Dec 5, 2024
Dominic Galante, MD | Chief Medical Officer | Access Experience Team
The Public Health Service Act 340B Drug Pricing Program enables providers that serve vulnerable patient populations to access outpatient drugs at significantly lower costs, which helps improve overall patient care. The 340B program is administered by the Health Resources and Services Administration (HRSA). Enrolled hospitals and other covered entities can typically save 25–50% on pharmaceutical purchases through the program. There have been some recent updates to the 340B Drug Pricing Program as well as to federal and state policies related to it.
Recent updates to the Federal 340B Drug Pricing Program
Anti-discrimination legislation
As of April 2024, almost 30 states had passed laws to protect 340B providers from discriminatory practices by pharmacy benefit managers (PBMs). These laws prohibit PBMs from reimbursing 340B entities at a lower rate than non-340B entities or charging them fees that aren't charged to non-340B entities. Some states have also extended these protections to insurers, third-party administrators, and other third-party payers1-3
Manufacturer restrictions
A new law that took effect on July 1, 2024, prohibits drug manufacturers from restricting access to discounted 340B drugs for certain pharmacies in a state. This law will be in effect for two fiscal years, ending on June 30, 2026.
Covered entity reporting
Hospitals participating in 340B may be required to submit certain drug pricing or financial performance information to states.
Payment rates
In 2022, the Supreme Court ruled that differential payment rates for 340B-acquired drugs were unlawful. In response, the Centers for Medicare & Medicaid Services (CMS) finalized a general payment rate of average sales price (ASP) plus 6% for drugs acquired through the 340B program for the rest of 2022.4,5
HRSA Audits and Compliance
The HRSA has intensified its audit activities to ensure compliance with 340B program requirements.
Federal Policy Updates
Representative Doris Matsui (D-CA) introduced the 340B PATIENTS Act, which aims to prohibit manufacturers from imposing restrictions on 340B pricing for contract pharmacies. In addition, a bipartisan Senate Working Group has released a draft bill, the SUSTAIN 340B Act, which addresses various aspects of the 340B program, including contract pharmacy use, patient definition, transparency, program integrity, and PBM anti-discrimination measures. This bill seeks to formalize many of the protections already being enacted at the state level and provides a framework for enhanced oversight and auditing.
State Policy Updates
Several states have enacted or are considering legislation to protect the 340B program from discriminatory practices by pharmacy benefit managers (PBMs). For instance, Nevada recently implemented a law that prohibits PBMs from setting unfavorable reimbursement rates for 340B drugs or penalizing entities that dispense these drugs. The law also ensures that PBMs cannot restrict contract pharmacies from participating in the program. Additionally, Arkansas and Louisiana have passed laws preventing manufacturers from restricting the acquisition of 340-B discounted drugs by contract pharmacies. These laws are currently facing legal challenges, but they could influence other states to adopt similar measures. Many states are also introducing “clawback” provisions to stop PBMs from retroactively recouping reimbursement amounts and implementing policies that protect 340B drug pricing and reporting.
As each reform is implemented, HHS will need to adapt rapidly to issue guidance and build the support systems necessary for well-intentioned stakeholders to comply with the laws. Many drug manufacturers are expressing concern, not only because of compliance but also because of the cost of these changes. Litigation is already underway in some states, and the arguably short timeline for rolling out the rest of the IRA’s healthcare and drug pricing provisions is expected to inspire even more legal pushback in the coming months and years. The landscape is constantly shifting with these changes and challenges, so we recommend that all stakeholders invest in staying informed and up to date with the official implementation news coming out of the Department of Health and Human Services and the CMS.
References:
- Health Resources & Services Administration. 340B drug pricing program. Accessed September 11, 2024. https://www.hrsa.gov/opa
- Avalere States may consider 340B legislative proposals in 2024. December 1, 2023. Accessed September 11, 2024. https://avalere.com/insights/states-may-consider-340b-legislative-proposals-in-2024
- National Association of Community Health Centers. 32 state-level laws to protect CHCs’ 340B savings. Updated May 2024. Accessed September 11, 2024. https://www.nachc.org/wp-content/uploads/2024/01/05_03_24_nachc_state-level-340b-laws-and-legislation_tracker.pdf
- Animashaun F. State 340B legislation protects drug access, sets reporting requirements. America’s Essential Hospitals. April 9, 2024. Accessed September 11, 2024. https://essentialhospitals.org/state-340b-legislation-protects-drug-access-sets-reporting-requirements
- Centers for Medicare & Medicaid Services. Fact Sheets. Hospital outpatient prospective payment system (OPPS): remedy for the 340B-acquired drug payment policy for calendar years 2018-2022 final rule (CMS 1793-F). November 1, 2023. Accessed September 11, 2024. https://www.cms.gov/newsroom/fact-sheets/hospital-outpatient-prospective-payment-system-opps-remedy-340b-acquired-drug-payment-policy https://www.aamc.org/news/340b#:~:text=On%20Sept.,CY%202023%20OPPS%20final%20rule.