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In response to the Request for Input on Modernizing the 340B Drug Pricing Program issued by Representative Greg Walden and Senator Lamar Alexander, PhRMA has outlined a number of commonsense ways policymakers can get the 340B program back on track and refocused on patients.

• Ensure the program delivers broader program accountability and transparency requirements for patients. “Currently, standards are highly variable, and in some instances woefully inadequate, across the range of providers participating in the 340B program. As a result, policymakers and stakeholders are unable to evaluate the program, quantify its benefit to patients, or objectively confirm that patients fully benefit from the program discounts. … At a minimum, all covered entities should have similar reporting requirements to ensure that vulnerable patients benefit from the program.”
  
  
• Clarify which patients are eligible for the program so we can ensure those patients are in fact benefiting. “Despite this centrality of ‘patient’ to defining the program’s scope and assuring that statutory program integrity requirements are met, it has been a quarter of a century since the 340B program was created, and the patient definition has yet to be more clearly defined. As a result, there is broad consensus that the lack of specificity in the current (1996) patient definition invites abuse. … The lapse in guidance defining 340B eligible patients is glaring given the 340B statute creates an absolute prohibition on covered entities transferring or selling 340B drugs to individuals who are not patients of the covered entity. Therefore, a clear definition of ‘patient’ is a crucial element of the program and critical to the integrity and long-term sustainability of the 340B program.”
  
  
• Strengthen eligibility criteria for 340B hospitals and their offsite outpatient facilities to ensure 340B discounts are going to true safety-net facilities and that child sites are subject to the same standards as their parent hospital. “Current standards are not correlated with the level of care delivered to vulnerable patients or the level of charity care at 340B hospitals. This misalignment calls into question whether the program is focused on fully benefiting low-income patients and other vulnerable patient groups. Updating eligibility metrics should account for the degree to which 340B covered entities continue to serve a meaningful and measurable safety-net function relative to typical non-340B providers.” Similarly, “[t]he current 340B hospital ‘child site’ policy is outdated, increases costs, and drives consolidation that can negatively impact patient access to care. At a minimum, 340B hospitals should be required to report how discounts are used at each of these child sites. In addition, as policymakers consider broader restructuring of hospital 340B eligibility standards to deliver more benefit to patients, the appropriate role of child sites must be addressed.”
  
  
• Examine the role of contract pharmacies in the program and whether they are in fact providing clear benefit to needy patients. “Researchers, economists, thought leaders, and Members of Congress have documented how contract pharmacy arrangements’ growth contributes to the program’s ballooning size without any accompanying guarantee of patient benefit. … Without providing a clear benefit to needy patients, as the 340B program was intended to do, the dramatic expansion of contract pharmacy arrangements into the for-profit, retail pharmacy sector represents an unreasonable and unnecessary risk to program compliance. … It is important to note that the term ‘contract pharmacy’ is not mentioned in the 340B law or in any regulations.”
  
  
• Take steps to restore confidence that the program is helping patients through improved audit and program violation enforcement. “Although 340B / Medicaid duplicate discounts are statutorily prohibited, a drug with a negotiated commercial or Medicare Part D rebate can also be subject to a 340B discount due to the lack of appropriate mechanisms to identify 340B-eligible claims. As a result, manufacturers could end up paying a 340B discount and a plan / PBM rebate on the same claim. … There are no program requirements on PBMs or contract pharmacies to identify 340B claims properly, and some of the profit-driven motives previously mentioned could have unintended affordability consequences for patients.”

While well intentioned, over the years, there has been a lack of clear evidence that the 340B program is working in the best interest of patients. Instead, there has been growing evidence that needy patients aren’t benefiting. From the GAO which found that more than half of 340B hospitals surveyed reported that they did not share discounts with patients at their contract pharmacies to the New England Journal of Medicine which found no evidence that expansion of the 340B program has resulted in improved care or lower mortality among low-income patients. 

Misaligned financial incentives in the 340B program have led to winners and losers – and more often than not, patients are the losers. That’s a problem. The 340B program must be fixed to ensure patients are benefiting.

Read PhRMA’s full comments here, and learn more about the 340B program are PhRMA.org/340B.

Nicole Longo

Nicole Longo is Deputy Vice President of public affairs at PhRMA focusing on Medicare, 340B, importation and more. She previously worked for a D.C.-based public affairs firm where she assisted a wide range of clients with communications efforts on everything from trade policy to agriculture policy to health care policy. Outside the office, Nicole can be found trying new restaurants (usually Italian), taking an occasional barre class and cheering on the Cincinnati Bengals.

Nicole Longo

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