2020 was a tumultuous year for virtually everyone and everything, and the 340B Program was no exception. As we outlined in previous articles, many drug manufacturers have decided that the Health Resources and Services Administration’s Office of Pharmacy Affairs (“HRSA OPA”) guidance on contract pharmacy arrangements is no longer binding. Accordingly, many drug manufacturers have curtailed selling 340B-priced drugs based on contract pharmacy encounters, causing a significant disruption in operations and loss in revenue for all types of 340B covered entities. Finally, in keeping with the “roller coaster” nature of the year, the Department of Health and Human Services (“HHS”), the agency that generally oversees HRSA OPA, issued an Advisory Opinion on December 30, 2020 stating the law requires manufacturers offer 340B pricing on appropriate drugs dispensed by contract pharmacies.
While we addressed recent wins for 340B covered entities concerning manufacturer transparency in a previous article, Merck Sharpe & Dohme Corp. (“Merck” or “Manufacturer”) now appears to seek its own access to 340B covered entity data in a different fashion.
Specifically, over the past few weeks, Merck has sent letters to numerous 340B covered entities substantially in the form below seeking access to all contract pharmacy claims data for its products. The Manufacturer letter requests that the covered entity “share 340B Program contract pharmacy claims data for [its] products” so the Manufacturer may “use this data to match against rebate claims it receives to ensure it isn’t paying duplicate Medicaid discounts and duplicate discounts on Medicare Part D and commercial utilization through [its] contracts with commercial payers[.]” This would involve the 340B covered entity uploading the requested data every two weeks via a dedicated portal. Continue Reading
On April 24, 2020, the Centers for Medicare and Medicaid Services (CMS) finalized and published a survey intended to capture the actual amounts paid by 340B covered entities (excluding critical access hospitals) for 340B drugs. CMS then intends to use the data collected from the survey to adjust the Medicare Part B reimbursement rate for 340B drugs purchased by certain covered entities. This survey is an offshoot of the ongoing litigation surrounding the Medicare Part B payment reductions that CMS imposed on 340B drugs for certain 340B covered entities, and reflects a continued effort by CMS to reduce Medicare Part B reimbursement despite recent judicial setbacks. We discussed these payment reductions and the ongoing litigation in a prior article.
As the COVID-19 crisis continues to unfold, the Health Resources & Services Administration Office of Pharmacy Affairs (HRSA OPA) has taken unprecedented steps to provide 340B Program participants with additional flexibility to help meet surging patient demand. At the highest level, HRSA OPA acknowledges that “this public health emergency may warrant additional flexibilities, especially to affected 340B covered entities.” Continue Reading
On January 10, 2020, the Government Accountability Office (GAO) released a report which “found weaknesses in the Health Resources and Services Administration’s (HRSA) oversight [of the 340B Program] that may result in some hospitals receiving discounts for which they are not eligible.” The GAO report primarily focused on the extent to which HRSA is monitoring and reviewing nongovernmental hospitals’ contracts with state or local governments. These contracts, required by statute as a condition of participation in the 340B Program, must be between the nongovernmental hospital and a unit of state or local government, and must indicate that the hospital will provide health care services to low-income individuals not eligible for Medicaid or Medicare.
While much attention has been paid to the ongoing litigation related to the ongoing 340B Medicare Part B payment reduction litigation (which is now pending before the US Court of Appeals for the DC Circuit), new legislation at the state level may also have a significant impact on covered entity reimbursement for 340B drugs.
The Centers for Medicare & Medicaid Services (CMS) “respectfully disagreed” with a recent federal district court’s “understanding of the scope of CMS’ adjustment authority” in making cuts to Medicare Part B reimbursement for drugs purchased through the 340B program, saying it plans to continue its 28.5 percent reduction in reimbursement while it pursues an appeal in federal court.
340B Medicare Part B Adjustment Litigation Update
In the latest development of the ongoing 340B Medicare Part B payment reduction controversy, US District Judge Rudolph Contreras again concluded that the Department of Health and Human Services (HHS) exceeded its statutory authority in implementing a reduced Medicare reimbursement rate for 340B Program drugs for 2019. In issuing the opinion, the court relied upon the same analysis it employed to declare the same 2018 reimbursement reductions unlawful. As such, the court has enjoined HHS’ proposed Medicare reimbursement reductions for both 2018 and 2019. Continue Reading
On March 11, 2019, the President delivered his proposed 2020 budget to Congress. While a President’s budget proposal is the beginning of a lengthy budget process, this proposed budget nonetheless keeps the 340B Program in the national focus and delineates the President’s position on desired 340B Program changes.
CVS Caremark has decided not to implement reimbursement reductions which may have had adverse effects on Covered Entities and their retail pharmacies (including contract pharmacies). This decision, coupled with the recent court decision invalidating certain aspects of the proposed Medicare Part B payment reductions for 340B drugs, provides some positive news for these Covered Entities after years of uncertainty over the future of the 340B Program.