340B Developments

Updated August 29, 2023

1. Merck loosens contract pharmacy restrictions in Louisiana and Arkansas; Teva also loosens restrictions in Louisiana. On July 31, Merck announced that it was updating its contract pharmacy policy for covered entities in Louisiana and Arkansas. Effective July 31, Merck announced that for hospitals and health centers, it will voluntarily honor 340B pricing for contract pharmacies in exchange for 340B claims data by August 25. Merck is allowing a single contract pharmacy as long as it is located within 40 miles of the parent site. All federal grantees will continue to be exempt from the policy.
2. That same day, on July 31, Teva Pharmaceuticals sent a notice to 340B covered entities in Louisiana informing them that, effective August 1, they will be able to place bill to / ship to replenishment orders through an unlimited number of contract pharmacies. Additionally, Teva Pharmaceuticals informed covered entities that, while it will not require the submission of claims data, it strongly encourages covered entities to voluntarily continue to submit claims data.

Updated July 11, 2023

Organon, Teva, Astellas are the latest drug manufacturers to impose restrictions on contract pharmacies.

1. Organon. Organon, a Merck spinoff focused on women’s health, sent a notice to 340B covered entities on June 1 informing them that, beginning on July 1, it would only provide products purchased at the 340B price to locations registered as 340B covered entities and will decline to facilitate bill to / ship to orders for all hospital covered entities. Hospital covered entities may designate a single contract pharmacy in exchange for claims data. Orders for hospital covered entities registered with 340B ESP will be honored for prescriptions dispensed to eligible 340B patients within forty-five (45) days of each data submission to 340B ESP. There is no exception for wholly-owned pharmacies. Federal grantees are exempted from Organon’s new policy.
2. Teva. On June 8, Teva Pharmaceuticals sent a notice to 340B covered entities informing them that, beginning on July 5, it will only provide products at the 340B price to locations registered as 340B covered entities or 340B child sites. Hospital covered entities may designate a single contract pharmacy as long as the pharmacy is located within 40 miles of the hospital parent site and the covered entity submits claims data to 340B ESP. There is no exception for wholly-owned pharmacies. Federal grantees are exempted from Teva Pharmaceuticals’ new policy. The policy applies to a list of 36 medicines, including its multiple sclerosis drug Copaxone, its injectable migraine prevention drug Ajovy, and its leukemia and lymphoma treatment Treanda.
3. Astellas. On July 3, Astellas sent a notice to 340B covered entities informing them that, beginning on September 1, it will no longer facilitate bill to / ship to orders of Xtandi products purchased at the 340B price to contract pharmacies. Covered entities without an in-house pharmacy may designate a single contract pharmacy through 340B ESP. There is no exception for wholly-owned pharmacies. Federal grantees are exempt.

Novo Nordisk, Exelixis, Bausch, Boehringer Ingelheim, and AstraZeneca issue updates to contract pharmacy policies.

1. Novo Nordisk. On June 1, Novo Nordisk informed 340B covered entities that, beginning on July 1, it will no longer allow hospital covered entities to place bill to / ship to orders of 340B drugs to unlimited contract pharmacies in exchange for related claims data. It will continue to allow orders to wholly-owned pharmacies in exchange for data. Federal grantees remain exempt.
2. Exelixis. On June 9, Exelixis informed 340B covered entities that, beginning on June 26, it would be extending its conditions on 340B pricing to contract pharmacies that are wholly owned or under common ownership with a hospital covered entity unless the covered entity provides related claims data. Federal grantees remain exempt.
3. Bausch. On June 12, Bausch Health informed 340B covered entities that, beginning on June 26, it would no longer allow covered entities to place bill to / ship to orders of 340B drugs to unlimited contract pharmacies in exchange for related claims data. All covered entities without an in-house pharmacy may designate one contract pharmacy that is within 40 miles of the covered entity’s parent site. Bausch is also rescinding its exemption for wholly-owned pharmacies.
4. Boehringer Ingelheim. On June 23, BI informed 340B covered entities that, effective August 1, it is rescinding its exemption for federal grantees to its contract pharmacy policy. All covered entities without an in-house pharmacy may designate contract pharmacy within 40 miles of the parent site that is not a central fill pharmacy. Covered entities may voluntarily submit claims data to 340B ESP, but it is not required. BI is also rescinding its exemption for wholly-owned pharmacies.AstraZeneca. On July 3, AstraZeneca informed covered entities that, effective August 1, it will transition the administration of its 340B contract pharmacy program to 340B ESP. Covered entities without an on-site dispensing pharmacy must designate a contract pharmacy through 340B ESP, including covered entities that had selected a contract pharmacy directly with AstraZeneca.

Updated May 23, 2023

1. Merck. Effective June 12, 340B hospitals and health centers lacking an in-house pharmacy may designate one contract pharmacy located within 40 miles of the parent site. This update to the policy will now apply to contract pharmacies that are wholly-owned by a 340B hospital or health center covered entity, or are under common ownership with a 340B health system or health center covered entity. Merck no longer will honor 340B pricing for multiple contract pharmacy arrangements if a hospital or health center provides 340B claims data to 340B ESP for claims originating from contract pharmacies. Merck’s update to its policy does not include any changes for other federal grantees.
2. Sanofi. Effective June 1, 340B hospitals lacking an in-house pharmacy may designate one contract pharmacy location through the 340B ESP platform. No claims data is required for the designated single contract pharmacy location. Contract pharmacies that are wholly owned by the hospital or have common ownership with the hospital will not be able to access 340B pricing unless the hospital does not have an in-house pharmacy, and the wholly owned pharmacy is designated as the single contract pharmacy through the 340B ESP platform. Sanofi’s update does not include any changes for federal grantees.
3. Bayer. Effective June 1, 340B hospitals lacking an in-house pharmacy may designate one contract pharmacy location within 40 miles of the hospital parent site. Bayer will no longer provide 340B pricing in exchange for submitting 340B claims to 340B ESP. Bayer said hospitals may voluntarily provide claims data for their single designated contract pharmacy through 340B ESP. Bayer also is ending its policy exemption for contract pharmacies that are wholly owned by a 340B hospital or have common ownership with a health system. Bayer’s update does not include any changes for federal grantees.
4. Exelixis. Effective May 15, Exelixis will only honor requests for replenishment and reclassification that it receives within 45 days of the day the product was dispensed.
   

Updated April 20, 2023

1. Biogen becomes the 19th drug manufacturer to impose restrictions on 340B contract pharmacies. On December 12, Biogen issued a notice to 340B covered entities informing them that, beginning on February 1, 2023, it will only ship AVONEX® and PLEGRIDY® purchased at 340B price to locations registered as a 340B covered entity or a child site. Covered entities that do not have an in-house pharmacy capable of dispensing 340B purchased drugs may designate a single contract pharmacy location via 340B ESP. Contract pharmacies that are wholly owned by a 340B hospital or have common ownership with a 340B health system will remain eligible to receive Bill-To/Ship-To orders. Federal grantees are exempted. A copy is here. 
2. Novo Nordisk revises restrictions on 340B contract pharmacies. On December 2, Novo Nordisk issued a notice to 340B covered entities revising its policy starting January 1, 2023, to allow 340B hospitals to buy drugs at 340B price for shipment to multiple contract pharmacies if the hospitals submit their claims data for such drugs to 340B ESP. Under the original 2021 policy, Novo Nordisk limited 340B hospitals to one contract pharmacy for hospitals lacking an in-house outpatient pharmacy. Beginning on February 1, 2022, it began letting 340B hospitals ship its drugs one retail and one specialty pharmacy. If a hospital owns and operates a wholly owned contract pharmacy, it will let the hospital designate multiple wholly owned contract pharmacy relationships. Grantee covered entities are exempt from Novo Nordisk’s restrictions. The notice is available here. 
3. Eli Lilly clarifies restrictions on 340B contract pharmacies. On December 27, 340B ESP sent a notice to 340B covered entities on behalf of Eli Lilly clarifying the drug manufacturer’s restrictions on 340B contract pharmacies. The notice states that central fill pharmacies “are not eligible as designated retail pharmacy locations” and that “Lilly will only facilitate shipment or replenishment to the contract pharmacy for product dispensed directly by that contract pharmacy at that physical location.” More information is available here. 

Updated August 29, 2023

1. CMS issues CY 2024 Medicare hospital OPPS proposed rule. On July 31, the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule revising the Medicare hospital outpatient prospective payment system (OPPS) for calendar year (CY) 2024. Among other things, CMS proposes to continue to apply the default rate, average sales price (ASP) plus 6 percent, to 340B acquired drugs and biologicals, effectively ensuring that drugs and biologicals acquired under the 340B program are paid at the same rate as those drugs not acquired under the 340B program. Additionally, in an effort to lessen administrative burdens, CMS is proposing that, beginning on January 1, 2025, the “JG” modifier be deleted and hospitals be required to report drugs and biologicals acquired through the 340B program using only the “TB” modifier. CMS is accepting comments through September 11, 2023. A copy is available here.
2. CMS issues Medicare hospital OPPS remedy for 340B drugs for CY 2018-2022. On July 11, CMS issued a proposed rule outlining the proposed remedy for 340B payment under the Medicare hospital OPPS for CY 2018-2022 in light of the Supreme Court’s decision in American Hospital Association v. Becerra and the district court’s remand to the agency. To this end, CMS is proposing to make an additional payment to affected providers for 340B acquired drugs as a one-time lump sum payment. The proposed rule contains the calculations of the amounts owed to each of approximately 1,600 affected 340B hospitals. CMS is accepting comments through September 11, 2023. A copy is available here. Listen to the K&L Gates Triage episode here.

Updated July 11, 2023

1. CMS proposed rulemaking aims to address duplicate discounts in Medicaid Managed Care. On May 26, the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule seeking to implement policies in the Medicaid Drug Rebate Program. As part of this rulemaking, CMS is proposing to require that National Council for Prescription Drug Programs’ Processing Bank Identification Numbers / Processor Control Numbers be used in Medicaid managed care pharmacy identification cards to help states and their managed care plans identify claims for drugs paid for under the 340B Program and avoid invoicing for rebates on 340B drugs. CMS is accepting comments on the proposal by July 25. A copy is available here.
2. HRSA plans to finalize 340B Administrative Dispute Resolution rulemaking by the end of the year. According to the Administration’s Spring 2023 Regulatory Agenda, the Health Resources and Services Administration (HRSA) is planning to finalize the 340B Administrative Dispute Resolution final rule by December 2023. HRSA issued a proposal last year and accepted comments through January 2023. This administrative process will allow covered entities and manufacturers to file claims for specific compliance areas outlined in the statute after good faith efforts have been exhausted. More information is here.

Updated May 23, 2023

1. HRSA ends flexibility allowing dispensing 340B drugs in unregistered hospital offsite locations. The Health Resources and Services Administration (HRSA) had announced that it is ending a flexibility that allowed hospitals to use 340B in outpatient facilities not yet listed as reimbursable on a hospital’s Medicare cost report. The announcement has come as a surprise to many stakeholders, as HRSA had suggested back in 2020 that the flexibility would be permanent. HRSA and Apexus have since removed the Frequently Asked Questions guidance on this flexibility. However, HRSA has not specifically issued guidance that such outpatient facilities are not permitted to utilize 340B drugs.
2. HRSA Administrator is open to accountability and transparency in the 340B Program. During a recent House Energy and Commerce Committee hearing on improving federal health programs, Carole Johnson, Administrator of HRSA, said the agency welcomes Congressional help to ensure there is accountability and transparency in the 340B program. She noted, “We also have had the issue of manufacturers not selling to covered entities by their contract pharmacy arrangements,” adding that the agency “would ask for your assistance here.” More information is available here.

Updated April 20, 2023

1. CMS issues the Administrative Dispute Resolution proposed rule. In November, CMS issued the “340B Drug Pricing Program; Administrative Dispute Resolution” proposed rule. The rule would revise the Administrative Dispute Resolution (ADR) final rule currently in effect and apply to all drug manufacturers and covered entities that participate in the 340B Program. The semiannual regulatory agenda does not indicate an expected release date for the final rule. The ADR rule currently in effect is being litigated. If finalized, the new rule may be litigated as well. Comments are due on January 30, 2023. More information is available here and here.
2. CMS finalizes OPPS rule without addressing drug reimbursement cuts from 2018-2022. In November, CMS published the Calendar Year (CY) 2023 hospital Outpatient Prospective Payment System (OPPS) final rule. For CY 2023, in light of the Supreme Court’s decision in American Hospital Association v. Becerra, CMS provided a payment rate of ASP plus 6% for drugs and biologicals acquired through the 340B Program while implementing a –3.09% reduction to the rates for non-drug services to achieve budget neutrality for the 340B payment rate change for CY 2023. CMS said it “will address the remedy for 340B drug payments from 2018-2022 in future rulemaking prior to the CY 2024 OPPS/ASC proposed rule.” The most recent semiannual regulatory agenda indicates that a proposed rule is expected in April 2023. More information is available here and here.
3. CMS is requiring 340B covered entities to use claims modifiers when billing Part B. In December, CMS issued guidance titled, “Part B Inflation Rebate Guidance: Use of the 340B Modifiers.” The guidance provides that, no later than January 1, 2024, CMS is requiring all 340B covered entities, including hospital-based and non-hospital-based entities, that submit claims for separately payable Part B drugs and biologicals to report the applicable modifier (“JG” or “TB”) on claim lines for drugs acquired through the 340B Program. While these modifiers have been required and utilized by 340B providers paid under the OPPS since CY 2018, this requirement may be new for other 340B covered entities. The guidance is available here.

Updated August 29, 2023

1. Senate Finance Committee approves PBM reform bill. On July 26, the Senate Finance Committee considered and approved the Modernizing and Ensuring PBM Accountability (MEPA) Act. Notably, in an effort to prevent pharmacy benefit manager (PBM) “spread pricing” in Medicaid and managed care contracts, which occurs when PBMs reimburse pharmacies at a lower amount than what is charged to health plans, the bill would require that payment for PBM services be limited to the ingredient cost for the drug and a professional dispensing fee. The provision would allow an exception to the pass-through payment requirement for drugs “furnished” by 340B covered entities if they report certain information. Covered entities have expressed concerned with this language, noting that “furnished by” could be interpreted to limit the exemption’s applicability when they use contract pharmacies to dispense 340B drugs. Furthermore, it is worth noting that Sen. John Thune (R-SD) offered – but quickly withdrew – an amendment to the bill that would have required 340B covered entities to report information around the use of 340B savings, including how such amount in excess of the acquisition costs of the drugs are used to provide uncompensated or undercompensated services to beneficiaries. He said the 340B program would benefit from increased transparency, pointing to the bipartisan request for information he released with several of his committee colleagues seeking input on how to address overarching issues with the program. Committee Chair Ron Wyden (D-OR) said he planned to “work very closely” with Sen. Thune on this issue, highlighting that the committee has “a lot of work to do” with regard to 340B. While MEPA can now be considered by the Senate, there are multiple Congressional committees working on PBM reform legislation. We expect them to work on a bicameral, bipartisan bill that can move through Congress in the fall. More information, including a copy of the bill language, a summary, and its amendments is available here.

• House Energy and Commerce Committee Republicans release drug shortages discussion draft with 340B provisions. Republican leaders of the House Energy and Commerce Committee released a discussion draft of the Stop Drug Shortages Act. Among other things, the bill contains provisions impacting the 340B program. As drafted, the bill would:
  – Exempt generic, sterile injectable drugs with at least one indication for a serious disease or condition that are made by more than one manufacturer from being required to provide 340B rebates.
  – Direct the Government Accountability Office to examine the number of generic drugs that are subject to 340B penny pricing, or that have costs equal to $1 or less, and evaluate how many have been subject of shortages.
  – Direct the Health Resources and Services Administration to issue guidance to covered entities on permissible ways to share drugs during shortages without violating prohibitions on diverting drugs.More information about the discussion draft, including a copy of the bill language and a summary, is available here.

Updated July 11, 2023

1. House Energy & Commerce Committee advances 340B proposed legislation. The Energy and Commerce Committee approved two 340B legislative proposals, sending them to the full House for consideration.
   • 340B Transparency Act (H.R. 3290). Sponsored by Rep. Larry Bucshon (R-IN), the bill would require covered entities to report data on patients served, costs, and revenues, and for HRSA to publish that data in OPAIS. The bill also would let HRSA audit covered entity records to determine how covered entities use their net income from 340B.
   • PATIENT Act (H.R. 3561). Sponsored by Rep. Cathy McMorris Rodgers (R-WA), the bill is primarily a hospital and health insurer transparency bill. Among other things, the bill addresses billing Medicaid managed care organizations (MCOs) or their pharmacy benefit managers (PBMs) for prescription drugs. It would require Medicaid MCOs or PBMs to pay ingredient cost plus a dispensing fee for drugs. MCOs and PBMs may pay more for drugs furnished by 340B covered entities, but they would have to report annually the total amount of payments they get above their acquisition costs. The government would have to make the financial disclosures public.
2. Senators request stakeholder feedback on 340B Program. On June 16, Sen. John Thune (R-SD), the Senate’s second-ranking Republican, along with a bipartisan group of six of his colleagues, asked stakeholders for feedback on “bipartisan policy solutions that would ensure the [340B] program has stability and oversight to continue to achieve its original intention of serving eligible patients.” The letter specifically asks for feedback on “on ways to improve accountability of covered entities in the program and ensure there is adequate appropriate transparency” and “on proposals to ensure adequate claims information exists to prevent [340B] duplicate discounts from occurring.” The request aims to inform legislative proposals. Feedback is requested by July 28. A copy of the letter is available here.
3. Senate HELP Ranking Member publishes op-ed on drug pricing. On July 5, Sen. Bill Cassidy (R-LA), the top Republican in the Senate Health, Education, Labor, and Pensions (HELP) Committee, published an op-ed titled, “Smart, practical ways to lower drug prices.” He argues, in part, that Congress should increase 340B transparency and accountability to preserve the intent of the program because “certain providers that clearly do not treat low-income patients take advantage of the program’s loose requirements to access the discounted drugs to maximize profit,” which “costs pharmaceutical companies billions.” A copy is here.

Updated May 23, 2023

1. House Energy & Commerce Health Subcommittee Votes to Require Cost Plus Reimbursement for MMCOs. On May 17, the Energy & Commerce health subcommittee attached an amendment to H.R. 3281, the Transparent PRICE Act, a bill focused mainly on requiring hospitals and health insurance companies to make charges and prices more accessible. It then passed the bill 27-0 and sent it to the full committee for action maybe as soon as next week. The amendment would require actual acquisition cost reimbursement in managed Medicaid on 340B entities (similar to Medicaid fee-for-service reimbursement).
2. House Energy and Commerce Committee explore transparency in 340B. The House Energy and Commerce Committee held a recent hearing on transparency and competition in health care. In advance of the hearing, Rep. Larry Bucshon (R-IN) introduced H.R. 3290, which aims to ensure transparency and oversight of the 340B program. The bill would require covered entities to report data on patients served, costs, and revenues, and for HRSA to publish that data in OPAIS. The bill also would let HRSA audit covered entity records to determine how covered entities use their net income from 340B. The Health Subcommittee approved the bill this week, allowing for full committee consideration in the following weeks. More information is available here.
3. Sen. Braun introduces 340B Accountability Act. Sen. Mike Braun (R-IN) introduced the 340B Accountability Act, which would require that covered entities permit the Secretary of Health and Human Services to audit, at the Secretary’s expense, the records of the entity to determine how net income from purchases are used by the covered entity. It would also require covered entities to provide data as necessary. Sen. Braun is a member of the Senate Health, Education, Labor and Pensions (HELP) Committee, which has jurisdiction over 340B. A copy is available here.
4. Sen. Kennedy introduces the 340B Reporting and Accountability Act. Sen. John Kennedy (R-LA) introduced the 340B Reporting and Accountability Act, which would require 340B covered entities to bill patients at acquisition cost, including insured patients. The bill would also require entities to report to the federal government the amount they paid for 340B drugs, the amount they received for such drugs, and any associated revenue. A copy is available here.

Updated April 20, 2023

1. President Biden signs Fiscal Year (FY) 2023 omnibus appropriations legislation with 340B directives. In December, President Biden signed a $1.7 trillion FY 2023 omnibus appropriations legislation. HRSA’s Office of Pharmacy Affairs (OPA) will get $12.2 million this fiscal year. In addition to providing $1 million more than in FY 2022 to OPA, the report accompanying the new appropriations law directs HRSA to brief Congress by April 2023 “on actions taken to safeguard covered entities’ lawful access to discounted drugs” under the 340B Program. The report further expresses Congress’ support for “HRSA’s continued use of its authorities and any available measures, including the imposition of civil penalties, as appropriate, to hold those drug manufacturers in violation of the law directly accountable.” More information is available here and here.
2. Rep. Rosendale introduces bill aimed at increasing transparency in the 340B Program. Last week, Rep. Matthew Rosendale (R-MT) introduced H.R. 198, which is aimed at increasing “reporting requirements and transparency requirements in the 340B Drug Pricing Program, and for other purposes.” While the text of the bill is not yet available, Rep. Rosendale in 2021 introduced the Drug Pricing Transparency and Accountability Act. This bill would have required hospitals to submit drug claims on all Medicare and Medicaid transactions for 340B users. It would also require that hospitals that accept Medicare and utilize the 340B program include the price they paid for the drugs and revenue made off their sale in their Medicare cost reports to “ensure hospitals pass on their savings from the 340B program.” The text of H.R. 198 should be available next week here. 

Updated August 29, 2023

1. Manufacturers challenge state contract pharmacy laws. Following Arkansas, Louisiana recently enacted a law, Act 358, aimed at protecting contract pharmacy arrangements. PhRMA and AstraZeneca have sued Louisiana over its contract pharmacy law in federal court. Arkansas’ similar contract pharmacy law, Act 1103, has been in effect since July 2021. PhRMA also sued challenging the law, but a federal district court ruled against PhRMA in December 2022. That case is pending before the U.S. Court of Appeals for the Eighth Circuit, which is scheduled to hear oral arguments on September 20. The Arkansas Insurance Department paused enforcement of the state’s contract pharmacy law as litigation proceeds.
2. Several drug manufacturers file amicus brief in Genesis Health Care v. Becerra. On August 4, AbbVie, Bristol Myers Squibb, Janssen, Lilly, and Merck filed an amicus brief in Genesis Health Care v. Becerra. Back in 2019, the Health Resources and Services Administration (HRSA) declined to defend negative audit findings against Genesis Health Care, a South Carolina-based community health center, which was widely perceived to be as a result of the agency’s perceived lack of authority to enforce more restrictive program eligibility. The U.S. District Court for the District of South Carolina dismissed the case, but the U.S. Court of Appeals for the Fourth Circuit reversed the decision in 2022, remanding to the district court for further proceedings. Multiple drug manufacturers have now asked the South Carolina federal district court to dismiss Genesis’s challenge to HRSA’s interpretation of the 340B Program “eligible patient” definition.
3. Johnson & Johnson, Astellas, and Boehringer Ingelheim join other stakeholders in challenging the Inflation Reduction Act’s Medicare drug price negotiation. Johnson & Johnson filed a lawsuit in federal district court in New Jersey while Astellas filed a lawsuit federal district court in Illinois and Boehringer Ingelheim filed a lawsuit in federal district court in Connecticut arguing that the Medicare drug price negotiation policy is unconstitutional. The manufacturers join Merck, Bristol Myers Squibb, PhRMA, and the U.S. Chamber of Commerce, which have also sued in the past two months. They argue that the program violates the U.S. Constitution because it includes barriers to transparency, hands the executive branch unfettered discretion to set the price of drugs in Medicare, and threatens continued research and development.

Updated July 11, 2023

1. PhRMA, other stakeholders challenge Inflation Reduction Act’s drug price negotiation provisions. The Pharmaceutical Research and Manufacturers of America (PhRMA), Bristol Myers Squibb, Merck, and the U.S. Chamber of Commerce have sued separately in the past month challenging the new Medicare drug price negotiation program. They argue that the program violates the U.S. Constitution because it includes barriers to transparency and accountability, hands the executive branch unfettered discretion to set the price of medicines in Medicare, and threatens continued research and development and patient access.
   

Updated May 24, 2023

1. The federal government decides not to ask all Third Circuit judges to review three-judge panel decision. The federal government decided not to ask all judges on the U.S. Third Circuit Court of Appeals to review the three-judge panel’s January decision upholding AstraZeneca, Novo Nordisk, and Sanofi’s restrictions on 340B pricing when their drugs are shipped to be dispensed by contract pharmacies. Two other federal appeals courts are expected to issue opinions soon regarding Eli Lilly’s, as well as Novartis’ and United Therapeutics’, 340B pricing conditions.
2. PA Department of Human Services imposes new 340B requirements. The Pennsylvania Department of Human Services issued a bulletin to inform health providers of new procedures for dispensing 340B drugs. Starting July 1, the department is requiring drug claims billed to Medicaid managed care organizations to include a modifier showing if the prescription was filled with a 340B-purchased drug. Comments were due by May 4. A copy is available here.

Updated April 20, 2023

1. UCB and Amgen become the latest drug manufacturers to sue HHS and HRSA over contract pharmacy restrictions. In September, UCB filed a complaint in federal district court in Washington, D.C., challenging the administration’s violation letter. More recently, in December, Amgen also filed a complaint in Washington, D.C. As of now, 10 drug manufacturers have sued the federal government over actions related to their contract pharmacy restrictions. The D.C. Circuit Court heard arguments in Novartis and United Therapeutics’ cases in October. Other appeal courts similarly heard oral arguments in related challenges late last year. The appeal courts are expected to release their opinions this year. Divergent appellate decisions increase the likelihood that the Supreme Court may hear an appeal. The complaints are available here and here.    

Updated July 11, 2023

1. Louisiana enacts 340B contract pharmacy restrictions. On June 12, Louisiana Gov. John Bel Edwards (D) signed HB548 into law. The legislation is the second in the nation addressing manufacturer restrictions. PhRMA challenged the first law of its kind, Arkansas’s Act 1103, and is expected to challenge Louisiana’s new law. A federal appeals court is considering the constitutionality of Act 1103. A copy is available here.
2. Minnesota and Maine impose 340B covered entity reporting requirements. On May 24, Minnesota Gov. Tim Walz (D) signed a health care financing bill into law that includes 340B transparency requirements for covered entities, including the total acquisition cost for 340B drugs, the total payment received for these drugs, and the total payment made to contract pharmacies to dispense 340B drugs. These requirements apply to all 340B covered entities. On June 23, Maine Gov. Janet Mills (D) also signed legislation requiring only 340B hospitals to submit annual reports consistent with the American Hospital Association’s voluntary 340B good stewardship principles. Copies of the legislation are available here and here.
3. Connecticut and Nevada enact 340B non-discrimination laws. On June 7, Connecticut Gov. Ned Lamont (D) signed HB6669 into law, prohibiting PBMs and payers from discriminating against 340B entities. On June 12, Gov. Joe Lombardo (R) signed AB 434 into law, prohibiting PBMs and payers from discriminating against 340B entities as well as their contract pharmacies. Copies are available here and here.

Updated May 24, 2023

1. The Government Accountability Office issues new report on 340B. The Government Accountability Office (GAO) issued a report requested by the Chair of the House Energy and Commerce Committee about a recent flexibility that let some hospitals participate in the 340B Program despite not meeting the 340B DSH percentage eligibility requirement. GAO said 61 hospitals requested an exception and 53 were approved. Their DSH percentages ranged from 0.2 to 9.0 percentage points below their required DSH percentage thresholds for 340B eligibility. GAO said HRSA as of July 2022 had audited 25 of the 53 hospitals that got the exceptions. HRSA issued a total of 19 adverse finding to 14 hospitals. A copy of the report is available here.
2. Senate HELP Committee approves PBM legislation. The Senate HELP Committee recently approved bills aimed at addressing pharmacy benefit manager (PBM) practices and increasing access to generics. This includes an amended version of the Pharmacy Benefit Manager Reform Act, which provides for increased oversight and prohibits PBM practices like spread pricing here.
3. Senate Finance Committee releases framework for addressing PBM practices. The Senate Finance Committee has also released a legislative framework for addressing PBM practices. Among other things, the committee is considering enhancing PBM accountability, modernizing Medicare’s Any Willing Pharmacy requirements, and increasing transparency here.