The Health Resources and Services Administration’s (HRSA) rebate model pilot marks an important first step in bringing greater transparency and accountability to the 340B hospital markup program which has limited oversight. PhRMA underscores this point in a letter submitted in response to HRSA’s request for feedback on the 340B Rebate Model Pilot Program.
PhRMA stands ready to engage with all stakeholders and HRSA to ensure the successful implementation of the pilot program in an effort to improve program integrity.
Four things to know about the rebate model pilot:
- It can prevent illegal duplicate discounts. Manufacturer rebates have been used for decades in other federal programs and should prove to be one of the most effective tools to prevent illegal 340B duplicative discounts.
- Zoom in: In 2019, when the program was less than half its current size, it was estimated that as much as $1.5 billion in duplicate discounts were claimed by participating hospitals and clinics.
- It is consistent with how hospitals already operate. Most participating hospitals and clinics use a “replenishment model,” meaning they purchase medicines at the list price and receive a discount only after there are sufficient purchases eligible to “replenish” at the 340B price.
- It won’t require hospitals to float significant amounts of money. The HRSA rebate notice requires that manufacturers pay 340B claims within 10 days, which means that in most cases hospitals will receive rebates before they have to pay their wholesalers.
- It can save taxpayer dollars: A Rebate Model will help spur a larger private sector role in addressing operational challenges created by the Inflation Reduction Act, lessening federal involvement and saving taxpayers money.
What PhRMA is saying:
- On implementation: “PhRMA and our members stand ready to work to ensure the successful implementation of the Rebate Pilot as described in the HRSA notice. Our members are committed to engaging in good faith with HRSA and covered entities to ensure a successful pilot and expect that all stakeholders will do the same.”
- On expansion: “HRSA should quickly expand this Rebate Pilot to all 340B covered outpatient drugs and allow for the broad use of rebates in the 340B program. This would be an important step towards safeguarding the program, without sacrificing support for true safety net providers and the patients they serve.”
- On taxpayer impact: “We anticipate that the Rebate Pilot will spur a larger private sector role in addressing 340B compliance challenges, which have been exacerbated by the Inflation Reduction Act (“IRA”), thereby lessening federal burden and saving taxpayers money.”
The bottom line: Implementing the Rebate Model Pilot offers a straightforward and efficient way to increase transparency and the integrity of the 340B program. The notice released by HHS is a positive first step towards leveraging this solution to efficiently ensure that program rules and requirements are met.
Looking ahead: HRSA should expand the pilot to all 340B drugs and allow for the broad use of rebates in the program. PhRMA appreciates the opportunity to weigh in on this important issue and looks forward to continued dialogue with all stakeholders to ensure the success and rapid expansion of this pilot.
Learn more at phrma.org/340B.
Elise Shutzer
Elise Shutzer currently serves as Vice President of Public Affairs at PhRMA, leading issue communications for key topics including cost and access, hospitals, as well as strategic insights which oversees polling and message research activities. Shutzer is a seasoned leader with extensive experience in public policy advocacy, grassroots and public affairs. She most recently served as the Global Corporate Issue Head for Sustainability and Circularity at ExxonMobil leading advocacy campaigns on plastic waste, the circular economy and other environmental issues. Previously, Shutzer ran the energy and environmental grassroots and coalition development program at The Pew Charitable Trusts, and she spent over a decade at the Dewey Square Group, a prominent public affairs and communications firm.
Elise Shutzer