The federal government’s 340B Drug Pricing Program has been under a lot of scrutiny recently. More than 30 years old at this point, the program has significantly expanded since its inception. Now it is looking at a potential overhaul thanks to litigation, new state laws, and potential intervention by Congress. Indeed, 2024 could end up being a big year for the program.
Congress created the 340B Drug Pricing Program in 1992 to help hospitals and healthcare clinics serving the indigent stretch their federal dollars further by giving them access to deeply discounted drugs. These were mostly disproportionate share hospitals that provided a good portion of their services to the poor and needy. These days however, there is evidence that the original intent of 340B has long since been abandoned and is now used as a way to boost bottom lines.
340B Litigation in the Courts
Multiple lawsuits have been filed over 340B over the last five or six years. Litigants have debated over how many contract pharmacies a covered entity can utilize. They have debated what constitutes a ‘patient’ under the program and whether drug distributors are eligible to participate as covered entity agents.
A few key court cases were decided in late 2023. However, now we wait for the appeals process to play out. Here is what it boils down to: drug companies want to reduce the volume of drugs they sell at a discount to program participants. Meanwhile, covered entities continue to look for new ways to expand their use of the program, thereby having access to even greater volumes of discounted drugs.
States Are Stepping In
As the 340B program has been litigated, certain gaps have been created by key court decisions. According to Bloomberg Law, this has prompted certain states to get involved with their own regulations designed to fill in the gaps. Bloomberg cites Louisiana and Arkansas as two states that enacted legislation to prevent drug companies from cutting off contract pharmacies. Bloomberg suggests additional states could follow with similar laws in 2024.
If their predictions hold true, we could end up with a patchwork of regulations that make an already complicated system even more so. But that is the way it goes with government. Between complications and lack of accountability, programs like 340B are allowed to grow and expand until they become unmanageable behemoths.
Difficult to Keep Up With
Thirty years ago, the 340B Drug Pricing Program was pretty straightforward and easy to manage. This is no longer the case. The program is difficult to keep up with from either side of the equation. Both drug companies and covered entities need to continually work their way through a maze of rules and regulations to maintain compliance.
It is complicated enough that 340B consultants like Ravin Consultants stay busy helping clients establish new drug programs, determining eligibility, optimizing their programs, and even conducting mock audits. Without expert 340B consultants, many covered entities would literally lose their way.
Something Needs to Change
There is no telling how courts will rule in the coming year. There is also the possibility that Congress will step in and either overhaul the program or shut it down altogether. No one really knows for sure. What we do know is that 340B faces significant uncertainty. Something needs to change if the program is to survive without disproportionately harming either drug companies or safety net hospitals.
If you are affected by 340B in any way, keep your eyes open. This is going to be a very big year for the program one way or another.