Axios Pro: Health Care Policy

February 21, 2024

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1 big thing: 340B reforms tempt Congress (again)

Illustration: Brendan Lynch/Axios

An overhaul of the 340B drug discount program is again tempting some lawmakers on the Hill, despite an already formidable health care to-do list, Victoria reports.

Why it matters: The program has been a magnet for conflict, drawing drugmakers, hospitals and other providers into a thicket of litigation and state legislative fights.

  • Congress could have an opening to set new guardrails for dispensing discounted drugs and clarify reporting requirements and federal enforcement powers.

Yes, but: The lawmakers still haven't settled on basics like the definition of a 340B patient, and they face the same gridlock that's stalled numerous other health bills.

Driving the news: A recent legislative draft by six senators — John Thune, Debbie Stabenow, Shelley Moore Capito, Tammy Baldwin, Jerry Moran and Ben Cardin — seeks to resolve some of the biggest friction points in 340B.

  • By stipulating that drugmakers must provide discounted prices wherever their products are dispensed, it would respond to the growing number of manufacturers that have restricted when providers can use 340B discounts at contract pharmacies.
  • Hospitals, community health centers and other 340B entities maintain that the drugmakers' actions are unlawful and threaten patient access. The drugmakers say the limits enhance program integrity.
  • The draft also clarifies that off-site outpatient facilities, or "child sites," must be wholly owned by and clinically and financially integrated with an affiliated hospital to be eligible for 340B discounts.
  • And it would require 340B facilities to detail the number of people who received drugs at a discounted price and how the savings are used, along with other oversight measures.

What the draft doesn't contain is a definition of a 340B patient. That's crucial, because critics in the pharmaceutical industry say the program has strayed from its safety net purpose and is exploited to pad hospitals' bottom lines.

  • Drugmakers say the current patient definition is too expansive, while providers maintain they're using language in the 1996 law that established the program.
  • "Patient definition is going to matter a lot," said Peggy Tighe, a principal at Powers Pyles Sutter & Verville and a 340B lobbyist for Ryan White clinics. "The senators left an intentional hole because they know they need more information to sort out if there's a reason to change patient definition."

The big picture: The congressional efforts are running parallel with those in state legislatures, with several recently passing bills requiring drugmakers to provide discounts to contract pharmacies.

  • There's also a tangle of court cases that take up how the Health Resources and Services Administration polices the program — including whether the agency can require delivery of discounted drugs to an unlimited number of contract pharmacies.

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