Post Election Analysis: Implications for the 340B Program

By Ted Slafsky

With President-elect Donald Trump’s (R) big victory and the GOP takeover of the U.S. Senate in Tuesday’s elections, we are likely to see increased scrutiny over and additional efforts to place restrictions on the 340B program.

On the positive side for 340B providers, U.S. Sen. John Thune (R-S.D.), a longtime 340B champion, who has been taking the lead role in drafting the comprehensive SUSTAIN 340B Act, has a good chance of being elevated from the No. 2 position in Senate GOP leadership to majority leader. Senate Majority Leader Mitch McConnell (R-Ky.) is stepping down from his leadership role, but will serve out the rest of his term, which is set to end in early 2027.

U.S. Sen. Bill Cassidy (R-La.) is expected to take over as chairperson of the Senate Health Education Labor and Pensions (HELP) Committee, which has jurisdiction over the 340B program. Cassidy has been a longtime critic of the 340B program, particularly of 340B hospitals and contract pharmacies. As the top Republican on the HELP Committee, he’s launched a probe into the 340B program, focused on hospitals, health centers and pharmacy giants CVS and Walgreens. He has also requested information from two drug manufacturers, but those questions appeared to be more friendly in tone. If named HELP chairperson, Cassidy will have subpoena power (starting in January), and we can expect that inquiry to expand, as well as to see tough HELP Committee hearings on the 340B program.

Nonetheless, it will likely be difficult for the Senate to pass 340B bills without bipartisan support. Despite the GOP’s good night, Republicans will have at most a 55-45 majority in the Senate.  Three races remain too close to call.

U.S. Sen. Tammy Baldwin (D-Wisc.), a 340B champion and the lead Democrat in the “Group of Six” behind the SUSTAIN Act, narrowly survived her race. Assuming the Group of Six remains united, they will be looking for two new Democrats to support the bill with U.S. Sens. Debbie Stabenow (D-Mich.) and Ben Cardin (D-Md.) are retiring. I am hearing that U.S. Sen. Tim Kaine (D-Va.) is one likely replacement. It is unclear who would be the other Democratic senator to join the bipartisan effort.

House of Representatives

Despite being outspent, there is a strong chance that the GOP will continue to narrowly control the U.S. House. Assuming the Republicans retain control, the House Energy and Commerce (E&C) Committee, which has jurisdiction over the 340B program, is expected to be under the leadership of either U.S. Rep. Brett Guthrie (R-Ky.), who chairs E&C’s Health Subcommittee, or U.S. Rep. Bob Latta (R-Ohio), who chairs E&C’s Communications and Technology Subcommittee.

U.S. Reps. Earl “Buddy” Carter (R-Ga.) and Diane Harshbarger (R-Tenn.), who are pharmacists and have owned independent pharmacies, are likely to continue to lead the efforts to significantly narrow the scope of the program. As I wrote in a previous column, the 340B ACCESS Act, which they co-sponsored with retiring U.S. Rep. Larry Bucshon (R-Ind.), is highly problematic for all 340B covered entities.

I expect the E&C Committee to hold more hearings on the 340B program, as well as continued efforts to pass legislation that places restrictions on the program. Whether the National Association of Community Health Centers (NACHC) continues to work with Pharmaceutical Research and Manufacturers of America (PhRMA) in their controversial alliance, remains to be seen.

Fortunately for the 340B provider community, the House should remain closely divided between the two parties. While the House majority can more easily pass legislation that does not have bipartisan support, it will be difficult for a major bill that’s highly problematic to 340B providers to make it through the House, let alone the more bipartisan Senate.

The Senate majority can use a procedure called reconciliation to pass budgetary related legislation with a simple majority, but it’s unclear whether the chamber will want to include contentious 340B legislation in such bills.

State Ballot Initiative Targeted at AHF

In California, Proposition 34, has a narrow lead as the votes continue to be counted. As my 340B Report colleague Shannon Young has reported, the ballot measure would require certain state healthcare providers that participate in the 340B program to spend nearly all their net revenue on direct healthcare services or risk losing their license. 

It specifically targets healthcare providers that have spent at least $100 million in the last 10 years on things not considered direct patient care and that operate multifamily housing with more than 500 high-severity health and safety violations. Critics have argued it would essentially only affect one provider: the AIDS Healthcare Foundation (AHF)—a Los Angeles-based nonprofit and the nation’s largest provider of HIV services.

AHF officials have cast the proposal as a “revenge initiative” for the organization’s support of rent control ballot measures. If approved, I would expect AHF to sue to try to block it from going into effect since there is provision in California law that prevents ballot initiatives to go into effect that unfairly target one group. Hopefully, the organization will be successful.

Trump Administration

As for the Trump administration and where it is headed on the 340B program, I am going to hold off on providing a lot of thoughts until we get a better sense of who is appointed to various key positions.  For a deeper dive on the first Trump term and 340B, check out my column from last month.

If former presidential candidate Robert F. Kennedy Jr. plays as important role, as the president-elect has said he will, this may be helpful to 340B providers considering Kennedy’s feelings towards the drug industry. Nonetheless, I anticipate continued skepticism towards the 340B program to remain a part of the second Trump administration.

Fasten your seat belts!

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 ted.slafsky@340Breport.com.

Disclaimer: The views and opinions expressed in this blog are those of the authors. They do not necessarily reflect the official policy or position of any other agency, organization, employer, or company.