In the January 2018 Point of View, we discussed threats that the 340B Program is facing in 2018.

We also provided an overview of changes that have already occurred, as well as identified new threats the 340B Program is facing this year. This article will review the regulatory and legislative activities that occurred late last year and those that have occurred to date in 2018.  

On November 1, 2017, CMS announced its intent to finalize proposed rule changes to the Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems Quality Reporting Program.  The proposed rule changes were published in the Federal Register on November 13, 2017. The CMS Outpatient Prospective Payment System (OPPS) rule reduces reimbursement for separately payable Medicare Part B drugs for those 340B hospitals reimbursed under OPPS. The rule became effective as of January 1, 2018. The American Hospital Association (AHA) sued the federal government in November 2017 over the CMS cut, but a federal district court tossed the case in late December 2017 because it had yet to go into effect and the complaint was premature.

On May 4, 2018, a panel of federal appellate judges considered reviving the Association’s challenge to Medicare Part B 340B reimbursement cuts, questioning whether the changes were made properly. Although the Trump administration claimed that the CMS has the authority to adjust Medicare drug reimbursements for 340B hospitals through rulemaking, the three judges for the U.S. Court of Appeals for the District of Columbia Circuit found inconsistencies in the government’s argument. Two judges, Judges Sri Srinivasan and Gregory Katsas, questioned the Department of Justice’s claims over when the agency’s authority is immune from outside challenge. A ruling is anticipated by the end of May.

In response to this rule on November 14,2017, Reps. David McKinley (R-WV) and Mike Thompson (D-CA) Introduced House bill, H.R. 4392 to stop CMS’ planned cuts. The bill, which has 196 co-sponsors, was referred to the House Energy & Commerce (E&C) subcommittee on Health November 17, 2017.

In the January 2018 Visante Insider we also discussed the 340B PAUSE Act which was introduced just prior to Congress leaving for the holidays by Reps. Larry Bucshon (R-IN) and Scott Peters (D-CA). It was referred to the E&C subcommittee on Health on December 22, 2017. The bill has 4 co-sponsors. Readers may refer to the January 2018 issue of the Visante Insider for a review of the 340B PAUSE Act.

There have been numerous other 340B related events since those mentioned above. These include:

A House Energy & Commerce Committee report issued on January 10, 2018 that recommends a series of legislative and regulatory changes to the 340B Program. The report is the latest activity in the Committee’s oversight investigation of the program. The report made several recommendations, including the following:

  1. Congress should clarify the intent of the 340B Program.
  2. Congress should reassess whether DSH is an appropriate measure for program eligibility, or whether a metric based on outpatient population would be more appropriate.
  3. Congress should establish a mechanism to monitor the level of charity care provided by covered entities.
  4. Congress should promote transparency in the 340B Program, including ensuring that covered entities and other relevant stakeholders have access to ceiling prices and requiring covered entities to disclose information about annual 340B Program savings and/or revenue.
  5. Congress should give HRSA sufficient regulatory authority to adequately administer and oversee the 340B Program.
  6. Congress should require certain covered entities to conduct independent audits of program compliance.
  7. All covered entities should perform independent audits of their contract pharmacies at regular intervals
  8. Congress (and HHS to the degree possible) should take steps to identify and reduce duplicate discounts for drugs paid under Medicaid managed care.
  9. Congress should evaluate whether the permissible scope of HRSA’s audits should be expanded to cover other features of the program.
  10. Congress should equip HRSA with more resources and staff to conduct more rigorous oversight and more effective management of the 340B Program.
  11. HRSA should soon finalize and begin enforcing regulations in each of the three areas in which it currently has regulatory authority, including the 340B Alternative Dispute Resolution process, the imposition of civil monetary penalties against manufacturers that knowingly and intentionally overcharge a covered entity for a 340B drug, and the calculation of ceiling prices.

The Senate health committee plans to hold its second 340B hearing on May 15, according to an announcement released Friday, May 4, and the HHS Office of Inspector General and Government Accountability Office are set to testify. HRSA is expected to testify at a third hearing on the program focused on effective administration of 340B. A date for that hearing has not yet been scheduled.

On Friday, May 4, HRSA proposed to again delay implementing the 340B ceiling price and penalty rule, and in the process revealed the Trump administration’s highly anticipated plan to stem drug costs which will likely affect four government health programs: 340B, Medicare Parts B and D, and Medicaid. HRSA has indicated it would not make sense to put the 340B rule into place when a broad HHS drug-cost containment plan will also deal with the program. Does this appear to directly conflict with the Energy & Commerce Committee Report’s recommendations #4 and #11 above?

HRSA recently updated the OPA covered entity section of its website’s program integrity page to state:

Covered entities with follow up audits that identify the same exact finding of noncompliance, may be subject to additional audits. A finding of non-compliance in two or more audits, depending on the type of violation, may be considered systematic and egregious, as well as knowing and intentional, which may result in the covered entity being removed from the 340B Program. Such a finding may also disqualify the covered entity from re-entry into the 340B Program for a reasonable period of time.

On Jan. 16, Sen. Bill Cassidy (R-La.) introduced legislation (Helping Ensure Low-income Patients have Access to Care and Treatment or HELP Act, (S. 2312) that would freeze 340B Program enrollment by new DSH hospitals and child sites of DSH hospitals already in the 340B Program for two years; revise hospital eligibility requirements and child site standards for DSH, children’s, and cancer hospitals; implement new hospital reporting requirements for DSH, children’s, and cancer hospitals; require the use of modifiers to identify 340B claims when billing payers; and require new 340B reports from the Department of Health and Human Services Office of Inspector General (OIG) and the Government Accountability Office (GAO). The bill was referred to the Senate Committee on Health, Education, Labor, and Pensions. It currently has no co-sponsors.

Rep. Buddy Carter, a member of the House Energy & Commerce Committee announced his 340B Optimization Act (H.R. 5598) in a press release that included support for the bill from the Community Oncology Alliance, AIR 340B, the Biotechnology Innovation Organization (BIO), and the U.S. Oncology Network. This bill was introduced in the House and was referred to E&C Committee 4/24/2018. Its only co-sponsor to date is Rep. Chris Collins.

In late breaking news, the spring Unified Agenda stated on May 9 that HRSA is working on a final version of a wide-ranging “mega-guidance” on the 340B drug discount program that the administration had pulled shortly after coming into office. The following day it was announced that this statement had been made in error.

So, what conclusion can we come to from all of this? Without trying to do any “crystal ball” gazing, it is probably safe to conclude:

  • The attention that the 340B Program has been receiving over the past year will continue.
  • The attention will come from both inside and outside of the federal government.
  • Changes WILL happen. Okay, that’s crystal ball gazing but that is an author’s prerogative
  • Fasten your seat belts, it’s going to be a bumpy ride!

LATE BREAKING NEWS: On May 11, President Trump announced his long-awaited plan to reduce drug prices. The American Patients First plan was released after the May Visante Insider had been finalized. We hope to publish a review and analysis of this plan in the months ahead. Stay tuned!

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