Now in its 25th year, the 340B Drug Pricing Program is facing a dramatic rule change to ceiling price and the application of civil monetary penalties that may significantly reduce reimbursement and impact savings of 340B covered entities.1
However, HRSA announced on August 21, 2017 that the rule’s effective date has been pushed back to July 1, 2018.2 This date has historically been pushed back several times in the past year, first supposed to take effect on March 21, 2017, then pushed to May 22, 2017, then delayed to October 1, 2017.
Why delay to July 1, 2018? The Trump administration cited the time needed “to allow a more deliberate process of considering alternative and supplemental regulatory provisions and to allow for sufficient time for additional rulemaking.”2
Currently, 340B Program reimbursement rates for Medicare Part B drugs are set at an average sales price (ASP) plus 6 percent. However, the proposed rule announced by the Trump administration would “adjust” this rate to ASP minus 22.5 percent for separately payable outpatient drugs and biologicals not considered “pass-through” or vaccines. CMS argued that such a change would decrease Outpatient Prospective Payment System (OPPS) payments by an estimated $900 million, which could potentially be redistributed under Part B’s general fund or under specific OPPS operations.1
Advisory Panel on Hospital Outpatient Payment Votes Against Proposed 340B Rule
On August 21, the CMS Advisory Panel on Hospital Outpatient Payment voted against the proposed rule after siding with three provider‑represented groups, including the Association of Community Cancer Centers, The Provider Roundtable, and MedStar Health. The groups strongly disagreed with the proposed rule change, saying it was premature and inappropriate for several reasons:
- Data is lacking to determine “where patients are being served and how resources are being used.”3
- Data supporting rule change is “based on questionable assumptions and studies.”4
- The proposed rule “defeats the clear intent by Congress and HRSA that 340B hospitals use savings on drug costs to expand care for underserved patients.”3
- Deleterious consequences would come in the form of “inappropriate payments to both 340B and non-340B providers” and “Part B payment redistribution will occur in a manner that is inappropriate and could result in access to care consequences.”5
How do Covered Entities Currently Use 340B Program Savings?
Why would a redistribution of federal dollars away from the 340B Program disrupt and harm reinvestment of savings? The provider advocacy groups asserted that patient care services would suffer and access would be hampered, ultimately impeding delivery of the very drugs to patients the Program was established to benefit. How and why? In its presentation to the Advisory Panel, MedStar Health said their 340B Programs, active at 7 of their 10 hospitals, generated savings of $60 million. MedStar Health then detailed how and why 340B hospitals reinvest Program savings4:
- By providing financial assistance to those who can’t afford prescription drugs
- By providing clinical pharmacy services (including disease management or medication therapy management programs)
- By funding ambulatory medical services (e.g., obstetrics, diabetes education, etc.)
- By expanding access through creation of more outpatient clinics
- By creating community outreach programs
- By offering free vaccinations for vulnerable populations.
Comments to the proposed rule to raise the ASP ceiling were due by September 11, 2017. CMS is expected to announce the final rule November 2017.
- 82 Fed. Reg. 33558, 33634 (July 20, 2017). Accessed September 8, 2017: https://www.gpo.gov/fdsys/pkg/FR-2017-07-20/pdf/2017-14883.pdf.
- 82 Fed. Reg. 39553 (August 21, 2017). Accessed September 8, 2017: https://www.gpo.gov/fdsys/pkg/FR-2017-08-21/pdf/2017-17633.pdf.
- ACCC presentation to CMS Advisory Panel on Hospital Outpatient Payment (August 21). Accessed September 8, 2017: https://kslawemail.com/128/2687/uploads/swayne-item-3.pdf.
- MedStar Health presentation to CMS Advisory Panel on Hospital Outpatient Payment (August 21): Accessed September 8, 2017: https://kslawemail.com/128/2687/uploads/swayne-item-2.pdf.
- The Provider Roundtable presentation to CMS Advisory Panel on Hospital Outpatient Payment (August 21). Accessed September 8, 2017: https://kslawemail.com/128/2687/uploads/swayne-item-1.pdf.