340B Insight

This week, we are joined by Maureen Testoni, 340B Health’s president and CEO. The Health Resources & Services Administration (HRSA) made a major announcement recently regarding drug companies that are denying 340B discounts on drugs dispensed at community pharmacies. Maureen analyzes the news and discusses what comes next on this issue. She also catches us up on several other important 340B developments from during the summer. 

HRSA Refers Six Drug Companies for Possible Fines 

HRSA recently referred the first six drug manufacturers that imposed 340B pricing restrictions to the Health and Human Services Office of Inspector General (HHS OIG). Maureen explains what this step in the enforcement process means, what the OIG will do next, how the drug companies are responding, and what covered entities should do about two companies that were not included.    

The Drug Companies’ Motivation to Deny 340B Discounts 

340B Health recently released a report about how the 340B community pharmacy dispute has affected diabetes drugs. Maureen recaps the report’s findings and how it uncovers the drug companies’ likely motivation for sidestepping the 340B statute. 

Drug Pricing Legislation and 340B 

Congress is working on legislation to lower drug prices. Lawmakers also have introduced bipartisan legislation that would prevent certain discriminatory pricing behavior against 340B providers. Maureen explains what potential federal bills could mean for 340B.

COVID-19 Concerns Continue

The COVID-19 pandemic has prompted concerns that some hospitals could become ineligible for the 340B program. Maureen explains how 340B Health is working with Congress on legislation to ensure protection for these hospitals. 

U.S. Supreme Court Takes 340B Case 

This fall, the U.S. Supreme Court will hear a case regarding Medicare drug payment cuts to many 340B hospitals that have been in place since 2018. Maureen discusses the case and why the administration should not wait to hear the court’s decision to stop the cuts.   

Check out all of our episodes on the 340B Insight podcast website. You also can stay updated on all 340B Health news and information by visiting our homepage. If you have any questions you’d like us to cover in this podcast, email us at [email protected].

Resources 

1. Six Drug Companies Referred for Penalties for Continued Violations of Federal Law on 340B Pricing 
2. Report: The Impact on Diabetes of Restrictions on 340B Community Pharmacies 
3. New 340B Health Video Explains 340B Community Pharmacy Dispute
4. Momentum Grows to End Medicare Cuts for 340B Hospitals
5. Maureen Testoni Participates in STAT Event About the Future of 340B 

This week, we are joined by Sumona Das Gupta, assistant director of pharmacy audit and compliance at University of Washington Medical Center and Harborview Medical Center. As part of the UW Medicine health system, the hospitals operate in the first region of the U.S. that experienced community transmission of COVID-19 last year. Sumona discusses how her hospitals quickly expanded their telehealth capacity to serve patients, how this transformation impacted their 340B program operations and compliance, and the benefits telehealth brings to both patients and providers. 

Telehealth Before and During the COVID-19 Pandemic 

Sumona explains how her medical centers began building a foundation for telehealth prior to the pandemic to reach underserved communities. Before the pandemic, limitations on telehealth existed. However, the pandemic brought changes in policy and technology regarding telehealth. She shares how the medical centers quickly adapted to these changes and what strategies they used to expand their telehealth capabilities. 

Addressing 340B Policies and Procedures for Telehealth

Sumona shares how telehealth visits remained eligible for 340B and how her system updated its 340B policies and procedures to reflect telehealth implementation and ensure 340B compliance. This was aided by the Health Resources & Services Administration’s public health emergency flexibilities for 340B providers.  

The Benefits and Challenges of Telehealth 

Telehealth has widened the ability for patients to access care, even across state lines, while keeping everyone safe. Sumona shares how to help prepare patients for a telehealth visit, the strategies used to help patients feel connected with practitioners during telehealth visits, and the overall satisfaction patients are experiencing with telehealth. She also discusses how telehealth might not work for every patient. 

Telehealth is Here to Stay 

Sumona previews what is ahead for telehealth post pandemic and how 340B savings can help further expand the access to care that telehealth provides. 

Check out all of our episodes on the 340B Insight podcast website. You also can stay updated on all 340B Health news and information by visiting our homepage. If you have any questions you’d like us to cover in this podcast, email us at [email protected].

Resources 

1. 340B Health Online Platform for Commenting on CMS’s Proposed Medicare Part B Cuts for 2022
2. 340B Health Webinar Slides: Telemedicine Use By 340B Hospitals (May 2020)
3. UW Medicine 

This week, we are joined by Tim Maurice, chief financial officer for UC Davis Health. Tim discusses how hospital finance teams support 340B and how they work together with hospital departments to provide the resources for health care services that patients need. Prior to the interview, we share a news update on an eighth drug manufacturer that plans to deny 340B discounts on drugs dispensed at community pharmacies. 

How Health System Finances Have Changed Over the Years

Health system finances have drastically changed over the years. Tim shares how UC Davis has responded to these changes, explains the financial challenges caused by COVID-19, and discusses how 340B eases the financial burden for safety-net hospitals both during a public health emergency and in regular times.   

Finance Departments Support Improved Patient Care

Finance departments ensure that providers and patients receive adequate resources. Tim explains how this responsibility is constantly focused on improving patient care. The CFO’s office collaborates with hospital departments to determine which services the community needs. Tim provides an example of this at UC Davis and what providers who have a new idea for a health care service should do to collaborate with the finance department to develop a robust plan that takes 340B into consideration.   

Participating in Associations 

Tim is a member of 340B Health’s Board of Directors, a member of the California Association of Public Hospitals and Health Systems board and is in a leadership role with America’s Essential Hospitals.  He explains how becoming active in associations helps 340B professionals in their own careers and in advocating for the health care safety net.  

Check out all of our episodes on the 340B Insight podcast website. You also can stay updated on all 340B Health news and information by visiting our homepage. If you have any questions you’d like us to cover in this podcast, email us at [email protected].

Resources 

1. Merck Plan to Withhold 340B Discounts Adds to Threat to Diabetes Patients
2. Hospital and Pharmacist Groups Urge Court to Reject United Therapeutics’ Arguments in Community Pharmacy Case 
3. 340B Health Upcoming Webinars 
4. Tim Maurice Bio 

This week, we are joined by Nan Kempadoo, 340B internal auditor for Memorial Healthcare System in Hollywood, Fla. Nan is a certified pharmacy technician who spoke on the pharmacy technician roundtable at last month’s 340B Coalition Summer Conference. She discusses how pharmacy techs play an important role in the operations and compliance of 340B hospitals and notes the growing number of career opportunities available to them in 340B. Before the interview, we give an update on a seventh drug company that has refused 340B discounts to safety-net providers when drugs are dispensed at community pharmacies as well as how members of Congress are responding to the continuing dispute. 

The Role Pharmacy Techs Play in 340B

Nan shares how she first became a pharmacy tech and progressed to becoming a 340B internal auditor. Pharmacy techs’ experience equips them to take on 340B program management and auditing. Nan describes the roles pharmacy techs can take on, both on and off the 340B team, and how tech positions have evolved. 

Resources for 340B Newcomers

Nan shares what resources were most helpful when she first began her role in 340B. These resources provided basic insight into how the 340B program works. Nan also shares how she realized the importance of developing soft skills after she started working with the program. She gives advice to pharmacy techs who are starting their careers in 340B. 

Hospital Training on 340B 

Internal training also is critical for the professional development of pharmacy techs. Nan’s health system uses a combination of internal resources, presentations, and in-person site visits to help their teams learn more about 340B operations and compliance as well as how they use 340B savings to support their community. 

Check out all of our episodes on the 340B Insight podcast website. You also can stay updated on all 340B Health news and information by visiting our homepage. If you have any questions you’d like us to cover in this podcast, email us at [email protected].

Resources 

1. Boehringer Ingelheim Cuts Off 340B Contract Pharmacies
2. Statement on U.S. House Amendment in Support of Ending Drug Company Attacks on 340B 
3. 340B Insight Episode 31: Preparing for 340B Recertification
4. Memorial Healthcare System  

This week, we are joined by Steven Miller, vice president of pharmacy services at 340B Health. The Health Resources & Services Administration (HRSA) recently announced that annual 340B recertification for hospitals will begin on Aug. 16, 2021. Steve discusses what 340B hospitals need to know about preparing for recertification and avoiding common errors during the process. Prior to the interview, we provide news updates on the Centers for Medicare & Medicaid Services proposing to continue Medicare Part B cuts to many 340B hospitals and new legislation introduced in Congress to protect 340B hospitals from discriminatory payment rules by pharmacy benefit managers and health insurers. 

The Purpose of Recertification

340B hospitals must go through the recertification process to confirm and validate the accuracy of their information and ensure they comply with all program requirements. Steve recommends that 340B hospitals begin getting into the habit of preparing for recertification as soon as they qualify for the program and look at their policies and procedures to confirm they align with the 340B statute. 

The Recertification Steps

Steve explains the steps of the recertification process. He stresses the importance of reviewing information for the parent hospital first and then any child sites. The hospital will need to review the qualification information to confirm that the information on the most recent Medicare cost report matches with the information in OPAIS. If the information does not match, the hospital can make the changes in the recertification task and upload the supporting documentation. Steve also explains the Medicaid Exclusion File and why it is a critical component to recertification.

Best Practices For 340B Hospitals Recertifying

Steve shares common errors made when recertifying. The most common error is the authorizing official (AO) not checking every single qualification requirement. These include DSH percentage and Medicare cost report filing date. Steve recommends having both the primary contact and the AO review the information separately to ensure accuracy. He also encourages checking to ensure everything in OPAIS is saved correctly and taking screenshots of each screen in case the information does not save. 

Resources For 340B Recertification

Members of 340B Health have access to several resources to prepare for recertification and registration. Members can reach out to 340B Health to set up a technical assistance call with a 340B Health staff expert. Steve also recommends members attend a webinar on Aug. 12, 2021, that will review the recertification process and highlight any new changes for this year. 

Check out all of our episodes on the 340B Insight podcast website. You also can stay updated on all 340B Health news and information by visiting our homepage. If you have any questions you would like us to cover in this podcast, email us at [email protected].

Resources 

1. 340B Health Statement on Proposed Medicare Payment Cuts to 340B Hospitals In 2022

2. 340B Health Statement on the Bipartisan Protect 340B Act to Stop Discriminatory Actions by PBMs and Insurers

3. 340B Health Member Resources on Program Registration and Recertification 

4. 340B Health Webinar on Recertification on Aug. 12, 2021

This week, we are joined by Bryan Jackson, chief administrative officer at Jefferson Regional Medical Center in Arkansas. Bryan discusses why he advocates for 340B at the federal and state levels, explains how to prepare for and participate in advocacy meetings with policymakers and their staff, and shares his advocacy success stories. Prior to the interview, our news segment discusses how a seventh drug company is threatening to start denying 340B discounts on drugs dispensed at community pharmacies and how the U.S. Supreme Court will be hearing a 340B-related case during its next term. 

Why to Advocate for 340B

Jefferson Regional Medical Center (JRMC) is an independent, community-based hospital that treats patients in southeast Arkansas, many of whom experience socioeconomic challenges. While Bryan is not a full-time government relations staff member, he wanted to support his community’s needs, so he decided to devote time advocating to protect 340B at both the state and federal levels. Bryan discusses the time involved in preparing for advocacy meetings such as a 340B Health Hill Day, and he explains how to have efficient communications when speaking with busy policymakers and their staff. 

The Key to 340B Advocacy Success 

Bryan discusses the 340B issues he has recently advocated for with policymakers. At the federal level this includes asking members of Congress to support legislation that protects hospitals from losing eligibility for 340B during the COVID-19 public health emergency. Members of the Arkansas congressional delegation have responded with support for the legislation. At the state level, the efforts of Bryan and other Arkansas hospital advocates have resulted in the enactment of a law to stop drug companies from refusing 340B discounts to safety-net providers on drugs dispensed at community pharmacies. Bryan then explains why a big key to their success is building relationships with policymakers and their staff.  

The Tool to Use When Advocating for 340B  

When meeting with policymakers, Bryan recommends always using an Impact Profile that demonstrates how 340B has benefited the community the hospital serves. He says that all members of Congress are interested in helping their constituents, and it is a win for policymakers when they can share with the voters who elected them that they are supporting a program such as 340B that is positive for the community. The Impact Profile also ensures that hospital leadership understands 340B’s worth and encourages them to become involved in advocacy efforts. Bryan explains the importance of hospital leadership joining in advocacy efforts for 340B to demonstrate to policymakers that 340B is a priority to the entire hospital. Bryan says that sharing with policymakers how critical 340B is to the health of the hospital, how it provides critical resources to the communities that they serve, and how it does not cost taxpayer dollars is a winning message. 

Check out all of our episodes on the 340B Insight podcast website. You also can stay updated on all 340B Health news and information by visiting our homepage. If you have any questions you would like us to cover in this podcast, email us at [email protected].

Resources 

1. 340B Health Calls on Boehringer Ingelheim to Withdraw Threat to Deny Drug Discounts to Safety-Net Hospitals 
2. U.S. Department of Health & Human Services Federal Court Motion Shares Harm to Patients from Drug Company Refusals to Provide 340B Discounts on Drugs Dispensed at Community Pharmacies
3. 340B Insight Episode 27 With Anne Webster 
4. 340B Health Statement on U.S. Supreme Court Order In 340B Medicare Cuts Lawsuit 
5. 340B Coalition 2021 Summer Conference 

This week, we are joined by 340B Health President and CEO Maureen Testoni. Maureen provides analysis of the most recent developments regarding the 340B contract pharmacy dispute and what’s next in the efforts to resolve the matter. Before our conversation, we share the findings of a recently released 340B Health report that demonstrates how 340B hospitals are treating large percentages of patients who often are underserved by the broader health care system.

HRSA’s Letters to Drug Companies

On May 17, HRSA sent letters to the six drug companies that have refused to provide 340B discounts to safety-net hospitals and other providers on drugs dispensed at community pharmacies. The letters require the drug companies restore the discounts and repay all overcharges. 

Drug Companies’ Response to HRSA

After receiving letters from HRSA, the drug companies went to federal court to prevent HRSA from enforcing the 340B statute. The drug companies had already been challenging a December 2020 advisory opinion from the Health and Human Services (HHS) General Counsel that said that drug companies must provide 340B discounts on drugs dispensed at community pharmacies. Following a federal court decision in one of the cases challenging the advisory opinion, HHS chose to withdraw the advisory opinion. Maureen explains that HHS has said it does not need the advisory opinion to continue with the steps it needs to take to enforce the 340B statute. 

HRSA’s Next Steps

Maureen explains that HRSA can refer the drug companies’ actions to the HHS Office of the Inspector General (OIG). The OIG can impose civil monetary penalty fines on the drug companies. These fines can be imposed when drug companies knowingly and intentionally overcharge covered entities. The fines can be $6,000 dollars per overcharge. However, Maureen shares that drug companies are putting up a strong fight and that it will take time for this issue to be resolved. 

Next Steps for 340B Hospitals 

340B hospitals are waiting to be paid current and past refusals of 340B discounts. The refusals limit their ability to provide services for low-income and rural patients. Maureen recommends that hospitals continue sharing examples of the damage drug company refusals to provide 340B discounts is doing to patient care. Maureen says this type of advocacy led to HRSA issuing the May 17 enforcement letters to the drug companies and is needed to keep the pressure on the drug companies. She also invites listeners to attend the 340B Coalition Summer Conference in July to hear from top 340B experts and key officials regarding the contract pharmacy issue. 

340B Health Continues the Fight

340B Health is active in the litigation processes in various states. The organization is filing friend-of-the-court briefs describing the effects the drug companies’ actions have on covered entities and their patients and addressing incorrect information in drug companies’ briefs on how the contract pharmacy system works. Maureen shares that 340B supporters are fighting a strong fight and that the Department of Justice has shown strong support for providers and what the 340B statute requires. Maureen credits HRSA leadership and Secretary Becerra for HHS’ recent actions and the many patient and provider groups as well as members of Congress who have advocated for the drug companies to restore the discounts. 

Check out all our episodes on the 340B Insight podcast website. You also can stay updated on all 340B Health news and information by visiting our homepage. If you have any questions you would like us to cover in this podcast, email us at [email protected].

Resources 

1. New 340B Health Report on the Comparison of Medicare Beneficiaries Treated in 340B Hospitals, Non-340B Hospitals, and Independent Physician Offices
2. New Federal 340B Order Is Major Step Toward Restoring Drug Discounts
3. 340B Health Statement on Withdrawal of HHS Advisory Opinion on 340B Community Pharmacies
4. The Human Toll of Drug Company Restrictions on 340B 
5. 2021 340B Coalition Summer Conference  

This week, we are joined by Kyle Robb, a state policy and advocacy associate for the American Society of Health System Pharmacists (ASHP). Kyle discusses the rise in payer-mandated white bagging, why hospital pharmacists are concerned about the trend, and how health providers and patients are affected by this model. Before the interview, our news update covers the critical step the Health Resources & Services Administration (HRSA) recently took to enforce the law on drug companies that have refused discounts to 340B covered entities when drugs are dispensed at contract pharmacies.

The Differences Between White Bagging, Brown Bagging, and Clear Bagging. 

Kyle explains that clinician-administered drugs typically are distributed under the “buy-and-bill” model, where the provider purchases the drugs, administers them to the patient, and bills the health insurance plan. Under the white-bagging model, the drug is purchased through a specialty pharmacy affiliated with the insurance  plan, shipped via common carrier to the hospital or clinic location, and reimbursed via the pharmacy benefit, not the medical benefit. Brown-bagged drugs are purchased through the affiliated pharmacy and reimbursed under the pharmacy benefit as well, but those are mailed directly to the patient, who must bring the drugs to their clinic appointments. Clear bagging describes a situation in which the drug is purchased and distributed by a pharmacy under common ownership with the administering facility.  

The Harm That Payer-Mandated White Bagging Can Cause. 

White bagging adds external entities into the patient care process, creating more complexity in patient care coordination. Kyle explains that when facilities receive white-bagged drugs, they have no access to the drug pedigree information or to the same security protocols they have when receiving drugs from their wholesale partners. White bagging also can disrupt the administering facility’s ability to make “just-in-time” treatment decisions, can delay hospital discharges, and can cause unnecessary hospital admissions if a patient cannot receive their drug in time. Drug shortages, delivery delays, and mishandled shipments also can result in serious patient safety concerns.

White Bagging’s Impact On 340B Discounts and Covered Entities. 

340B covered entities do not receive 340B discounts on white-bagged drugs, as the drug is purchased through plan-affiliated pharmacies and not through the administering facilities’ wholesale partners. Kyle explains that in addition to these lost savings, hospitals can incur additional costs, as they must store, segregate, and prepare the drugs for specified patients prior to administration without additional reimbursement. White bagging consumes additional hospital resources and can lead to more medication waste.

Payers’ Rationales for White-Bagging Mandates.

Payers believe white bagging saves them money. However, ASHP argues that the money is not saved but rather shifted to the providers. Payers can reduce their net drug costs by capturing more reimbursements through vertically integrated, plan-owned specialty pharmacies and pharmacy benefit managers (PBMs). 

How ASHP Is Addressing Payer-Mandated White Bagging.

ASHP’s position is that white bagging never should be forced on facilities and always should be a choice for the provider and patient to use in limited circumstances when patient safety can be ensured. Kyle shares that his association is advocating against the payer-mandated white bagging model at both the federal and state levels. It is urging the Food & Drug Administration (FDA) to require that administering facilities have access to drug pedigree information on white-bagged drugs. ASHP also is engaging with state legislatures and state boards of pharmacy on settling legal questions about which entity is responsible for white-bagged drugs that are mishandled. ASHP is working with states to pass patient-choice protections to prohibit insurance companies from forcing white bagging and is advocating to ban the unsafe practice of brown bagging. 

Check out all our episodes on the 340B Insight podcast website. You also can stay updated on all 340B Health news and information by visiting our homepage. If you have any questions you would like us to cover in this podcast, email us at [email protected].

Resources 

1. 340B Health statement on HRSA May 17 letters to drug companies 
2. 340B Health member update on contract pharmacy court case
3. ASHP statement on payer-mandated white bagging

It is the one-year anniversary of 340B Insight, and this week we are joined by Anne Webster, a nurse practitioner for UnityPoint Health Methodist in Peoria, Ill. Anne discusses how drug company restrictions on 340B pricing on drugs dispensed at community pharmacies have directly affected her patients living with diabetes and their ability to access the insulin and other medications they need to manage their conditions. Please note that the episode was recorded prior to the Health Resources & Services Administration (HRSA) announcing on May 17, 2021, that drug companies refusing 340B discounts to safety-net hospitals and providers on drugs dispensed at community pharmacies are in violation of the law and that they must offer 340B pricing and pay refunds. We will discuss this news in future episodes.

340B Increases Patient Access to Insulin  

Anne works in an endocrinology clinic, and her patients are living with complex cases of type 1 and type 2 diabetes. Her patients usually have several comorbidities and are underinsured. As one of the few 340B providers in the area, her clinic treats patients who travel up to two hours one way to receive care from Anne and access the insulin they need at the community pharmacy on the hospital campus. Through the community pharmacy partnership, Anne’s uninsured and underinsured patients were accessing highly concentrated insulin, reducing the frequency of injections per day. She explains that 340B pricing has helped patients obtain high-quality insulin and other medications at a price they could only afford with a discount. Anne says her uninsured and underinsured patients saved $1.2 million in out-of-pocket expenses per year by receiving their medications at UnityPoint Health Methodist’s community pharmacy. 

Patients Are Losing Access to Insulin and Other Medications  

After drug company refusals to provide 340B discounts on drugs dispensed at community pharmacies, Anne had to switch patients to lower-quality, less-concentrated insulin. This resulted in patients with worse glycemic control who were injecting a large volume of fluid under their skin, which can lead to health complications. Anne’s patients were very upset about the changes to their insulin and other medications. The insulin they often had to switch to must be injected through a vial and syringe setup. This is challenging for patients with vision and dexterity problems. 

Higher Costs for Patients 

In addition to taking insulin that is ill-suited for them, patients had higher costs due to the inability to access insulin at the community pharmacy. Anne shares that through the community pharmacy partnership, patients could access a month’s supply of insulin for less than $40. The insulin they often switched to can cost them up to $150 per month out of pocket.  

Patient Stories 

Anne also explains the stress the drug manufacturers’ actions have placed on her patients. She shares the stories of two patients who are living with diabetes and fall into the Medicare coverage gap. The first patient, a retired factory worker, has had his insulin prescription switched multiple times over the past year. The first time was when Eli Lilly refused to provide 340B discounts and the second time was when Novo Nordisk followed suit. Even though he since has gained access to insulin through a drug company patient assistance program, this took a long time. During that process, he experienced significant stress from the uncertainty about whether he could access the insulin he needs. The second patient is a retired police officer. He was accessing a medication from AstraZeneca for blood sugar and weight control that reduced the amount of insulin he needed. AstraZeneca’s decision to refuse 340B pricing on drugs dispensed at community pharmacies resulted in the patient losing access to the drug for a long time until a patient assistance program decided it would cover it. 

Check out all our episodes on the 340B Insight podcast website. You also can stay updated on all 340B Health news and information by visiting our homepage. If you have any questions you would like us to cover in this podcast, email us at [email protected].

Resources 

1. 340B Health and Allied Organizations Brief in AstraZeneca vs. HHS Federal Court Case About HHS Advisory Opinion Regarding 340B Community Pharmacies 
2. HHS Brief in AstraZeneca vs. HHS Federal Court Case About HHS Advisory Opinion Regarding 340B Community Pharmacies 
3. More States Acting To Protect 340B Safety-Net Hospitals
4. Rising Insulin Prices Impact Patients’ Diabetes Management, Holistic Wellness
5. Episode One: HRSA’s OPA Response to COVID-19 with Rear Admiral Krista Pedley– May 18, 2020

This week we are joined by Sean Dickson, director of health policy for West Health Policy Center. Sean is an expert on the U.S drug system and focuses on policies that reduce prescription drug costs. Sean discusses why drug prices are so high, his research on how 340B fits into the drug pricing policy conversation and affects overall drug pricing, and what approaches policymakers can take to curb high drug prices. Before the interview, our news update shares developments on drug pricing bills recently introduced in Congress and how a group of hospital and pharmacy organizations, including 340B Health, wrote to HHS Secretary Xavier Becerra about what the department can do to stop drug manufacturers from refusing 340B discounts on drugs dispensed at community pharmacies. 

Why Drug Prices Are High

Sean explains that the U.S. health care system allows drug manufacturers to choose prices, and manufacturers choose the most profit-maximizing price for each drug that they can achieve. The prices do not reflect the cost of research and development or even the drug’s therapeutic benefits. Sean provides more details on what factors affect the manufacturer’s choice, including which types of payers – commercial or government – will be providing drug coverage to the patients taking the drug.  

340B Puts Downward Pressure on Drug Prices

While some have argued that 340B causes higher drug list prices, Sean discusses how his research on drug pricing demonstrates the opposite. In one of his studies, Sean examined why new hepatitis C drugs were coming to market with lower list prices than their competitors. He found it was more profitable for drug manufacturers to reduce list prices for hepatitis C drugs, which often are provided through 340B covered entities, and reduce the manufacturers’ 340B and PBM obligations. This demonstrated that 340B discounts can lead to lower list prices.  

Research on the 340B Inflation Penalty 

Under 340B, inflation penalties kick in when a manufacturer raises their prices at a pace greater than the inflation rate. Sean found in recently published research that these inflation penalties slow the growth of drug prices when a drug has a large percentage of its sales to 340B covered entities. The 340B program has been a model policymakers can look to when considering whether to expand the inflation penalties to the broader drug market. Sean further explains that if 340B ever were cut back, manufacturers likely would take larger price increases year-over-year, which would pass down to Medicare beneficiaries and could lead to seniors not adhering to their medication regimens due to the higher costs.  

Research Best Practices 

For listeners interested in conducting their own drug pricing and 340B research, Sean shares that there are plenty of quality data available publicly for examining drug spending and 340B’s role in the marketplace. For example, the Medicare prescriber utilization file is accessible for free and is a great place for researchers to start. This has been the starting point for many of Sean’s own research projects. 

Approaches to Slowing Drug Costs 

Sean recaps three areas policymakers can implement to curb drug prices. The first is capping drug price growth, possibly at the rate of inflation. However, this won’t stop new drugs from coming onto the market at high prices. To address this, new drugs could be priced under domestic reference pricing, which is basing the price on the historic costs of similar drugs, adjusted for the rate of inflation. Finally, Medicare or commercial entities could be authorized to negotiate with manufacturers directly.  

Check out all our episodes on the 340B Insight podcast website. You also can stay updated on all 340B Health news and information by visiting our homepage. If you have any questions you would like us to cover in this podcast, email us at [email protected].

Resources

1. Hospital and Pharmacy Groups Seek Action on Drug Company Violations of 340B Law  
2. HHS Considering Alternatives to ADR to Enforce 340B Statute on Contract Pharmacies 
3. Sean Dickson Research Article: Estimated Changes in Manufacturer and Health Care Organization Revenue Following List Price Reductions for Hepatitis C Treatments
4. Sean Dickson Research Article: Association Between the Percentage of US Drug Sales Subject to Inflation Penalties and the Extent of Drug Price Increases
5. Upcoming 340B Health Webinars