February 23, 2024
Key Takeaways from Senate Group of Six Draft 340B Bill
By Ted Slafsky
(Part One of a Two-Part Analysis)
After reviewing comments from over 250 stakeholders, meeting with various interest groups and holding regular staff meetings, the U.S. Senate bipartisan “Group of Six” have released a highly anticipated discussion draft bill and a bill summary/request for more information on some of the more contentious issues in the 340B program. Since the draft bill (the SUSTAIN 340B Act) is 51 pages and addresses a host of key areas, I am going devote two columns to this legislation. Due to the bipartisan nature of the effort and group of lawmakers involved in crafting the proposed bill, I expect the SUSTAIN 340B Act to get more traction than any other 340B reform bill since 2010, the last time a major 340B bill became law. Part Two will be published in early March to give stakeholders plenty of time to submit comments prior to the April 1 deadline.
In Part One, I reflect on the importance of this legislation and a few of the critical areas that are covered including the intent of the 340B program and the structure and scope of the contract pharmacy program. Part Two will focus on other elements including patient definition, duplicate discount protection, child sites, user-fees, and “pickpocketing” protections.
Heavy Hitters: The bipartisan Group of Six, who apparently prefer that term to the Gang of Six, include Republican Senators John Thune (S.D.), Shelley Moore Capito (W.Va.), and Jerry Moran (Kan.), and Democrats Debbie Stabenow (Mich.), Tammy Baldwin (Wis.), and Benjamin Cardin (Md.). All of the lawmakers have served in the Senate for decades, with Thune and Baldwin being particularly active on 340B matters.
Thune is listed as the lead sponsor of the draft bill and is the second-ranking Republican in the Senate. If Senate Minority Leader Mitch McConnell (R-Ky.) chooses not to run again for the top Republican leadership position in January 2025, Thune could end up being elevated from Whip to either Minority Leader or Majority Leader depending on the outcome of the November elections. Many observers expect the GOP to narrowly take back control of the upper chamber and that McConnell will step down from his leadership position.
Baldwin chairs the subcommittee that funds the Health and Human Services Department (where the Health Resources and Services Administration [HRSA] is located) and is a high-ranking Democrat on the Senate HELP Committee, which has jurisdiction over the 340B program.
Ambitious Goal: In a letter that accompanied the discussion draft, the lawmakers said, “We believe it is necessary to pass legislation in the 118th Congress that provides clarity, transparency, and accountability in the 340B program in order to ensure the program remains strong, long into the future.” This ambitious goal is certainly welcomed by 340B providers, who have lost billions in drug discounts over the past few years since drug manufacturers began to impose significant restrictions on access to 340B pricing in the contract pharmacy setting. “We are committed to addressing the concerns that have been raised by stakeholders as part of this process, including HRSA’s authorities and resources; contract pharmacy arrangements; the role of PBMs in the program; duplicate discounts; and the promotion of transparency and program integrity,” said the senators.
Intent of Program: The draft legislation would, for the first time, define 340B’s purpose in the statute. As the senators point out, “While previously only expressed in report language, we are now providing clarity in statute about Congress’s intent for the 340B program. “It is the sense of Congress” that 340B’s purpose “is to stretch scare federal resources and help safety net providers maintain, improve, and expand patient access to health care services.” While the government and 340B providers always have described the program this way, many in the pharmaceutical industry and their allies on Capitol Hill have a narrower interpretation of the law focused simply on it being a discount program for indigent patients.
Contract Pharmacy: The drug industry’s decision to stop or significantly restrict access to 340B discounts in the contract pharmacy setting is the main reason the Group of Six is legislating on the 340B program. While contract pharmacies have been an integral part of 340B since its inception, drug manufacturers are correct that the phrase “contract pharmacy” is not mentioned in the statute. The draft bill would codify the contract pharmacy program but enact new guardrails, including requiring covered entities to extend their financial assistance policy to patients that pick up their medications at a retail pharmacy or receive prescriptions in the mail. Under the bill, “the covered entity must ensure the financial assistance option is made transparent to patients and publicly reported.”
This requirement is an important and significant concession to the drug industry considering the operational challenges in having a charity care or patient assistance program available at the counter of a pharmacy that sees many patients that are not 340B-eligible. In addition, all contract pharmacy arrangements would need to be submitted for review by HRSA and the agency would be authorized to conduct audits of contract pharmacies.
Contract Pharmacy Scope: The senators also recognize that drug manufacturers and some policy makers believe that the contract pharmacy program has grown too large. At the same time, they point out that its growth may be exaggerated. “We understand that not all of these pharmacies may be actively providing prescriptions to patients as part of the 340B program and are only included due to other contractual requirements, such as effectively requiring them to contract with an entire pharmacy chain, regardless of their need or preference,” they said. The senators request that “If stakeholders are proposing additional limitations on the use of contract pharmacies, how should any restrictions reflect the difference between how urban and rural hospitals utilize contract pharmacy arrangements?
The senators rightly point out “that many community health centers and hospitals in rural and underserved areas see patients from large service areas, many of whom have limited transportation options. Many of these health centers and hospitals do not have an in-house pharmacy and thus rely on contract pharmacy arrangements to provide patients access to medications.” The senators advise stakeholders to structure any geographic restrictions or other restrictions to ensure patients in rural and underserved areas maintain access to drugs.
They also point out that a significant portion of 340B medications are now specialty medications, which can often only be obtained through specialty pharmacies. These specialty pharmacies often have only a few locations throughout the country. They ask stakeholders who recommend restrictions for guidance on how to structure any limitations, while also ensuring patients have access to these specialty medications.
April 1 Deadline to Submit Comments: It is important for stakeholders to weigh in on the discussion draft and answer the questions raised in the request for information (RFI) by April 1. I encourage you to consult with your trade associations and advocacy groups and talk to your counsel and auditors to solicit their feedback. I will be back in a few weeks with commentary on the other matters raised by the senators.
