The Association of American Medical Colleges has lent its support to new legislation that would tweak the 340B statute so that covered entities can use contract pharmacies to dispense outpatient drugs.
According to the AAMC, since 2020, an increasing number of manufacturers have opted to restrict access to 340B discounts for eligible drugs dispensed at contract pharmacy locations, prompting enforcement action by the Health Resources and Services Administration (HRSA), the agency responsible for overseeing and administering the program.
In response to these actions, several manufacturers sued the federal government, contending that the 340B statute is silent with respect to covered entities’ ability to use contract pharmacy arrangements. Litigation related to this matter is ongoing, with the U.S. Court of Appeals for the District of Columbia Circuit issuing a 2024 opinion in favor of the manufacturers.
On July 31, the AAMC sent a letter to Sen. Peter Welch and Rep. Doris Matsui in support of the 340B Patients Act, saying the 340B program plays “a critical role” in supporting the nation’s healthcare safety net, enabling providers to care for patients and communities that are historically low-income and underserved.
“The program allows safety-net hospitals, many of which are teaching hospitals, to purchase covered outpatient drugs at a discount from manufacturers, and thus, stretch scarce financial resources and maintain, improve, and expand access to care,” the AAMC wrote. “Simply stated, the 340B program helps hospitals care for low-income patients.”
WHAT’S THE IMPACT
The HRSA allows covered entities to contract with community and specialty pharmacies, or contract pharmacies, to dispense drugs on their behalf to eligible patients. According to the AAMC, it’s often logistically infeasible to require patients to travel to a teaching hospital’s in-house pharmacy to receive their medications.
Since 2020, a growing number of drug companies have imposed restrictions on covered entities’ use of contract pharmacies, which the AAMC said threatens the 340B program by “prioritizing the pharmaceutical industry’s profits at the expense of safety-net providers and the patients and communities they serve.”
The group cited an American Hospital Association survey showing that manufacturer restrictions on contract pharmacy arrangements take a toll, with disproportionate share hospitals (DSHs) reporting annualized losses of nearly $3 million.
The 340B Patients Act would amend the 340B statute to prohibit manufacturers from imposing limits or conditions on the ability of a covered entity to purchase and dispense 340B drugs, including through the use of contract pharmacy arrangements. It would also authorize civil monetary penalties on manufacturers who are found to have violated these requirements.
“The 340B Patients Act would safeguard the 340B program, ensuring that it can continue to benefit safety-net providers, patients, and communities long into the future,” the AAMC wrote.
THE LARGER TREND
An April report released by Sen. Bill Cassidy, R-La., chairman of the Senate Health, Education, Labor, and Pensions (HELP) Committee, found Congress needs to act to bring needed reforms into the 340B program to make revenue from the drug pricing program more transparent and to ensure patients are benefiting from the discounts.
The report found that hospitals, contract pharmacies and others make significant revenue from the 340B program, but questions whether low income or uninsured patients benefit from increased charity care or lower costs.
In May, a federal court rejected a lawsuit by several drugmakers that sought to change the 340B Drug Pricing Program from an upfront payment model to a backend rebate structure. The court found in favor of intervening providers and 340B Health because the HRSA has yet to make a decision on the rebate program.
The HRSA last week released a voluntary 340B Rebate Model Pilot Program for qualifying drug manufacturers to effectuate the 340B ceiling price on select drugs to all 340B-covered entities.
The HRSA’s Office of Pharmacy Affairs (OPA) is inviting certain drug manufacturers to apply for participation in the pilot program for a minimum of one year. The pilot program will allow rebates only for the 10 drugs selected for the Medicare negotiation program, and OPA will not permit manufacturers to deny rebates based on diversion or duplicate discount concerns.
Email: jlagasse@himss.org
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