Now is time for all Covered Entities participating in the 340B Drug Pricing Program – the key stakeholders – to pay close attention to the November elections. Collectively, the White House, Senate and House of Representatives have the power to make legislative changes to the Program, as well as influence the responsible government agency, the Health Resources and Services Administration (HRSA), and its Office of Pharmacy Affairs (OPA).
Elevating the importance of the November elections, the White House Office of
Management and Budget (OMB) reported online that it received 340B Program
Omnibus Guidelines (“the Guidelines”) from HRSA on September 1. Whatever direction
HRSA, with OMB input take the Guidelines there is potential for legislative actions.
Should the Guidelines maintain the status quo or offer opportunities to expand the
Program, it is logical to expect a legislative assault on the program fueled by the drug
manufacturers stated dissatisfaction with the Program. Should the Guidelines cause the
program to contract, Covered Entities and their 340B partners will need to actively
engage both the Senate and the House of Representatives to get the legislation needed
to optimize the Program.
With respect to the Federal regulations, including the Guidelines, OMB’s core mission
is to serve and implement the President’s vision across the Executive Branch. To
accomplish this, OMB evaluates the economic and broader potential impacts of
regulations, as part of the regulatory decision-making process. Typically, OMB reviews
result in either approving the proposed rules, in which case they are published in the
Federal Register and become effective; or sending them back to the agency that
promulgated them, for further consideration. Reviews are normally completed in 90 days.
If OMB follows its normal course, and does not ask HRSA to make any major changes,
the Guidelines should be released in the late November/early December time-frame,
after the elections.
Separately, we note that there is already one Congressman, Christopher Collins (R-NY),
who serves on the House of Representatives Energy and Commerce Committee’s health
sub-committee, who is on record stating that 340B legislation could surface in early
2017. At an August industry conference, Congressman Collins suggested that reforms to
the Program could parallel future efforts to renew Medicare extenders, which end in
2017, or the reauthorization of funding for the Children’s Health Insurance Program.
Neither candidate has articulated, nor is expected to articulate a view on the 340B Program.
However, the candidates’ divergent views on the Affordable Care Act (ACA) may
provide a roadmap for their potential actions. Clinton’s view that the ACA should be defended
and expanded appears to align with a positive view of protecting the Program.
Trump’s view that the ACA needs to be completely repealed appears to align with a negative
view of protecting the Program. A repeal process would provide numerous opportunities
to introduce legislation negative to the Program.
The Senate Races
Currently, the United States Senate consists of 54 Republicans, 44 Democrats and 2
Independents. Twenty-four of the Republican Senators, 10 of the Democratic Senators,
and none of the Independent Senators are up for election. Democrats are expected to
make a significant gain in this election cycle, and are likely to regain the majority. This
change would be accompanied by gaining control of the highly influential Health, Education,
Labor and Pensions (HELP) Committee. Under Republican control for the last 2
years, the Committee has been attempting to take a critical look at the Program through
studies conducted by the General Accountability Office and the Office of the Inspector
General. See Table 1 for information on all 34 Senate races.
The House Races
The House of Representatives consists of 435 members who are elected biennially. The
current make-up of the House is 247 Republicans, 187 Democrats, 0 Independents and
2 vacancies. All seats are up for election in November. Current predictions indicate that
the Democrats will pick up a significant number of seats, but have only an outside
chance of gaining the majority. Control of the critically important Energy and Commerce
(E&C) Committee is expected to remain in Republican hands. See Tables 2 and 3 for
information on the House of Representative races.
It is important to note that views of the Program do not align 100% by either political
party. Many Republican members of Congress have been supportive of the Program.
Evidence of this bipartisan support is best seen in the July 25, 2014 letter to the House’s
E&C Committee, which was signed by 76 Congressmen, and the July 28, 2014 letter to
the Senate’s HELP Committee, which was signed by 31 Senators. Senators and Congressmen
interested in the Program tend to focus on whether or not “it is working.” Typically,
support for the Program comes when a Senator/Congressman sees real-life examples
of the Program working as planned – Covered Entities enabled to stretch scarce Federal
resources as far as possible, reaching more eligible patients and providing more comprehensive
How can Covered Entities make sure that the Program remains intact and that changes
focus on expansion and optimization, not contraction? We urge you to follow the following
four simple steps: We are confident they will be highly effective.
Know where the candidates stand on healthcare issues, in general, and the
340B program specifically.
Make sure the candidates know how important your work is to their state
and/or district. Support your statements with facts, including how many people
you employ and how many patients you treat. Discuss how critical your Covered
entity is to their constituency.
All elected officials want to know if the Program is working as it should. Give
them your success story – discuss gains in treating more patients, creating innovative
programs to improve health and opening new clinics to serve more patients.
The most efficient way to let candidates know about your Program is
through opinion/editorial pieces placed in local newspapers.
Opponents to the Program have been very effective in “changing the facts.” Let
the candidates know the following.
- The program was not established to exclusively benefit the uninsured. The program
was enacted to eliminate a loophole in the 1990 Medicaid Drug Rebate
Program that resulted in Covered Entities experiencing significant increases in
the cost of pharmaceuticals for their outpatients. As stated by HRSA, “The 340B
Program enables covered entities to stretch scarce Federal resources as far as
possible, reaching more eligible patients and providing more comprehensive
- Drug manufacturers are not mandated to participate in the Program. They are
only required to participate, if they elect to make their drugs eligible for purchase
by State Medicaid Agencies.
- The size of the 340B discount is determined by the drug manufacturers’ actions
not the regulator’s. The initial 340B discount is statutory and nearly equal to the
discount that State Medicaid agencies receive. However, the discount increases
if the manufacturer increases the price of its drug at a rate above the increase
of the Consumer Price Index for inner cities. Rapid or prolonged increases in
prices by a manufacturer are the only pathway to the 340B price of a drug declining.
The fact that many drugs have a $0.01 340B price is testament to drug
manufacturers’ decisions to increase prices both rapidly and consistently.
- The size and the “cost” of the program to the drug manufacturers are two different
calculations. Drug manufacturers often combine the two, making it appear
that the size of the Program is equal to the amount of dollars they are contributing
to the Program. This is incorrect. Current industry estimates indicate that
$10-$12 billion worth of drugs were purchased from drug manufacturers at
340B prices in 2015. That is $10-$12 billion of cash paid to the drug manufacturers
by Covered Entities. Assuming a 340B discount was not available, Covered
Entities would have paid $12 to $15 billion for these same drugs. The net cost to
the drug manufacturers, therefore, ranges somewhere between $2-$5 billion.
This represents a very small percentage of the HHS’ estimated $457 billion
spent on drugs in 2015.
The entire Wellpartner Team is here to serve as an information source for 340B-related
news and analysis, and to partner with you to advocate on behalf of the lives and communities
serviced. Please call or email us, if we can assist you.