A Patient’s Guide to 340B: Why Program Reform Matters to You

***This is the final report in a six-part series to educate patients about the 340B Drug Pricing Program***

The 340B Drug Pricing Program has no doubt added benefit for patients and providers, alike. The measure of this benefit, however, is shrouded by uncertainty over the lack of transparency and accountability, decline in hospital charity care, as well as the explosive middleman growth in contract pharmacies and pharmacy benefit managers. Twenty-nine years after the program’s inception, it is now unclear to both regulators and patients, both qualitatively and quantitatively, if the Congressional intent is being met.

With all the noise around whether rebate programs might encourage pharmaceutical manufacturers to raise the cost of their products, there is no conversation on how those rebate dollars are used. The lack of the requisite transparency reporting among non-federal grantee covered entities participating in the 340B program makes it impossible to distinguish between anecdotal claims of abuses versus legitimate use of these rebate dollars to the benefit of patients.

These combined situations place the future of the 340B program at exceptional risk, if only by politicization of the national conversation on medication affordability alone. That national conversation churns now, as Congress debates drug pricing legislation. Aside from notorious stump speeches about the prices other countries pay for their medications, nowhere in these discussions do we talk about payers (insurers) and the middleman dictating the at-the-counter prices of medications realized by patients. The ongoing political debate is absent of the larger impacts on safety-net programs benefitting from 340B revenue and the impact on the poorest patients among us. Without clear guidance, all patients can come to expect is more squabbling among covered entities, drug manufacturers, hospitals, and regulators. It is this type of environment in which an idealistic program finds itself at risk.

Lawmakers have reasonably argued federal regulators have not demonstrated a particular need for additional regulatory powers because the Health Services and Resources Administration (HRSA) has not adequately flexed their current oversight muscle (…much less that such would be exercised efficiently). Therefore, regulatory interpretation should be updated, specifically regarding the patient definition, and possibly with further defining “low-income” for more clarity on who the program should benefit most. To the extent of “cracking open the legislation”, there is a singular area in which lawmakers from both sides and the Biden Administration agree: the issue of transparency in reporting. Earlier this year, the Biden Administration’s discretionary budget included an ask of Congress to specifically fund greater oversight and administration of 340B, explicitly including requirements on reporting of how non-grantee entities use these dollars. In this space, where few agreements can be made found, this is one area where legislators can and should move swiftly. The data generated by transparent reporting on use of these dollars is invaluable in evaluating the efficacy of 340B in benefitting patients or otherwise meeting the intent of the program.

To the extent HRSA may need more room for rulemaking, legislators desperately need extend rulemaking authority to include allowable uses for 340B dollars and clarity on the intent of the program. Federal grantees already have to report use of these dollars while other covered entities aren’t. With executives reaping in millions of dollars, reasonable people can grow concerned these dollars are being used to prop up the profiteering and personal enrichment administrators may be enjoying at the expense of employees providing care and patients themselves. Employees of federal grantees don’t generally get to enjoy much in the way of raises and their pay is not on par with the private sector. Hardware and software systems lag in terms of keeping up with modern technology. Sustaining non-revenue generating or underfunded patient benefit programs is absolutely something many entities enjoy as a use of their 340B dollars. There is no doubt these dollars can be used to patient benefit beyond directly sharing the savings with patients, though sharing the savings is the most direct means patients benefit from 340B. Putting guardrails on allowable uses of these dollars would serve well everyone touched by the program. Frankly, anyone fighting this transparency as a suggested method of shoring up 340B in meeting its intended purpose has something to hide and deserves closer scrutiny.

As an additional area of critical need to consider, for non-grantee covered entity hospitals, records of charity care and minimum realized values in served communities should be determinative for qualification to participate as a covered entity. The current calculation of disproportionate share hospitals as 340B participants or non-340B participants by the Government Accountability Office has shown a steadier and steeper decline of charity care among 340B hospitals than among non-340B hospitals. Additionally, hospitals carry the highest issuance of medical debt in the United States, disproportionately affecting low-income patients. Part of ensuring low-income patients get the most benefit from the discount drug program was and remains the ability to extend no- and low-cost care, writing off costs of providing that care, without punishing patients for having a need. If hospitals are to receive the benefit of this program, that same benefit should be extended to patients.

Lastly, in addressing the sheer size of the 340B discount drug program, the most significant areas of growth with questionable benefit to patients are among contract pharmacies. HRSA’s recognized this potential in commentary with its 2010 final rule only to realize those cautionary concerns and integrate guidance curbing the use and growth of contract pharmacies in the no-shelved 2015 “mega-guidance”. While the mega-guidance has been shelved, the abuse of the program by contract pharmacies has not abated. Among reducing the number of contract pharmacies a covered entity may make agreements with, and other geographic requirements, lawmakers and regulators should consider establishing market appropriate flat fees associated with services and a database of fees charged by pharmacy benefits managers, contract pharmacies, and third-party administrators, similar to the 340B ceiling price database established under the Office of Pharmacy Affairs Information System. A similarly situated claims hub would also allow for greater clarity in audits, assessment of potential duplicate discounts, and (if appropriately structured and compliant with patient privacy laws) detect potential diversion.

340B is a massive program which, arguably, has not yet been realized by much of the patient population. Not doing anything in this case doesn’t mean “keeping things status quo”, rather it means leaving the program open to attack, inefficiency, ineffectiveness, and abuse.  We can and should do more to ensure patients are aware of the program, how the program is used by covered entities nearest to them, and how this critical support to federally funded health care programs might be impacted by additional health care policy reform efforts. If ensuring the health and well-being of the country is the priority of all players in this system, then its time patients know it.

For more information on the issues facing the 340B Program, you can access the Community Access National Network’s 340B Commission final report and reform recommendations here.

Sources:

Jen Laws, President & CEO

Jen Laws (Pronouns: He/Him/His) is the President & Founder of Policy Candy, LLC, which is a non-partisan health policy analysis firm specializing in various aspects of health care and public health policy, focusing on the needs of the HIV-affected and Transgender communities. In that capacity, Jen has served as the President & CEO of the Community Access National Network (CANN), beginning in January 2022. He previously served as the Project Director of CANN's HIV/HCV Co-Infection Watch, as well as 340B Policy Consultant.

Jen began his advocacy efforts in Philadelphia in 2005, at the age of 19, coordinating team efforts for a corporation participating in the AIDS Walk. His connection to HIV advocacy grew when partnering with Mr. Friendly, a leading anti-HIV-stigma campaign.

He began working in public health policy in 2013, as a subcontractor for Broward Regional Planning Council evaluating Marketplace plans for plan year 2014, advising and educating constituents on plan selection. Jen was a member of South Florida AIDS Network and has worked with Florida Department of Health, Broward and Miami-Dade County Health Departments, Pride Center South Florida, and other local organizations to South Florida in addressing the concerns and needs of these intersecting communities. During this time, Jen was seated on the board of directors for the ADAP Advocacy Association.

Having moved to the New Orleans area in 2019, Jen resumed his community-based advocacy as the chair of Louisiana's Ending the HIV Epidemic planning subcommittee for Data-based Policy and Advocacy, regular participation as a community member and "do-gooder" with other governmental and non-governmental planning bodies across the Louisiana, and engages with other southern state planning bodies. He continues his advocacy in governmental health care policy evaluation, which has been utilized to expand access to quality healthcare by working with RAD Remedy to deliver the nation's foremost database of trans* competent health care providers. Lending his expertise on policy matters ranging from 340B impact on RW providers and patients to strategic communications and data analysis, Jen's approach to community engagement is focused on being accessible across all stakeholder groups and centering the perspectives of PLWHA and Transgender people. He is a community ambassador alumni of the CDC's Let's Stop HIV Together campaign.

In his personal life, Jen enjoys spending his time being "ridiculously wholesome" with his partner, Aisha, and her two amazing daughters. In their personal time, when not immersed in crafts or house projects, they can be found seeking opportunities to help their neighbors, friends, and community members (who have come to rightfully expect exquisite gift baskets of Aisha's homemade jams and jellies from time to time). Jen strives to set a good example both in his personal professional life of integrating values into action and extending the kindness and care that have led him to a life he calls "extraordinarily lucky".

https://tiicann.org
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Jen’s Half Cents: Stepping into the Shadow of a Giant

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A Patient’s Guide to 340B: Why the Middlemen Matters to You