By: Carolyn Commers
As most participants in the 340B program know, there has been a fury of activity surrounding contract pharmacy arrangements. Currently, there are 21 drug manufacturers imposing limitations on contract pharmacy arrangements for covered entities. Stemming back to August of 2020, health centers have lost millions of dollars in savings that would have been used to support patient services. This loss directly harms patients because health centers have fewer resources to provide services and cover uncompensated care.
But how did we get here? The story starts much earlier than the summer of 2020. Way back in February of 2018, HRSA issued an audit finding report to a South Carolina health center that had undergone an OPA audit. HRSA informed Genesis Healthcare, Inc, that it intended to revoke their 340B participation and require paybacks to manufacturers due to their viewed non-compliance with the statute’s definition of an “eligible patient”. Genesis disagreed with the finding and subsequently filed a lawsuit. HRSA decided to vacate the audit findings and reinstated Genesis into the 340B program. The US Justice Dept dismissed the case, upon HRSA’s request. However, Genesis appealed, citing that merely vacating the audit findings does not resolve the issue of the unclear interpretation and guidance. In early July 2020, HRSA issued statements avowing that its power to enforce 340B policies contained in guidance is limited unless there is a clear violation of the 340B statute. HRSA maintained that the contract pharmacy guidance established in 2010 remains in effect, “however, guidance is not legally enforceable. Without comprehensive regulatory authority, HRSA is unable to develop enforceable policy that ensures clarity in program requirements.”
Concurrent with this declaration, manufacturers began testing the limits. Eli Lilly was the first to stop providing 340B discounts on drugs shipped to contact pharmacies in July 2020, and many more jumped on the bandwagon shortly after that. Thus, the string was pulled, and the sweater unraveled…
HRSA referred a number of these manufacturers to the OIG for violating the 340B law, and several drug companies then filed lawsuits to counter. Fast forward 3 years to the current day, nothing has been resolved, and community health centers continue to be cut out of millions of dollars in savings. Add the rest of the affected covered entities, and the number registers in billions.
What can health centers do to mitigate the harm and strive for some resolution? One of the most important actions is to share your 340B program’s story. Several bills have been proposed to Congress with variations on how to “fix” the 340B problem. While none have passed yet, there are some commonalities. Most contain some language requiring transparency and reporting on 340B savings. Thus far, for community health centers, there are no specific reporting requirements for 340B activity, earnings, and use of 340B funds. The proceeds are aggregated in our routine reports like UDS, Medicare Costs Reports, FFRs, but nothing specific. It seems highly likely that there will be some form of reporting required in the future. So, why not gear up for that right now, and while you’re at it, prepare an impact summary of your program? An impact statement should provide more than just the net savings dollar amount. This is an opportunity to demonstrate the valuable patient-centered services those proceeds support. Health Centers truly do a fantastic job using the savings to provide a myriad of expanded patient services, but they don't often tell the story. By connecting the savings to support, your health center can show the direct relationship to reaching more eligible patients and providing more comprehensive services. This type of executive summary of your 340B program can and should be used for advocacy efforts through primary care associates, NACHC, and your federal and state lawmakers.
If you are interested in learning more, please reach out to Carolyn at: carolync@communitylinkconsulting.com.