Momentum for drug discount program reform

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May 30, 2024 View in browser   By Ben Leonard and Chelsea Cirruzzo Presented by  With Carmen Paun Driving The Day Sen. John Thune is part of a Senate working group that aims to reform the 340B drug discount program. | Francis Chung/POLITICO 340B IN THE CROSSHAIRS — A bipartisan and pharmaceutical industry-backed push in Congress to reform the controversial 340B drug discount program has gained steam. The program, established in the 1990s, mandates drugmakers to sell outpatient drugs at discounts to hospitals, community health centers and many provider-based rural health clinics. Lawmakers are hoping to make the program more transparent and increase oversight. The trend: The program has grown substantially since its inception, with participation from a wider range of providers and an increase in the amount of drugs bought. Facilities purchased more than $53 billion in discounted drugs in 2022, up from $7 billion a decade prior. Pharmaceutical companies have argued that the program has deviated from its safety-net mission, with hospitals purchasing lower-cost drugs and charging patients and insurers higher prices. “We couldn’t disagree more,” Maureen Testoni, president of 340B Health, a nonprofit organization of hospitals and health systems, told Pulse, saying that 340B hospitals’ “operating margins are meaningfully lower than non-340B hospitals.” The American Hospital Association has argued that the program allows hospitals to make the most of limited resources and offer more programs to underserved patients, in line with Congress’ intent. Aimee Kuhlman, AHA’s vice president of advocacy and grassroots, told Pulse that drug companies “spread misinformation” to limit “their commitment to underserved patients.” The policy: The House Energy and Commerce Oversight Subcommittee is set to examine potential reforms next week, and a bipartisan Senate working group is mulling changes. E&C Republicans introduced a bill this week that would set forth enforceable rules, bolster federal oversight, change the definition of a “patient” and establish criteria for contract pharmacy arrangements. The Senate working group, led by Sens. John Thune (R-S.D.) and Debbie Stabenow (D-Mich.), has floated a discussion draft that would bolster transparency and “prevent duplicate discounts and ensure proper accounting.” The group is also mulling how to define a “patient” in the program. Legislation is expected in the weeks to come. Thune has said he hopes to get 340B reforms into an end-of-year package. The lobbying battle: Pharmaceutical and hospital interests have ramped up lobbying on the issue in this Congress. Reforms could save drugmakers billions and hurt hospitals’ bottom lines. Brand-name drug lobby PhRMA has called for mandates that hospitals and contract pharmacies “pass-through” discounts to lower costs and for Congress to ensure that participants are “true safety-net entities” and provide “meaningful” charity care. "Tweaks around the edges or just doing one thing won’t solve the problem,” Nicole Longo, deputy vice president of public affairs at PhRMA, told Pulse. AHA has opposed proposals to “dramatically” expand reporting requirements and policies that would “scale back” or “significantly reduce the benefits” of the program. It wants to expand the program to reach more vulnerable people and backs “equitable and accountable” program integrity measures. WELCOME TO THURSDAY PULSE. We’re dying to know the story behind the engagement ring being posted for sale in the Rayburn House Office Building. Reach us and send us your tips, news and scoops at bleonard@politico.com or ccirruzzo@politico.com. Follow along @_BenLeonard_ and @ChelseaCirruzzo.   A message from PhRMA: The 340B drug pricing program is supposed to help vulnerable patients access medicines at qualifying hospitals and clinics. It’s meant to be a safety net for those who really need it. So why is the 340B program padding profits for large hospitals, PBMs and chain pharmacies? Let’s fix 340B so it can help the patients that need it most. Let’s fix 340B.   In Congress Dr. Anthony Fauci will return to Capitol Hill on Monday to testify before the House Select Subcommittee on the Coronavirus Pandemic. | Drew Angerer/Getty Images GOP WANTS FAUCI’S PERSONAL EMAILS — Rep. Brad Wenstrup (R-Ohio), chair of the House Select Subcommittee on the Coronavirus Pandemic, on Wednesday asked Dr. Anthony Fauci, the nation’s former top infectious disease official, for his personal emails and phone records containing communication about Covid-19’s origin and other related matters, Carmen reports. Why it matters: The request is an escalation of Fauci scrutiny ahead of his appearance before the panel Monday in what’s expected to be a testy hearing. Fauci’s public testimony is part of the subcommittee’s investigation into the origins of Covid-19 and the federal government’s response to the pandemic. Background: It comes after Dr. David Morens, a former Fauci aide, testified last week that he may have sent information on government business to Fauci’s personal email address. “I can either send stuff to Tony on his private gmail, or hand it to him at work or at his house,” Morens wrote in an April 2021 email made public before his hearing. “He is too smart to let colleagues send him stuff that could cause trouble,” the email read. Fauci told POLITICO he always complies with the subcommittee’s request. PRIOR AUTHORIZATION UNDER THE MICROSCOPE — The Government Accountability Office is calling for more scrutiny of the prior authorization decisions that Medicaid managed care plans make for kids. In a report requested by Rep. Frank Pallone (D-N.J.), ranking member of the House Energy and Commerce Committee, released Wednesday, the watchdog found scant state oversight of plans’ prior authorization decisions. It found that none of the states sampled scrutinized a representative sample of claim denials or leaned on data to determine “the appropriateness of the full scope of plans’ prior authorization decisions.” The Centers for Medicare and Medicaid Services conducts oversight by making sure states evaluate plans’ prior authorization policies, but the GAO said the agency must go further. “Without efforts to help ensure that plans’ prior authorization decisions are appropriate and that requirements are clear, plans may deny children access to medically necessary … services,” the watchdog wrote. Pallone said the report “underscores the need for heightened oversight” and will inform his prior authorization investigation with Senate Finance Committee Chair Ron Wyden (D-Ore.). Recommendations: The GAO called on CMS to offer written expectations for state monitoring and to “clearly define” when plans can mandate prior authorization for screening, diagnostic and treatment services when the state doesn’t require such review. The response: The report said HHS “partially concurred” with the recommendations. It said it’s collecting information on states’ prior authorization denial review and plans to use it to determine whether more oversight is needed, according to the GAO. HHS also agreed that more clarity is needed on prior authorization for screening, diagnostic and treatment services. FDA FUNDING PROSPECTS — Rep. Andy Harris (R-Md.), chair of the House Appropriations Agriculture-FDA funding panel, told POLITICO’s Jennifer Scholtes and Caitlin Emma that passing his fiscal 2025 measure this summer is possible but not certain. “It’ll pass out of subcommittee and committee easily. When it goes to the floor, I suspect it might,” Harris said, noting that last year’s bill had a “much, much lower” overall total. “And obviously that was too low. But that’s not going to be a problem this year.” Last summer, a proposed rider that would ban the mail delivery of abortion pills snarled House GOP funding ambitions. Harris said not to assume that a push for a ban would be revived this year. That’s a win for moderate Republicans, who have pushed leadership to avoid controversial policy riders. “The appropriations committee knows a good number of us have concerns. We’re hopeful that they can consider that as they draft,” Rep. Marc Molinaro (R-N.Y.) said, noting that his stance hasn’t changed since last year on partisan restrictions like anti-abortion riders in the Labor-HHS-Education bill and others. Still, it doesn’t mean that appropriators will forgo all controversial earmarks.   THE GOLD STANDARD OF HEALTHCARE POLICY REPORTING & INTELLIGENCE: POLITICO has more than 500 journalists delivering unrivaled reporting and illuminating the policy and regulatory landscape for those who need to know what’s next. Throughout the election and the legislative and regulatory pushes that will follow, POLITICO Pro is indispensable to those who need to make informed decisions fast. The Pro platform dives deeper into critical and quickly evolving sectors and industries, like healthcare, equipping policymakers and those who shape legislation and regulation with essential news and intelligence from the world’s best politics and policy journalists. Our newsroom is deeper, more experienced and better sourced than any other. Our healthcare reporting team—including Alice Miranda Ollstein, Megan Messerly and Robert King—is embedded with the market-moving legislative committees and agencies in Washington and across states, delivering unparalleled coverage of health policy and the healthcare industry. We bring subscribers inside the conversations that determine policy outcomes and the future of industries, providing insight that cannot be found anywhere else. Get the premier news and policy intelligence service, SUBSCRIBE TO POLITICO PRO TODAY.     Lobby Watch HEALTH AI LOBBYING TAKES OFF — Health care has a top target for artificial intelligence lobbying, according to a new report from the progressive group Public Citizen. Although the tech sector has about 20 percent of the 3,400 lobbyists working on AI-related issues, the health care sector is among those with the most lobbyists engaged on the issues at 179 — about 5 percent of all lobbyists working on AI issues, according to the report. In 2023, more than 360 lobbyists lobbied HHS, behind only the Department of Commerce in terms of federal agencies. “As federal agencies move forward with developing guardrails for AI technologies, stakeholders will likely rely even more on their lobbyists to shape how AI policy is formed,” the group said in the report. The bigger picture: The lobbying blitz comes as lawmakers on Capitol Hill mull regulating artificial intelligence in the sector, though lawmakers don’t appear close to getting legislation signed into law soon. They’ve broadly focused on ensuring AI doesn’t cause unnecessary harm and incentivizing innovation and research.   A message from PhRMA:   Names in the News Chris Bond is now SVP of communications at AHIP. He previously was managing director at PLUS Communications. Sharon Pearce is now VP and government affairs lead at the Plasma Protein Therapeutics Association. She previously was SVP of government relations at the National Kidney Foundation.   DON’T MISS POLITICO’S ENERGY SUMMIT: The future of energy faces a crossroads in 2024 as policymakers and industry leaders shape new rules, investments and technologies. Join POLITICO’s Energy Summit on June 5 as we convene top voices to examine the shifting global policy environment in a year of major elections in the U.S. and around the world. POLITICO will examine how governments are writing and rewriting new rules for the energy future and America’s own role as a major exporter. REGISTER HERE.     WHAT WE'RE READING POLITICO’s David Lim reports on the American Clinical Laboratory Association suing the FDA over lab test regulation. CNBC reports on telehealth firm Ro rolling out a weight-loss drug tracker to help patients find the drugs amid shortages. Fierce Healthcare reports on hospital organizations pushing for the FTC to delay its noncompete ban.   A message from PhRMA: Hospitals that participate in the 340B program contract with more than 33,000 pharmacies to dispense the program’s drug prescriptions. More than 40% of these pharmacies have financial ties to one of the three largest PBMs – CVS Health, Express Scripts and OptumRx. 340B hospitals and the PBM-owned pharmacies they contract with are profiting off discounted medicines while uninsured patients are left paying full price for their medicines. Let’s fix 340B so it better helps patients.     Follow us on Twitter Dan Goldberg @dancgoldberg Chelsea Cirruzzo @chelseacirruzzo Lauren Gardner @Gardner_LM Sophie Gardner @sophie_gardnerj Kelly Hooper @kelhoops Robert King @rking_19 Ben Leonard @_BenLeonard_ David Lim @davidalim Megan Messerly @meganmesserly Alice Miranda Ollstein @aliceollstein Carmen Paun @carmenpaun Daniel Payne @_daniel_payne Ruth Reader @RuthReader Erin Schumaker @erinlschumaker Megan R. Wilson @misswilson   Follow us

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