For more than four years, disputes between safety-net hospitals and drug manufacturers have continued to disrupt healthcare, with additional manufacturers revising their policies to restrict 340B Program pricing for drugs dispensed through contract pharmacies.
Currently, there are 42 drug manufacturers that have imposed distribution limitations on covered outpatient drugs dispensed through the 340B Program:
In response to the restrictions, 20 states have passed legislation to prohibit drug companies from restricting access to 340B Program pricing through contract pharmacies:
Below is a summary of the most current legal and legislative battles affecting the 340B Program since March and ideas for how your organization can respond to these changes. You can read about updates from earlier in the year here.
Manufacturer updates
April 2: Organon transitions contract pharmacy claims data submission to Truzo
Organon has announced that it will transition its contract pharmacy claims data submission process to Truzo, a platform operated by Kalderos, and discontinue use of 340B ESP for this purpose. Effective May 1, hospitals must designate their contract pharmacies and submit contract pharmacy claims data through Truzo to continue receiving 340B pricing on Organon drugs dispensed at contract pharmacy locations. Consistent with its existing policy, Organon will continue to limit hospitals to a single contract pharmacy for 340B pricing eligibility unless an applicable exemption applies. To qualify for 340B pricing under this policy, hospitals must submit the required claims data to Truzo within 45 days of dispensing a drug.
April 8: AbbVie sues HRSA related to 340B patient definition
AbbVie filed the lawsuit on April 8 in federal district court in Washington, D.C., seeking judicial approval to use its own, more restrictive interpretation of a “340B patient” when auditing covered entities. Specifically, the company is asking the court to permit it to conduct audits based on its proposed definition rather than the patient definition that the Health Resources and Services Administration has applied since 1996. AbbVie also is requesting a declaratory judgment that its interpretation reflects the best reading of the 340B statute.
April 13: AstraZeneca updates 340B distribution program
Effective May 1, all 340B covered entity types will be required to submit claims‑level detail for all 340B utilization, including contract pharmacy and in‑house pharmacy dispensing, for specified products. Under the policy, covered entities must submit all 340B‑eligible pharmacy and medical claims through the 340B ESP platform within 45 days of the dispense date to the patient. Consistent with other drug manufacturers that have implemented data‑submission requirements, AstraZeneca states that failure to provide complete, accurate, and timely data may result in the suspension of access to 340B pricing for the affected products until the required information is submitted. The policy further specifies that 340B pricing will not be available until AstraZeneca has completed validation of the submitted data.
April 15: Bristol Myers Squibb updates 340B distribution program
Similar to the changes AstraZeneca made, Bristol Myers Squibb now requires, effective May 1, that all 340B covered entity types submit claims‑level detail for all 340B utilization, including contract pharmacy and in‑house pharmacy dispensing, for specified products. Under the policy, covered entities must submit all 340B‑eligible pharmacy and medical claims through the 340B ESP platform within 45 days of dispense to the patient or the administration date. Bristol Myers Squibb states that it will use the submitted claims data to identify potential duplicate discounts, including duplicates involving Medicaid rebates, Medicare Part D rebates, and Medicare maximum fair price obligations under the Inflation Reduction Act. The data will also be used to assess eligibility for 340B replenishment orders.
April 20: Stemline updates contract pharmacy policy
Effective May 18, Stemline will become the 42nd drug company to implement restrictions on access to 340B pricing through contract pharmacies. Under the policy, covered entities without an in-house pharmacy are limited to designating a single contract pharmacy within the drug’s limited distribution network. In addition, Stemline will require hospitals to submit claims data for all 340B drugs dispensed through the designated contract pharmacy within 45 days of the dispense date, using the 340B ESP platform.
May 4: Biogen updates claims data policy
Biogen has become the latest drug manufacturer to condition access to 340B pricing on hospitals’ submission of detailed claims-level data for drugs dispensed through in-house pharmacies. Effective June 1, the policy applies to Avonex, Plegridy, Tecfidera, and Vumerity. To maintain eligibility for 340B pricing, hospitals must submit claims-level data through the 340B ESP platform within 45 days of dispensing each applicable drug.
May 5: Gilead transitions contract pharmacy claims data submission to Truzo
Gilead has announced that, effective June 15, it will transition from the 340B ESP platform to the Truzo platform for contract pharmacy designation and claims-level data submission purposes. Hospitals will be required to use Truzo to maintain access to 340B pricing for certain Gilead products dispensed through contract pharmacy arrangements. With this transition, Gilead becomes the fourth manufacturer to use Truzo, joining Organon, Alkermes, and Puma Biotechnology.
Legislative updates
Following are key 340B-related legislative actions that have occurred since early March and considerations for healthcare organizations for how to prepare for and respond to these evolving changes.
March 30: Washington state enacts new 340B contract pharmacy and reporting law
Washington state enacted a new law establishing protections for 340B covered entities’ use of contract pharmacies. It also imposed new reporting requirements on covered entities. In response, two pharmaceutical manufacturers promptly filed lawsuits seeking to prevent the law from taking effect. The law bars drug manufacturers from restricting the delivery or acquisition of 340B drugs to covered entities and their contract pharmacies, except as required by federal law, and prohibits conditioning 340B pricing on the submission of data not explicitly required under federal law.
March 31: Appeals court blocks West Virginia’s 340B law
A federal appeals court panel has invalidated West Virginia’s 340B contract pharmacy law, becoming the first appellate court to side with drug manufacturers on these statutes. If the decision stands, it will create a split among federal circuits, increasing the likelihood of further litigation and potential U.S. Supreme Court review.
March 31: Federal court vacates HRSA’s GPO prohibition policy
A federal court has set aside a key federal policy governing how certain 340B covered entities purchase their initial outpatient drug inventories, a ruling that could carry significant financial and operational implications if it is upheld. The court vacated HRSA’s 2013 guidance that reinterpreted statutory restrictions on the use of group purchasing organizations for outpatient drugs, finding that the agency failed to adequately justify its revised interpretation of the 340B statute.
May 5: Federal court appeals HRSA child site policy ruling
The federal government indicated that it is appealing a recent federal district court ruling that found HRSA acted unlawfully when it implemented registration requirements that delayed 340B Program access for newly established child sites. HRSA had suspended enforcement of these requirements beginning in 2020. The district court’s decision effectively sets aside child site registration requirements that were in place from 1994 through 2020 and that frequently delayed hospitals’ ability to access 340B-priced drugs at new outpatient locations for extended periods, in some cases for months or nearly two years.
What can healthcare organizations do?
Engage internal and/or external legal counsel to assess legal implications of each manufacturer’s exception policy and the risks associated with sharing data with manufacturers. Assess prescription claims data to determine the impact of these manufacturers’ limited distribution models on your 340B Program savings over the past year.
File overcharge notices with HRSA for manufacturers that charge more than the ceiling price for a covered outpatient drug. Apexus has provided a template for submitting overcharges, which can be found here.
Continue advocacy and education efforts around how your covered entity is meeting the true intent of the 340B Program by using savings generated from purchasing discounted drugs to provide comprehensive care to more patients within your community.
Help raise awarenessof the financial impact to your organization from drug company restrictions on contract pharmacies by sharing financial impact data with your elected officials in Washington. Urge them to push for an end to these drug company actions.
Use social media platforms and/or consider working with your local media to create an opinion piece from your organization regarding the impact manufacturer actions have had on prescription drug savings and your organization’s ability to serve patients. Correlate how 340B benefit loss affects patient care and healthcare service offerings.
The 340B landscape continues to evolve rapidly. If you have questions about the information in this article, or if Kodiak can assist you with managing your 340B compliance program, please reach out to Susan Brankin.
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