Congress Seeks Input on 340B Policies and Drug Shortages
by Ellen Riker, Hemophilia Alliance Advocacy Consultant

Senate RFI on 340B – Last month we reported on a Request for Information (RFI), issued by a bipartisan group of Senators, including Senators Tammy Baldwin (D-WI), Shelley Moore Capito (R-WV), Ben Cardin (D-MD), Jerry Moran (R-Ks), Debbie Stabenow (D-MI), and John Thune (R-SD), seeking ideas for how Congress can “further the original intent of the 340B program, strengthening the program’s ability to support entities serving eligible patients.”

The Hemophilia Alliance submitted a letter, developed by the Alliance staff leadership, board and the Artemis Policy Group team. The letter highlights the importance of the 340B Program to the HTCs and responds to the Senators specific questions on potential policy changes related to contract pharmacies, HRSA/Office of Pharm Affairs limited regulatory authority, requirements on the use of program income and issues related to PBMs discriminatory practices.

Other responses to the Senate RFI can be found at https://www.drugchannels.net/2023/08/what-i-and-others-told-senate-about.html?m=1. It is not clear how quickly or if the group of Senators will compile the comments received and develop legislation. The group is seeking solutions that would be accepted by a majority of stakeholders in the program.

House Committee Seeks Input on Drug Shortages – On July 28, the Chair of the Energy and Commerce Committee, Cathy McMorris Rodgers released policy proposals to address recent drug shortages in the US. The Committee has held multiple hearings and sought input through a Request for Information released earlier this summer. The policy changes under consideration would impact FDA authority as well as Medicare, Medicaid and 340B.

The focus of the proposed 340B changes are:

• Exempts generic, sterile injectable drugs with at least one indication for a serious disease or condition that are made by more than one manufacturer from being required to provide 340B rebates.
• Requires the Government Accountability Office (GAO) examine the number of generic drugs that are subject to 340B penny pricing, or that have costs equal to $1 or less, and evaluating the number of such drugs that have experienced shortages within the past decade.
• Tasks the Health Resources and Services Administration (HRSA) with issuing guidance to covered entities on permissible ways to share drugs during shortages without violating prohibitions on diverting drugs purchased through the 340B Program to patients not otherwise eligible in the Program.

Other policy issues of interest to HTCs include:

• Requires CMS to gradually phase-out the rebate reduction or waiver for drugs exiting a shortage. Currently, there is a 75% reduction in their penalty in the first quarter post-shortage; a 50% penalty reduction in the second quarter post-shortage; a 25% penalty reduction in the third quarter post-shortage; and a 10% penalty reduction in the fourth quarter after a drug comes out of shortage for Part B drugs and a 40% penalty reduction for Medicare Part D drugs. Additionally, HHS cannot condition waivers or reductions of the rebate penalties on the duration of a supply chain disruption or shortage.
• Requires HHS to study Medicare reimbursement of generic sterile injectable drugs, and other Part B drugs in shortage, for the purpose of recommendations on how to transition these drugs to market-based pricing.
• Requires CMMI to test market-based pricing reimbursement policy for generic sterile injectable drugs, which will receive payment based on commercial net pricing or a drug’s wholesale acquisition cost (WAC).
• Requires HHS to study Medicare coding policies for generic sterile injectables and other Part B drugs in shortage, for the purpose of providing recommendations to update Medicare billing and coding policies to mitigate drug shortages.
• Requires that hospitals, on their Medicare Cost Report, must report remuneration from GPOs, including remuneration tied to an ownership stake in a GPO, as a condition of participation in Medicare.
• Requires the Medicare Payment Advisory Commission to make recommendations for changing the add-on payment for Medicare Part B drugs to a flat fee-based payment from the current structure, which bases the add-on payment as a percentage of a drug’s price.

To improve transparency, the legislation:

• Requires Group Purchasing Organizations to report annually to the HHS OIG and the HHS Secretary their written agreements and disclosures for the purpose of review under the safe harbor.

With regard to the FDA, the legislation:

• Allows 503B compounding facilities to compound a drug within 30 days of appearing on FDA’s drug shortage list and to distribute and dispense a compounded drug within 180 days of such drug appearing on the drug shortage list.

A section-by-section analysis of the legislative concepts can be found at Stop Drug Shortages Act SBS (d1dth6e84htgma.cloudfront.net). The call for input as well as links to the draft legislation and hearing records can be found at Chair Rodgers Unveils Proposal to Address Root Cause of Drug Shortages Facing American Patients (house.gov).

The Alliance Advocacy and Payer Committees will be meeting to review these proposals and to develop a response to the request for comments, which will be shared in the next Newsletter.