase in the cost of LAI drugs, which would threaten the viability of the clinics and the financial assistance that many patients rely on to access their treatments. She says these clinics are a great example of how 340B is about much more than just price discounts; it provides resources for health systems to meet unique community health needs and serve patients where they are.
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About three years after being signed into law, one provision of the Inflation Reduction Act (IRA) that is of particular importance to 340B hospitals is about to take effect: Medicare price caps. Jan. 1, 2026, marks the date that the first 10 Medicare drugs will be subject to a maximum fair price (MFP). Meetali Desai, director of pharmacy business services at UMass Memorial Medical Center, joins us to explain how this will affect 340B hospitals and health centers such as hers.
The Good and Bad News for Covered Entities
The good news, Desai says, is that there is potential for the 340B ceiling prices to go down for certain medications. This is because the MFP will become the new “best” price in the formula for calculating 340B prices. However, because the law will cap reimbursement rates to MFP when Medicare patients receive those drugs, 340B hospitals will see their 340B savings amounts go down for those dispenses.
Updated Calculator Can Help Hospitals Gauge Potential Impact
340B Health recently updated its calculator for hospitals to use to estimate the effects of MFP pricing based on the newest data. This new calculator allows users to project what the potential impact from the IRA could be on a hospital, including if drugmakers decide to lower their list prices significantly to avoid IRA inflation penalties. This drop in prices of Medicare drugs could result in 340B hospitals seeing higher ceiling prices and reduced savings.
Reduced Savings Could Impact Patient Care
Desai says Medicare price caps, combined with other financial pressures on hospitals, could mean some rough times ahead for hospitals that care for a large proportion of low-income patients. She encourages 340B teams to share their results from the IRA calculator with their senior leadership and with 340B Health as the hospital community prepares for the impact of these caps.
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Health systems eligible for 340B savings must strike a balance by staying compliant with purchasing rules while also maximizing the amount of eligible savings they can obtain to invest in patient care. Angela Campitelli, the director of the pharmacy 340B program at MetroHealth System in Cleveland, explains how a hospital system such as hers implements a purchasing strategy that achieves that balance.
Following rules for 340B purchases
Disproportionate share (DSH) hospitals, children’s hospitals, and cancer hospitals are subject to a group purchasing organization (GPO) prohibition that bars them from buying covered outpatient drugs on GPO accounts. That requires maintaining a purchasing system that involves buying drugs at wholesale acquisition cost (WAC) for neutral inventory and then replenishing at 340B, WAC, or GPO pricing depending on how the drug is used.
How the cycle can break down
Purchasing drugs outside of the outlined processes could cause violations of the GPO prohibition or other 340B rules, which could lead to sanctions that might include losing eligibility for 340B. That is why health systems such as MetroHealth use staff education, regular auditing, and other safeguards to ensure they are purchasing and replenishing drugs on the correct accounts.
Investments in the strategy
Campitelli recommends 340B hospital teams bring their senior leadership on board to invest in auditing and other resources to ensure a strong purchasing strategy. Such investments will help avoid potential rule violations while ensuring that hospitals are not walking away from 340B savings to which they are entitled.
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After months of litigation in a federal district court, a key decision recently came out in the legal fight over 340B drug rebates. 340B Health Vice President of Legal and Policy Amanda Nagrotsky updates us on the development.
Court deals a blow to drugmakers
D.C. district court judge Dabney Friedrich ruled on May 15 that manufacturers cannot unilaterally implement rebate models for 340B, agreeing with the Health Resources & Services Administration (HRSA) that the agency effectively has preapproval authority over rebates. In her decision, the judge cited early results from a 340B Health survey finding that shifting 340B to a rebate model would divert significant hospital resources from patient care. Drugmakers have already appealed the ruling.
Some bright spots for drugmakers in this decision
Although the decision largely went against pharmaceutical companies, the judge ruled that the 340B statute does not categorically prohibit rebates, leaving the door open for government approvals of rebates. The judge also agreed with drugmakers’ assertions that HRSA should consider how rebate models could improve 340B compliance and how requiring the sharing of data through rebates could aid in drug company audits of covered entities.
Will HRSA stop all rebates from proceeding?
Despite this decision, the legal fight over rebates isn’t over yet. The judge found that, for three of the manufacturers in these cases, HRSA has yet to issue final decisions with respect to their proposed rebate models. In the case of Sanofi, the judge found that HRSA failed to adequately explain the legal basis for rejecting the drugmaker’s rebate model, and she directed the agency to reconsider its decision and explain whether and how it would violate the 340B statute. HRSA sent rebate guidance to the White House for approval earlier this month, though as of recording this episode it was not known what that guidance would say.
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More than a third of patients released from the hospital never fill their discharge prescriptions, but “meds-to-beds” programs can help improve that statistic. That is the approach Renown Health in Reno, Nev., took with the help of its 340B savings. Renown Vice President of Pharmacy Services Adam Porath joins us to describe how this meds-to-beds program improves patient care.
Hospital readmissions down, patient convenience up
Renown Health’s 340B-funded program offers medication to patients who are being discharged from the hospital, either through bedside delivery, pneumatic tube, or a unique discharge lounge. The effort began as a pilot for Medicaid patients in 2016, and it demonstrated patients in the program were 25% less likely to be readmitted to the hospital once discharged. These health improvements plus the added convenience of medication access for patients convinced the system to expand the program.
340B pricing to patients who cannot pay
Porath says Renown Health refers patients who cannot afford discharge medications to its social services team, which can authorize providing the drugs to those patients at the 340B-discounted rate. The team also will work with patients to see if they qualify for coverage such as Medicaid or other programs to reduce their out-of-pocket costs. Porath said Renown’s meds-to-beds program provides drugs free of charge to about 30 patients per month.
The keys to success
Renown Health’s meds-to-beds program has been a success, with more than 80% of eligible patients participating as of the end of 2024. The hospital expanded the services to all patients and started operating it 24/7 in April 2024. Porath said the keys to success include regular reporting to stakeholders and innovations to handle a large volume of patients discharging at once. Such changes allow all parties to stay in the loop with the development of the program and to celebrate successes as they occur.
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Big potential changes to how 340B operates plus heightened interest in both new protections and new restrictions for covered entities means there is much to keep track of in the 340B world. 340B Health CEO Maureen Testoni joins us to make sense of recent developments in the nation’s courts and beyond.
Rebates Get Their Day in Court
340B Health, two member hospitals, and the government met drug companies in court in late April to challenge drugmaker attempts to replace 340B discounts with rebates. Testoni says the judge cited potentially devastating consequences to hospitals if rebates proceeded but also had probing questions for the government on how it is working to address drugmaker compliance concerns. The Dept. of Health and Human Services is set to release guidance by early June on the rebate issue, and the court’s decision could come out soon.
The White House Proposes 340B Big Oversight Shift
A leaked copy of the Trump administration’s latest budget proposal includes a plan to move the Office of Pharmacy Affairs (OPA) from the Health Resources & Services Administration to the Centers for Medicare & Medicaid Services. Testoni says the oversight shift is concerning because of a stark difference between the purpose of 340B and the operations of Medicare and Medicaid. CMS also imposed years of Medicare payment cuts to 340B hospitals that the U.S. Supreme Court eventually overturned.
340B Protections, Mandates Take Center Stage
States continue enacting laws to protect hospital access to 340B pricing, but they also are moving forward with reporting mandates and proposals to define how hospitals should use their savings. Testoni said reporting and use-of-savings mandates lead to misdirected views on the purpose of 340B, which goes far beyond direct patient care and cost assistance. On Capitol Hill, a report from a long-running investigation of 340B recently came out, contributing to the debate over possible new restrictions.
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The ancillary outpatient sites known as 340B child sites serve as important places for patients to access the drugs and care they need. There are crucial steps involved in effectively onboarding potential child sites as well as ongoing processes involved with maintaining the parent hospital’s partnership with those sites. University Hospitals Cleveland Medical Center 340B Pharmacy Manager Joe Moss joins us to shed light on this process and the potential problems to be on the lookout for.
How is a 340B child site onboarded?
Moss says the first big step to identifying potential sites is to work with a hospital’s finance, revenue, pharmacy, and legal departments to evaluate a site. The team looks at Medicare cost reports and trial balances to ensure they are eligible for 340B. As part of the process, they also use electronic medical record and retail data to identify potential clinic areas based on their patient volumes.
A 340B child site is registered. Now what?
The work is not over once a child site has been registered in 340B. UH has a program it calls the “340B Concierge Program,” which aims to provide comprehensive, ongoing support and guidance to a given child site. The program offers additional education and information in such areas as procurement processes, the appropriate ways to handle drug transfers, and miscellaneous licensing issues.
Onboarding requires relationships and a close eye on compliance
Moss says that hospitals onboarding a child site should establish and maintain close ties with the site to prevent issues with 340B compliance. This can involve being the first line for any pharmacy issues the site staff might be having, holding frank conversations with clinic management when necessary, and inviting staff to observe mock audits so they can learn more about what goes into maintaining 340B compliance.
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Health Resources & Services Administration (HRSA) audits of hospitals play a key role in ensuring compliance with 340B rules and regulations. In this episode, Dave Lacknauth, executive director of pharmacy services at Broward Health in Fort. Lauderdale, Fla., joins us to discuss the importance of taking a proactive, comprehensive approach to audit readiness with the goal of ensuring clean audit results.
Compliance protects 340B access
Being prepared for HRSA audits serves a crucial function that ultimately benefits the patients whom hospitals serve, Lacknauth explains. Maintaining the integrity of 340B means protecting access to 340B savings that hospitals can invest in crucial care for community members that need it.
Continuous audit readiness
Lacknauth discusses how Broward Health maintains audit readiness by conducting internal audits, bringing in external consultants, and identifying areas of opportunity for improvement. A robust system of internal reviews means that when HRSA comes knocking, Broward Health is already prepared. This was evident after a recent audit of one of the system’s hospitals that resulted in zero recommendations for improvement.
Organization, resources, transparency are key
Preparing for audits requires a health system to invest time and resources, but Lacknauth stresses that these investments pay off. Engaging a comprehensive team from various departments in the audit readiness process allows for a health system to have the appropriate level of responsiveness and transparency during a HRSA audit.
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Artificial intelligence continues to impact industries, including pharmacy and 340B. As hospitals and health systems consider adopting AI, we spoke with Kristin Chupka, the 340B program system director for Dartmouth Health, who shares her experience launching this initiative there and considerations for entities seeking to do the same.
AI, automation, and how they can support 340B
Chupka distinguishes that AI is like a machine learning and making decisions depending on what it is taught. Automation, although similar to AI, does not make decisions. Both can systematize processes and with the help of guardrails, enable pharmacists to dedicate more time to patient care.
Opportunities and considerations
The novelty of AI promises an opportunity for 340B teams that can consider and correct its potential pitfalls. Chupka explains that as with any emerging technology, it is best to start slowly, teach the algorithm, and consistently check in to ensure accuracy and ethical considerations. This approach can limit errors and inspire confidence as time goes on.
What entities can learn from Dartmouth Health?
The Dartmouth Health team has explored how AI can help with budgeting, modeling, and auditing, always double-checking work to avoid errors. Because a fully staffed team is required for this, Chupka reassures that AI has not affected staffing. If anything, Chupka says AI is a tool to assist in compliance.
Check out all of our episodes on the 340B Insight podcast website. You also can stay updated on all 340B Health news and information by visiting our homepage. If you have any questions you’d like us to cover in this podcast, email us at podcast@340bhealth.org.
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Hospital clinical pharmacies play a key role in ensuring patients are taking medications effectively and supporting other providers who are managing their care. Mark Riggle, the assistant chief pharmacy officer at UC Davis Health, explains how 340B helps make this direct care and ancillary support possible.
Clinical pharmacies are a bridge between providers and patients
Riggle says clinical pharmacy teams serve as drug experts that can help teach patients about potential side effects and how to take their medications properly. But these teams also can take the lead on supporting other providers on refills, prior authorizations, financial assistance, and more. That allows the other providers to focus less on those processes and more on providing medical care to the patients.
In-house pharmacies can improve patient care and generate revenue
Using an in-house clinical pharmacy has benefits for both patients and the hospital. Riggle notes that keeping prescriptions and pharmacy support in-house can enable hospitals to keep better track of patients’ health and identify if there are issues or questions with certain medications. At the same time, it generates revenue and 340B savings that support even more hospital services and improve patient health outcomes even more.
Ramping up clinical pharmacy services and overcoming barriers can take time
Riggle says expanding clinical pharmacy initiatives at UC Davis Health has come with some challenges. It took years to roll out a refill program for all the providers who needed that support, and achieving success with a prior authorization program involved an evaluation of workflows to improve efficiency. But he noted that hospital pharmacists can present a value proposition to their leaders for how investing in 340B-supported clinical pharmacy services can be worth it to improve care quality and provider satisfaction.
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The legal fight over drugmakers’ push to impose 340B rebates is heating up, with five lawsuits pending in a federal court in Washington, D.C. Recently, 340B Health joined with two of its member hospitals in asking the court to intervene as defendants to stop these rebates from taking effect. Genesis HealthCare System based in Ohio is one of those hospitals. Shona Carr, the director of 340B and ambulatory pharmacies at Genesis, breaks down how rebate models would create financial challenges for hospitals that would hamper their patient care initiatives.
Carrying and Compliance Costs
Each drugmaker’s push to impose rebates would incur new drug purchasing and compliance expenses for covered entities. Bristol-Myers Squibb’s rebate policy alone would cost Genesis HealthCare System an additional $400,000 per month in drug spend if it applied to all BMS drugs. If 340B rebate models became the norm for all drugmakers, Carr estimates Genesis would pay an additional $5.2 million per month in upfront costs. Those figures do not include additional hundreds of thousands of dollars in annual staffing expenses to process rebate claims and challenge denials.
Effects on Patient Care and Support
Imposing 340B rebates could force Genesis HealthCare System to scale back or discontinue its patient assistance program, according to Carr. But 340B savings do not just go towards direct patient help with drug costs at the hospital. The financial impact of rebates also could affect other community programs and free services, such as patient transportation, meds-to-beds, health screenings, and a paramedicine program.
Advice for Other Hospitals
Carr says every covered entity that has not already done so should begin reviewing drugmaker rebate policies and working with their 340B third-party administrators to estimate potential costs. She says this involves entities asking bigger questions: Would rebate policies require additional 340B staffing? Does senior leadership understand the potential impact of these changes? What 340B-funded programs might be at risk?
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In what has become an annual tradition for the podcast, we consulted with 340B Health’s expert staff to answer our listeners’ most pressing 340B questions. As an uncertain and busy year starts for the world of 340B, we want to prepare you by covering your queries about the efforts by drug companies to impose 340B rebates, proposed federal and state legislation on 340B, how Inflation Reduction Act implementation will affect 340B, and more.
340B Rebate Lawsuits Heat Up
So far, five drug companies have sued the Health Resources & Services Administration to challenge HRSA’s rejections of their backend rebate proposals. 340B Health Vice President of Legal and Policy Amanda Nagrotsky notes that a rebate model would harm 340B hospitals through delayed access to 340B savings and potentially denials of legitimate rebate claims based on drugmaker interpretations of 340B rules. We recorded this episode just before 340B Health filed a motion to intervene as a defendant in the Johnson & Johnson (J&J) rebate lawsuit against HRSA.
Lawmakers Eye Ways To Protect or Cut 340B
The new year means a new Congress and the start of new state legislative sessions. 340B Health Senior Vice President of Government Relations Tom O’Donnell notes that members of Congress have floated potential reductions in what the federal government pays for 340B drugs to help fund new spending priorities outside of health care, though it is unclear how seriously they are considering those options. 340B Health Vice President of Legal and Policy Greg Doggett reports that several states are considering new contract pharmacy or payment nondiscrimination protections for 340B hospitals, but others have introduced proposed new mandates for covered entities.
Price Caps Will Apply to More Medicare Drugs
The list of drugs eligible for Medicare price caps will grow to 25 starting in 2027 under the Inflation Reduction Act, which will have implications for 340B savings on those drugs. 340B Health Research and Policy Analytics Manager Claudia Escue notes that popular weight loss and diabetes drugs like Ozempic and Wegovy have made the price cap list because of how much they cost Medicare. 340B Health is tracking how these price caps might lower 340B savings and have submitted letters to Medicare officials to represent other hospital concerns about the implementation of the IRA.
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A Minnesota requirement for covered entities to submit data on the costs they pay and the payments they receive for 340B drugs yielded its first annual report this past November. Today’s guest, Minnesota Hospital Association Director of State Government Relations Danny Ackert, tells us why the report’s findings don’t tell the whole story.
The Context for the Dollars
The first Minnesota report concluded that covered entities received a net of $630 million in payments for 340B drugs in 2023 and paid $120 million to contract pharmacies and third-party administrators. But Ackert notes the figures do not account for what entities would have paid for drugs at non-340B prices, nor what pharmacy administrative costs they would have had if they did not have access to 340B.
Where the Money Goes
Ackert notes that the report does not spell out how hospitals in the state use their 340B savings to stretch resources and provide more care and support to patients. He notes that Minnesota hospitals spend about $15 billion a year providing care. They also face an annual shortfall of about $1.8 billion from Medicare and Medicaid underpayments, a figure that does not even account for charity care, bad debt, and other unreimbursed hospital spending. Some rural hospitals in the state rely on 340B savings just to stay open.
What Other States Can Learn
Although submitting data for the report and countering misconceptions about its findings have been challenging for Minnesota hospitals, Ackert also notes that it has given them an opportunity to educate policymakers about 340B. By learning more about the report and following the state’s example, hospitals in other states considering reporting mandates can put themselves in a position to explain to lawmakers why 340B is so vital.
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Earlier this year, the Health Resources & Services Administration took a strong stance against drug giant Johnson & Johnson’s plan for a proposed 340B rebate model, but the fight over rebates is far from over. 340B Health President and CEO Maureen Testoni joins us to discuss how the company is taking the issue to federal court and how they are not the only drugmaker doing so.
J&J Sues HRSA Over Rebates
J&J is arguing in court that HRSA lacks the authority to block a 340B rebate model. Such a model would allow individual drug companies effectively to impose their own rules on 340B drug purchases. These rules would curtail the number of drugs a company would offer a 340B discount on and reduce the number of patients that would be deemed 340B-eligible.
Other Drugmakers Pushing Rebates
Bristol Myers Squibb and Eli Lilly also sued HRSA, claiming the agency does not have the authority to stop a rebate model. Sanofi has not yet filed suit but is saying it will impose its rebate scheme in early January. The Sanofi model raises significant concerns not just because of the imminent effective date but because it would impose far more stringent restrictions on 340B eligibility than HRSA ever has.
State Contract Pharmacy Laws Rack Up More Wins
In another 340B issue before the federal courts, state contract pharmacy protections continue obtaining key litigation wins. Several district courts and one appeals court have upheld state laws designed to protect covered entity access to 340B pricing through community and specialty contract pharmacies.
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What Does the GOP Trifecta Mean for 340B?
In January, Republicans will achieve what’s known as a governing trifecta – taking control of the executive branch combined with GOP majorities in both the U.S. House and Senate. How will this new dynamic affect the 340B world? We discuss what is ahead with McDermott+ vice presidents Rodney Whitlock, a former Republican legislative staffer, and Debbie Curtis, a former Democratic legislative staffer.
Capitol Hill Shakeups and New Faces
Several 340B champions are set to leave Congress through retirement or new appointments, including Reps. Elise Stefanik and Abigail Spanberger as well as Sens. Debbie Stabenow and Ben Cardin. But this provides an opportunity to speak to newly elected lawmakers to express the value of 340B and what it means for their constituents.
Preparing for 340B Oversight
The new Congress could bring oversight hearings and other opportunities for 340B critics to speak out. Although 340B has faced and surmounted challenges before, this will require getting back to core advocacy efforts designed to protect the program.
Trump’s Second Term
How the second Trump administration will fill key roles and the decisions they make on health policy issues could impact 340B. The implementation of Inflation Reduction Act drug pricing provisions also will affect 340B and could lead to discussions about additional changes to the program.
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The focus of attention on cancer care most often goes to the curative treatments required to put cancer into remission, but what do cancer survivors need after that point to fully recover and lead their best possible lives? We discuss that question and how 340B can help answer it with guests Sarah Loschiavo and Ellen Morris-White, two nurse practitioners with UConn Health based in Farmington, Conn.
Survivorship Care at a Crucial Time
UConn Health’s Cancer Survivorship Program is led by advanced practice registered nurses who provide comprehensive care and support to cancer patients starting three to six months after their curative cancer treatments are complete. With the help of 340B funding, the multidisciplinary program is broad in scope, including referrals to meet cancer survivors’ physical, psychosocial, spiritual, and financial needs. The goal is to keep patients on the road to recovery and to continue screening for any cancer recurrence or secondary cancers that could occur.
340B Is Key To Covering Costs
UConn Health covers the costs of its survivorship care, and low-income patients can receive additional financial assistance for their ongoing cancer therapies through this program. 340B funding is essential to making that happen. Over time, the program is expected to decrease health care costs by avoiding hospital readmissions and cancer recurrences.
Building Out Best Practices
Evidence on survivorship care models is lacking, but UConn Health has worked on research that could provide some best practices for other institutions. Although there is no one-size-fits-all approach for hospitals, they can use elements of the nurse practitioner-led, interdisciplinary model to meet cancer patients’ needs months and even years after curative treatment.
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The 340B drug pricing program is crucial for safety-net hospitals and other providers that care for patients in need, especially those whom traditionally have been underserved by the broader health system. We speak with Dr. Tony Jackson, assistant vice president for pharmacy services at Scripps Health in San Diego, for his views on why 340B is “all about health equity.”
340B Helps Serve the Underserved
Jackson stresses the variety of services and support that 340B funding enables at Scripps Health. Because of 340B, Scripps can serve large populations of patients in the area who are homeless, lack health coverage, and are dealing with higher rates of chronic illness and disease. It does so in part through partnerships with community health centers and other community groups on outreach to those populations.
Restrictions to 340B Threaten Patient Care
340B savings help support vital Scripps services that include emergency department care, access to specialists, discharge and maintenance medications, and community health benefits such as disease screenings. Jackson notes that drug company restrictions on access to those savings threaten such services and risk creating health care deserts in the area.
Representation and Advocacy Matter
Jackson is part of the Association of Black Health-System Pharmacists (ABHP), which works to increase Black representation in the pharmacy field with the goal of improving underserved patients’ trust in pharmacists and access to needed care. He notes how ABHP leaders have advocated for 340B with the understanding of how important it is to the pursuit of health care equity.
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Within the past few weeks, drugmaker Johnson & Johnson went head-to-head with 340B hospitals and the federal government over the company’s plan to stop paying upfront 340B discounts on two of its top-selling drugs. 340B Health Senior Counsel Amanda Nagrotsky joins us to explain how that conflict played out.
HRSA Warns Johnson & Johnson of Strong Punitive Actions
In letters to J&J, the Health Resources & Services Administration (HRSA) warned the drugmaker that replacing 340B rebates with discounts only would be allowed if approved by the Health and Human Services (HHS) secretary. HRSA gave the company until the end of September to announce that it was going to walk away from its plan or face both civil monetary penalties and the termination of its pharmaceutical pricing agreement (PPA). Nagrotsky said the threat to end the PPA was unprecedented, noting that it would cause the company to lose access to Medicaid and Medicare Part B coverage for all its drugs.
Johnson & Johnson Backs Down Under Pressure
J&J announced at the end of September that it would walk back its plan to implement rebates in mid-October, bowing to pressure from federal health officials and a bipartisan group of nearly 200 members of Congress who opposed the J&J strategy. The company maintained that it disagreed with HRSA’s reasoning and noted that it was reserving all legal rights with respect to rebates. That stance indicates the company is likely to continue its push to implement rebates.
The Battle Against Rebates Continues
Despite the win for hospitals on the J&J rebate scheme, efforts from the drug industry to change the 340B discount structure continue. Drug industry consultant Kalderos is part of ongoing litigation in a federal court in Washington, D.C., over the right to impose rebates. HRSA’s references to the concept of HHS approval of rebate proposals also leaves open the door for companies to seek federal consent for such a model.
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A renewed push by a drugmaker to fundamentally transform 340B has the potential to cause major problems for 340B hospitals if allowed to take effect. 340B Health President and CEO Maureen Testoni joins us to explain the controversial 340B rebate issue and to cover some of the other recent developments in the 340B world.
A Plan To Replace Upfront Discounts With Rebates
For years, drugmakers have been pushing unsuccessfully for approval to turn 340B from an upfront discount program into a back-end rebate program. But recently, Johnson & Johnson announced it would unilaterally proceed with plans to stop selling two of its drugs at the discounted price for certain hospitals. Maureen explains the reaction of the government, hospitals, and others and outlines the potential next steps in the advocacy against such a harmful change.
More Legislative Action on Capitol Hill
Recently, Sen. Peter Welch of Vermont introduced legislation to make access to 340B through contract pharmacies a very clear part of statute and to prohibit manufacturers from imposing conditions on 340B pricing. It is one of several 340B bills pending on Capitol Hill, which also include a potential Medicaid payment reporting requirement for 340B hospitals. Maureen notes that although Congress does not have much time left to legislate this year, it is possible 340B will be part of the action during a lame-duck session after the elections.
Court Action Continues on State 340B Laws
Although two federal appeals courts recently ruled that the 340B statute does not categorically prohibit drugmaker conditions on 340B pricing, several states have moved to impose their own such prohibitions. Drug companies are suing to block these laws, but so far courts have denied these attempts. Maureen notes that 340B Health and other organizations continue to file friend of the court briefs in support of these state laws.
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1. HRSA Threatens Johnson & Johnson With Sanctions Over Rebate Plans
The 340B drug pricing program is designed to give hospitals the flexibility to use their savings toward the types of patient care and support that their communities need the most. How does that work for hospitals that decide to use their access to 340B to provide the discounts directly to patients who cannot afford their drugs? Paul Orth, 340B program manager at University Health Kansas City Truman Medical Center, sits down with us to discuss how his health system’s direct drug savings program is helping both uninsured and underinsured patients.
How the program works
Orth says his system’s direct savings program is built into the system that prescribes medication electronically from its clinics and its hospitals’ electronic medical records system. When the prescriptions that generate from those visits are sent to a system pharmacy, 340B eligibility codes are attached that allows the pharmacy to know that they are eligible to receive the drugs at the 340B-discounted price plus a dispensing fee.
Underinsured patients also benefit
Orth says University Health describes its direct savings model as an uninsured program because that describes the key patient population that benefits from receiving the 340B price. But that assistance also is available for underinsured patients who otherwise would be expected to pay more in prescription drug copays than the 340B price.
Drugmaker restrictions are a barrier
Orth says this program is the difference between patients receiving a needed medication and going without one, which prevents hospital readmissions and emergency department visits. But he also notes that drug company restrictions limiting 340B pricing to a single contract pharmacy are negatively affecting the program, ultimately adding another barrier for access to care.
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