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    340B and The Likely Path Forward

    June 20, 2024

    After 340B Hearing and New Bills Emerging; The Likely Path Forward

    By Ted Slafsky

    Despite its importance, the 340B drug discount program rarely ever goes under the Congressional spotlight.  In fact, until the June 4th House Energy & Commerce (E&C) Oversight and Investigations Subcommittee hearing, there had not been a hearing specifically devoted to the 340B program since March 2018.

    This is due to the fact that most in Congress would prefer to avoid issues that have two powerful interest groups with often diametrically opposite opinions on key matters.  What has been the general approach of Congress when they are called upon to address the tricky, often contentious issues facing 340B stakeholders?  Let the Health Resources and Services Administration deal with it, or if need be, the federal courts.

    A Full-Blown Crisis

    However, as the contract pharmacy restrictions grow in complexity and states begin to try to fill the void, we are facing a full-blown crisis that I have not seen in the program in my 30-year history. The courts are moving slowly in addressing the legality of the restrictions and many judges have noted in their rulings that they are hamstrung, and it is up to Congress to step up to the plate.

    Congress is starting to take notice and there is progress towards addressing the stalemate.  Three bills, two of them currently with only the support of one political party, have either been introduced or are close to introduction in the House and Senate.  As reported in 340B Report, they include:

    • The 340B PATIENTS Act (H.R.7635), introduced March 12 by E&C Committee member Rep. Doris Matsui (D-Calif.), which would codify the use of contract pharmacies.
    • The 340B ACCESS Act (H.R.8574), introduced May 28 by E&C Committee member Larry Bucshon (R-Ind.) and two other House Republicans, which would significantly tighten 340B hospital eligibility, increase hospital reporting requirements, add a variety of restrictions on contract pharmacy use for all covered entities, narrow the 340B patient definition, among other changes.
    • The SUSTAIN 340B Act, released Feb. 2 as a discussion draft by a bipartisan group of six senators, would codify contract pharmacy use, define the 340B program’s intent, and implement a sliding fee scale for discounts, among other reforms, but left unresolved other tricky areas, including the 340B patient definition.  The bill’s sponsors are hoping to introduce the legislation prior to the August recess.

    One Deeply Flawed Bill

    The E&C subcommittee hearing, which was requested by the Republican majority, was intended partly to showcase the ACCESS Act which had just been introduced by committee members Bucshon, Carter (R-GA) and Harshbarger (R-TN). The bill has been endorsed by ASAP 340B, the alliance established by the Pharmaceutical Research and Manufacturers of America (PhRMA) and the National Association of Community Health Centers (NACHC).

    Even before the hearing, the ACCESS Act had already experienced strong headwinds in its brief life. Advocates for Community Health (ACH), a relatively new organization representing some of the largest health centers in the country said it “cannot support legislation that significantly reduces health centers’ ability to leverage 340B on behalf of their patients.”  More recently, they held a call, open to all health centers, detailing their strong opposition.

    “Many of the provisions in this legislation would result in an unacceptable reduction in the ability of health centers to leverage the 340B program, which would restrain their ability to care for patients and continue expanding access to care for those most in need,” said ACH CEO Amanda Pears Kelly. ACH went on to spell out the various reasons for its opposition.

    Another usual ally of NACHC, Ryan White Clinics for 340B Access (RWC-340B), which represents health centers and Ryan White clinics focused on HIV care, was blunter.  The legislation is “dangerous to public health, destructive of the safety net and undermines state law,” said Shannon Burger, president of RWC-340B and CEO of Cempa Community Care in Chattanooga, Tennessee.

    I have been told by several sources within the health center community that there is even significant opposition to the ACCESS Act within the NACHC membership.  It is one thing for a bill to be so one sided that it would force most of the 340B hospitals to withdraw from the program, it is another when it includes a variety of provisions that would make the program unworkable for health centers.  This includes creating significant disincentives for chain and independent pharmacies to partner with health centers and other 340B providers. The bill would significantly cut payments to pharmacies, drastically increase the workload for pharmacists and impose major fines on pharmacies for making a mistake in identifying a claim.  The bill includes new civil monetary penalties ($13,946 for each claim) for failing to comply with contract pharmacy regulations.

    There are currently over a dozen drug manufacturers imposing restrictions on health centers in the contract pharmacy space.  One long-time health center leader told me that if the ACCESS Act becomes law, the drug industry would not have to worry about offering 340B pricing to health centers and grantees at the contract pharmacy setting at all, since no pharmacy would even consider participating.

    There are too many poison pills in the ACCESS Act to cover in one column.  But I will mention one other that stands out.  Despite the fact that seven states have enacted 340B contract pharmacy protection laws and fifteen others have introduced similar bills, the bill would supersede all existing state laws and bans future ones.  States would also be prohibited from ever legislating or regulating anything involving 340B in the future.

    Fortunately, the ACCESS Act is, as one hospital lobbyist described it, “dead on arrival.” So where do we go now?  Rep. Matsui’s 340B PATIENTS Act, which would require drug manufactures to provide 340B discounts in the contract pharmacy setting, would certainly resolve the current impasse.  Unfortunately, the long-time 340B champion has been unable to obtain support for the bill from House Republicans that control the lower chamber.  Therefore, the bill is also dead-on arrival.

    The Path Forward

    While House Republicans and Democrats can’t agree on a path forward for the 340B program, there is a promising development in the Senate.  A group of six Senators — John Thune (R-SD), the second-ranking Senate Republican, Shelley Moore Capito (R-W.Va.), Jerry Moran (R-Kan.), Debbie Stabenow (D-Mich.), Tammy Baldwin (D-Wis.), and Benjamin Cardin (D-Md.) — are working hard on the herculean task of crafting a compromise bill that addresses all the major aspects of the 340B program.  The draft version of the SUSTAIN 340B Act focused on a host of matters including contract pharmacy use, duplicate discounts and clarifying child site eligibility.  The bill would restore broad access to the contract pharmacy program but require that covered entities extend their patient assistance policies to the pharmacy counter of their retail pharmacy partners.  Other important matters will be addressed in the final bill.

    Like most bills that stand a chance of passage in the narrowly divided chambers of Congress, not all aspects will be embraced by 340B providers or the drug industry.  But compromise is the only way to get things done in life or in politics.  When the bill is introduced later this summer, we will finally have a legislative vehicle that I believe will not only fairly address the areas that are most contentious in the 340B arena, but also has a chance of becoming law.

    Knowing the senators involved in this effort and their long history and support of the 340B program, I am very hopeful that we are headed towards a resolution in the ongoing 340B battle.  Whether there will be the political will to enact the legislation prior to the end of the year remains an open question but we can only hope.

    Ted Slafsky is the Publisher and CEO of 340B Report, the only news and intelligence service exclusively covering the 340B program.  Slafsky, who has over 25 years of leadership experience with the 340B program, is also Founder and Principal of Wexford Solutions.  Ted can be reached at