Whether it is 340B Policy or Keeping the Lights On, House Chaos Underscores Senate’s Importance

By Ted Slafsky

According to our history lessons, George Washington told Thomas Jefferson that the Senate was created to serve as a saucer to “cool” the House’s hot cup of tea.

There is still debate about whether this conversation ever happened but there is no debate that the Senate continues to play this critical role. After experiencing three weeks without a speaker of the House, the longest duration in history, it is the Senate, once again, that will play an outsized role in determining where we are headed on big picture issues, such as funding the federal government, funding our allies in various wars and even smaller policy challenges, such as the 340B program.

While the House has made the most progress in pushing changes to the 340B program (for better or worse), there is little chance that the bills will make it through the Senate unless the legislation is bipartisan in nature. Rep. Larry Bucshon (R-Ind.) successfully pushed his 340B provider transparency bill through the House Energy and Commerce Committee (E&C) this May but the bill has been frozen as the House tried to figure out who to elect as their next leader.  Speaker Mike Johnson (R-La.) was elected on October 25th and has many important matters to focus on. Even if the bill eventually is approved by the House, it stands little chance in the Senate since it was passed on a nearly party line vote. Democrats, who have a 51-49 advantage in the Senate, control the agenda in the upper chamber and some have said that they won’t support a bill aimed at 340B covered entities unless it also addresses drug manufacturer restrictions on access to 340B pricing in the contract pharmacy setting.

Another Bill with More Momentum

A different 340B-related bill that also passed the E&C Committee has a much better chance of enactment into law. The provision, which is part of a much bigger and widely popular bipartisan Pharmacy Benefit Manager (PBM) transparency bill, would require Medicaid managed care organizations (MCOs) and their PBMs to pay pharmacies no more than ingredient cost plus a dispensing fee for drugs. Under the bill, which was approved in May by the committee, 49-0, MCOs and PBMs “may” pay more for drugs furnished by 340B covered entities.  However, if they do, entities must report to the federal government annually on the total amount of payments they received above their acquisition costs and the government would need to publicly disclose this information.

A companion PBM transparency bill also was approved, 26-1, in July by the Senate Finance Committee. The bill’s 340B provision is similar to the House version in that it would allow MCOs and their PBMs to pay 340B providers more than acquisition cost but covered entities would have to report their MCO revenue to the Department of Health and Human Services (HHS). Unlike the House bill, HHS would not have to report this information on a searchable public website.

The PBM transparency bills could reduce revenue for 340B covered entities in about 10 states where they are paid more than acquisition cost by Medicaid MCOs, according to Jason Reddish, a principal at the law firm Powers, Pyles, Sutter and Verville. If such legislation is enacted into law, 340B providers would need to work with their states to try to ensure they can continue to receive the more generous reimbursement.

Senate Action Heating Up

After a slow start, 340B activity is heating up in the Senate. The bipartisan “Gang of Six” U.S. Senators received nearly 270 responses to their request for information on potential 340B reforms. The group includes Sens. John Thune (R-S.D.), and Tammy Baldwin (D-Wis), two members particularly active on 340B policy and are considered allies of the 340B provider community. The fact that Sen. Thune is the second ranking Republican in the closely divided Senate gives the group particular clout.

The group asked for feedback on a broad range of contentious issues including 340B program oversight, contract pharmacy arrangements, ensuring that the program benefits covered entities and their patients, duplicate discounts, accountability, and transparency. The senators’ staff have met with many key stakeholders and plan to hold additional meetings in November, according to a source with strong relationships with the senators’ offices.

New Influential Coalition

I anticipate that the providers and manufacturers that have a presence in the states of the six senators—South Dakota, Wisconsin, Kansas, Maryland, West Virginia and Michigan—will have the most influence on any legislation that comes out of these meetings. A coalition founded by drug manufacturer Genentech, South Dakota-based Sanford Health and community health center Carolinas Health Centers in South Carolina may play a particularly important role on any final legislative product. This type of coalition – which recently grew to include the other two large South Dakota-based health systems, health systems in Michigan, Minnesota and Nebraska and three additional health centers – is highly unusual in the 340B space.  The senators and their staff will likely perceive it as a more neutral player than others lobbying the lawmakers.

The bottom line? While the House may pass 340B legislation first, all eyes will remain focused on the Senate when it comes to resolving the numerous 340B policy challenges.

Ted Slafsky is the Publisher and CEO of 340B Report, the only news and intelligence service exclusively covering the 340B program.  Slafsky, who has over 25 years of leadership experience with the 340B program, is also Founder and Principal of Wexford Solutions.  Ted can be reached at ted.slafsky@340Breport.com.

Disclaimer: The views and opinions expressed in this blog are those of the authors. They do not necessarily reflect the official policy or position of any other agency, organization, employer, or company.