340B Manufacturer and Association Updates
Over the past three months, a small group of manufacturers have taken different steps to reduce their exposure to 340B discounted drugs, specifically via contract pharmacies. These actions attempt to address their long-running concern that lack of oversight and compliance has resulted in duplicate Medicaid and 340B discounts at contract pharmacies, which is prohibited by statute.
These actions follow recent significant 340B developments:
- A 2018 GAO report finding weakness in oversight of 340B contract pharmacies;\
- July 2020: HHS says 2010 CMS guidance allowing unlimited contract pharmacies is not legally enforceable due to HRSA’s lack of regulatory power; and
- July 2020: President Trump issues Executive Order calling on Federally Qualified Health Centers to pass 340B discounts on insulin and EpiPen to low-income patients, among others.
Please note that this is a fluid situation, in which the information change immediately.
Today, a manufacturer will fall into the following groupings identified below, with the noted changes to traditional 340B purchasing and access to product.
7/1/20, Lilly stopped providing 340B pricing on three formulations of its drug Cialis when the product was shipped to Contract Pharmacies. Distribution was limited to Covered Entities and their child sites only.
9/1/20, Lilly significantly escalated its efforts to restrict Contract Pharmacy access to 340B pricing. Lilly began limiting distribution on all its products to 340B Contract Pharmacies, except insulin*. Covered Entities that do not have an in-house pharmacy may contact Lilly regarding the exception process to designate a Contract Pharmacy Location.
Please Note 10/14/2020: Beginning October 9, 2020 Lilly will provide an exception for the wholly owned contract pharmacies. As a result, we have received an increase in the number of exceptions requested and granted by Lilly.
*Insulin exception (Lilly): Under the recent Executive Order (EO), Lilly stated that all pharmacies will be able to dispense insulin if a Covered Entity can assure the following:
- Any and all 340B eligible patients will be able to acquire their Lilly insulins through the Contract Pharmacy at the 340B price (typically $.03 per 3 mL pen or $.10 per 10 mL vial) at the point-of-sale;
- Neither the Covered Entity nor the Contract Pharmacy marks-up or otherwise charges a dispensing fee for the Lilly insulin;
- No insurer or payer is billed for the Lilly insulin dispensed; and,
- The Covered Entity provides Claim Level Detail (CLD) demonstrating satisfaction of these terms and conditions.
Takeaway: Lilly won’t provide 340B-priced products to any 340B Contract Pharmacies, except insulin* and a contract pharmacy location if the Covered Entity doesn’t have an in-house pharmacy.
Covered entities that do not have an in-house pharmacy may contact 340B@lilly.com regarding the exception process to designate a contract pharmacy location.
On 10/1/20, Astra Zeneca “only will process 340B pricing through a single contract pharmacy site for those Covered Entities that do not maintain their own on-site dispensing pharmacy” (rolling back HRSA Contract Pharmacy guidance from April 2010).
Takeaway: Astra Zeneca will only provide 340B-priced products to one contract pharmacy per Covered Entity for those lacking an outpatient dispensing pharmacy. Covered Entities can email Astra Zeneca at Membership@AstraZeneca.com with any questions or to initiate the process of selecting a single Contract Pharmacy to receive 340B pricing.
ESP - BRG - Sanofi - Merck - Novartis
On 10/1/20, Sanofi will only allow access to 340B pricing at a Contract Pharmacy if the Covered Entity provides Claims Level Detail (CLD) on all 340B claims processed at their Contract Pharmacies. Covered Entities will be required to upload their data to the 340B ESP platform every two weeks. If they don’t submit claims data for all Contract Pharmacies, they will no longer be able to place bill to / ship to replenishment orders.
- Novartis pulled back on plans to restrict access to 340B pricing just a few days prior to October 1st and start date for restrictions is still TBD.
- Merck start date is TBD but may occur prior to the end of 2020.
- Additional manufacturers participating with 340B ESP are expected prior to end of year with a Q1 2021 anticipated go-live.
Takeaway: 340B ESP will provide 340B-priced products to all Contract Pharmacies, if CLD is uploaded into the platform.
Kalderos Model (TBD): Still a lot of unknowns with this model. What we do know is that it will impact access to a front-end 340B discount for all Covered Entities and Contract Pharmacies. The Covered Entities will be responsible for buying drugs at WAC, uploading data into the Kalderos system, to obtain a 340B rebate on eligible dispensations/administrations.
Takeaway: Kalderos will provide 340B rebate on products purchased at WAC, to all Contract Pharmacies and Covered Entities, if necessary data is uploaded into the platform. https://www.kalderos.com/
There are significant complexities facing our customers and a long list of manufacturers taking different actions. The intention is to limit 340B sales to Contract Pharmacies and change how Covered Entities purchase 340B-priced product. The acceleration of information and changes have been daily over the last month and we encourage questions be filtered to 340B@amerisourcebergen.com.
Association UpdatesThere are many organizations, associations, and advocacy groups that are pushing back on these manufacturers’ actions. Further, it seems to also have the attention of leadership of the House Energy & Commerce Committee, with a letter sent to HHS Secretary, Alex Azar, asking that the manufacturers be held accountable for their actions and the program receive the enforcement expected by the Covered Entities. See stakeholder group actions and links below.
- Sent 8/19 letter to HHS Secretary Azar expressing concern that “these recent announcements will undermine contract pharmacy participation in the 340B program, which could reduce essential access to medications by beneficiaries.” Also, for HRSA to “take swift action to enforce the clear meaning of the 340B statute, which has provided the avenue for contract pharmacy participation in the 340B program.” Read the letter.
- Held a meeting with Tom Engels, the HRSA Administrator, on 10/2, to discuss protecting the 340B drug discount program and the participation in it of retail pharmacies. Call was held as a listening session due to potential litigation concerns. At conclusion of call RADM Krista Pedley, Office of Pharmacy Affairs, indicated that pharmacies could submit information via a complaint form detailing the impact they are seeing at the pharmacy counter from these moves and requested that as many specifics about potential impacts on patients and the program be included. Link to the form.
- Coordinating Hill advocacy with 340B Health and other pharmacy coalitions - hoping to be a united front on the issue.
- Sent 9/2 letter to Azar (and HRSA) urging HHS to “use its statutory authority to reject a rebate model for 340B and stop drug manufacturers from implementing such a model unilaterally.” Read the letter.
- 9/10 letter from 1100+ hospitals sent to Azar urging HHS to halt manufacturer attempts to undermine 340B program, referring to the actions as “clear violations of the 340B statute that will set a dangerous precedent.” Read the letter.
- 240+ bipartisan House members signed 9/14 letter to Azar calling on him to use his authority to stop drug companies from refusing to sell drugs at ceiling prices to covered entities for dispensing through contract pharmacies. Read the letter.
- Sent letters on 8/21 to Merck, Lilly, Sanofi, Novartis & AZ expressing “profound concern” and asking them to “cease these actions immediately”. Read the letter.
- Led 8/26 letter to Azar (and HRSA) urging HHS to “use its authority to require these and other manufacturers to comply with the law.” Letter was signed by 340B Health, ASHP, AEH, AHA, Association of American Medical Colleges, Catholic Health Association, Children’s Hospital Association. Read the letter.
National Association of Community Health CentersPreparing legal action: “In response to the multi-pronged attacks, NACHC is preparing legal action and communicating with supporters in Congress to ensure strong regulatory enforcement by the Health Resources and Services Administration (HRSA) against drug manufacturers that abandon their legal obligations to medically underserved patients.”
House Democrats (Majority)82 House Democrats signed a 9/10 letter to PhRMA asking that they require their membership to stop the recent changes to the 340B program and to immediately reverse course. "Additional oversight of the program may be needed to maintain its integrity, but the fact remains that these new actions to undercut and damage the 340B program are not a legal or viable solution, nor are they necessary." Requests a response from PhRMA by 9/17. Read the letter.
Senate Democrats (Minority)
- 22 Democratic Senators signed a 9/15 letter to PhRMA demanding that manufacturers stop withholding medications discounted under the 340B Drug Pricing Program from qualified providers that use contract pharmacies. Requests a response from PhRMA by 9/29. Read the letter.
- Democratic Senator Joe Manchin sent a 9/15 letter to Azar asking that HRSA notify manufacturers that their actions are counter to the guidance governing the program and they must cease and reverse these policies. Read the letter.
Hospitals Ask D.C. Circuit Court to Rehear Suit Over 340B Pay CutsThe American Hospital Association, Association of American Medical Colleges and America's Essential Hospitals asked the full U.S. Court of Appeals for the District of Columbia Circuit to rehear their lawsuit over cuts to hospitals' Medicare reimbursement for 340B drugs, arguing the court's initial decision doesn't match up with previous court rulings and doesn't take into account the exceptional importance of the issue at hand. Read more.
Sent a 9/29 letter to HHS and HRSA to request an agency response to certain pharmaceutical manufacturer restrictions on shipments or requests for data collection from dispensing contract pharmacies. The letter expressed concerns over the ability for independent pharmacy to serve patients in rural and medically underserved communities. Additionally, NCPA urged HHS to return to a model where contract pharmacies must be within a certain radius of the covered 340B entity to better benefit the health and wellness of the community. Read the letter.