An alliance of sort-of-stakeholders just put forward their plan. Interesting choice of bedfellows to say the least.
Plans announced last week between PhRMA and the National Association of Community Health Centers (NACHC) has attracted a fair amount of attention in 340B circles, and will surely be a major topic at the upcoming 340B Coalition Winter Conference. At face value, this is an odd alliance and the news took me a little time to digest so I haven’t commented until now. It seems as though many in the industry are trying to figure out what to make of it. My breakdown and thoughts on where this is headed follow.
First things first…who are we even talking about?
NACHC was prominently featured in the announcement, but there are 12 organizations involved in the newly minted “Alliance to Save America’s 340B Program” (ASAP 340B), most of whom you’ve probably never heard of.
I’ll acknowledge I’ve never put much thought into NACHC. I wouldn’t say they’ve been particularly vocal or influential on 340B m
atters, and to be fair they have a lot of other advocacy issues to worry about. Certainly they have policy statements on 340B, but they mostly represent FQHCs who have a very different perspective on the 340B program than other covered entity types. All that is to say, NACHC represents a subset of the 340B program and the broader 340B community isn’t well served by NACHC charging to the podium and implying that they speak for the group. At least one other stakeholder has criticized the plan—The AIDS Healthcare Foundation quickly responded with a scathing opinion.
The initial press release hardly mentioned them, but here are the other founders:
Autoimmune Association
Association of Asian Pacific Community Health Organizations
Black, Gifted, and Whole
Community Oncology Alliance
Health Choice Network
National Association of Community Health Centers
National Consumers League
National Hispanic Medical Association
The National Grange
NCODA
OCHIN
Pharmaceutical Research and Manufacturers of America
Stating the obvious here, PhRMA is in charge of this alliance and is paying for the whole thing. The combined budgets of the 11 other organizations are about what PhRMA spends on breakroom supplies each year. PhRMA has already tried to mount a public anti-340B campaign. It hasn’t worked very well because, well, th
is is big pharma we’re talking about. Anyone with a brain knows better than to believe PhRMA talking points at their face value. So what they’ve done here is pulled in other organizations that don’t have the same stigma in order to put a shiny altruistic face on this thing. Smart—but entirely transparent.
This strategy of pulling together a bunch of advocacy organizations to form an “alliance” with a slick name and carefully worded marketing language is straight out of the PhRMA playbook. This is chock full of slimy big corporation lobbyist tactics (sorry lobbyists, you’re not all slimy—some of you I like actually). This creates the impression of broad based support when in reality this new alliance is nothing more than a mouthpiece for the same PhRMA talking points.
It's also worth looking at the founding organizations so we can consider what their stance may be. I won’t go through all of them, just a few here that stand out:
Autoimmune Association: I suspected this was a PhRMA funded group, and it wasn’t hard to prove. Of their nearly $3.3M in contributions in 2021, $1.2M came from a single donor. I wonder who that could be? According to their most recent annual report, 15 entities contributed over $20,000 including AbbVie, BMS, Eli Lilly, Genentech, Gilead, J&J, Pfizer, Takeda and PhRMA.
Community Oncology Alliance: Please. This group is very transparent in their anti-340B position, and the reason is obvious—their members can’t participate. COA represents private oncology practices that aren’t covered entities. T
hey aren’t necessarily wrong in all their criticisms of 340B hospitals, many of whom have robust oncology practices they’re forced to compete with, but they frequently fail to acknowledge the services these hospitals provide that COA members don’t want to touch.
NCODA: This is the National Community Oncology Dispensing Association. They’ll have a similar take as COA, but more importantly they want to see private oncology practices doing office dispensing. This is all fine and good, but like COA they generally aren’t going to be 340B eligible. Like COA, they see 340B eligible oncology practices as a threat.
Black Gifted & Whole: They describe themselves as “…a revolutionary attempt to change the collective narrative of Black gay men.” The obvious connection is the many 340B covered entities that support care for HIV/AIDS patients including Ryan White clinics, STD grantees, and others. You would think they would have a pro-340B stance (if they have a position at all, which I suspect they haven’t until now). Their participation in ASAP 340B puts them at odds with the Aids Healthcare Foundation, who had a scathing commentary on this—more on that later.
Health Choice Network: Essentially the same demographic as NACHC, both organizations seem to think they can preserve 340B for themselves by throwing the rest of the covered entities to the wolves.
National Consumers League: The NCL has a mix of position statements on the pharmaceutical industry that are shockingly out of step with their consumer protection core. Their mission should make them the natural enemy of
these massive pharmaceutical manufacturers, so I’m not sure what they’re doing in this debate.
What are they proposing?
If you go to the ASAP 340B website, you can see exactly what they’re plan is. At first glance, especially to folks who don’t live in the 340B world every day, the ideas seem innocuous enough. The concepts are presented with a lot of spin, and it takes a bit of critical thinking to reveal problems with their position. Below I have their 10 point plan, with a few thoughts to consider on each point.
1. Make 340B a true safety-net program for patients
Emphasis on the word “patients” here. Like I said, a lot of spin--most people who read this statement will say “Yes of course it should be!” but that would be a monumental shift in the original intent of the program. Many 340B covered entities do in fact use 340B as a direct subsidy to patient drug costs, but the intent of the program was always to offset the under- reimbursed and unreimbursed costs covered entities costs covered entities bear as safety net providers. Borrowing language from HRSA, this allows them to stretch scarce resources, reaching more eligible patients and providing more comprehensive services. Nowhere in that statement from HRSA do you hear direct patie
nt subsidy.
2. Ensure 340B prescriptions are offered to patients at a discount
See notes in #1 above. Covered entities should have the freedom to apply their 340B value in alignment with their mission and their community needs, as they always have. Many choose to reduce drug costs to the patients, but this has never been a requirement and many patients don’t need this, like those on Medicaid.
3. Update the 340B patient definition with strong safeguards.
Here ASAP 340B suggests that covered entities don’t have a direct relationship with their patients, which is nonsense. That said, the statutory language could be clarified for all involved, so I’m not necessarily against this idea. If you read their policy statement, they tag on one little sentence at the end that shows their true intent, which is to exclude services referred to others by the covered entity.
4. Establish clear criteria for 340B contract pharmacy arrangements to improve access.
Well who can be against clear criteria, right? Again, spin spin spin. Look, I’m not one of the pro-340B advocates who thinks every element of the program is perfect and can’t be improved, but I certainly don’t want PhRMA writing the rules on this. Bill von Oehsen wrote a fantastic explanation of the historical reasons and intent of contract pharmacy relationships, which I shared on my LinkedIn recently. It wouldn’t be a bad thing to codify some of that. What PhRMA wants here is to severely restrict contract pharmacy under the guise of significant diversion and duplicate discount problems. This simply isn’t true, they just want to be subject to as few 340B purchases as possible.
5. Prevent middlemen and for-profit entities from profiting off the 340B programs
I actually agree with this, at least partially. There’s a l
ot of rent-taking out there, and while most fees for service vendors, contract pharmacies, auditors, etc are pretty reasonable, there are exceptions.I’m not against reasonable limits, but it will be hard to establish those limits without destroying the market (not that PhRMA would care). 340B service providers and contract pharmacies have to make at least some profit or they won’t provide the service. This is true of every business, they key here is that it needs to be reasonable and reflect a fair market rate. Awfully pious of big pharma to tell us who ought not be making money.
6. Update and strengthen 340B hospital eligibility requirements.
My gut reaction on this was negative, but when you read the detail, I like parts of it. They’re looking to see that NFP hospitals don’t pursue aggressive debt collection practices among other things. That’s not really a 340B problem, but it does need attention. I’m on the record saying hospitals need to do a better job with charity care, and some of the biggest NFP hospitals are indeed falling short here. It’s not entirely their fault, hospital charity care is a massively confusing topic thanks to the regulations involved. To fix this issue, more than just 340B laws and regs need updating.
7. Address standards for 340B child sites and subgrantee eligibility
The implication here is that child sites are the wild-wild-west and the use of child sites is being abused. This is nonsense. Off-site hospital prov
ider-based departments are subject to more scrutiny than the parent location, not less. There are already plenty of rules here.
8. Create a neutral 340B claims data clearinghouse.
Ah, there’s big pharma again. Let us not forget, the contract pharmacy standoff is at it’s core a PBM rebate issue, not a compliance or Duplicate Discount issue. They need the clearinghouse to make rebating easier to manage. PBMs are the silent partner here, they want this just as much as PhRMA. Let’s not forget, Duplicate Discount is a legally defined term, and refers only to Medicaid Rebate Duplicate Discount, not commercial rebates as PhRMA would like people to believe.
Perhaps PhRMA would like to make all of their data public too? I’ll agree there is more info that ought to be reported, but not necessarily the parts ASAP 340B is asking for here.
10. Establish enforceable rules and enhance federal administration and oversight of the 340B program.
This is a little contentious, but reasonable that HRSA and/or HHS should have rulemaking authority. I worry where that could lead and that it will subject the program to the political whims of the party in charge, but that exists elsewhere too. Can you imagine what big-pharma exec Alex Azar, head of HHS during the Trump administration, would have done with this power? The 340B industry is governed by a lot of sub-regulatory guidance that is honestly frustrating to all involved.
What to make of it all?
It’s honestly hard to take NACHC seriously on this. The hottest debate around the 340B program has been about drug manufacturer contract pharmacy restrictions, something FQHC’s are not subjected to nearly as much as other covered entity types. It’s awfully nice of them to propose a bunch of new rules that only partially address the biggest area of disagreement, which their membership is less affected by anyway.
The move to form ASAP 340B has garnered some attention, but I’m not sure it really changes much. The proposal isn’t going anywhere in the short term, and we don’t seem to be anywhere near resolving the contract pharmacy standoff or other 340B issues with a divided congress. Ab
sent a definitive court ruling at the highest level, the chess game is going to keep dragging along.
NACHC has made an odd move partnering with PhRMA, presumably under the belief they can save 340B for themselves by sacrificing everyone else. They’re already getting a reaction from other stakeholders, including the AIDS Healthcare Foundation, which is a great way to wrap this up:
“PhRMA set a trap, and the National Association of Community Health Centers (NACHC) walked right into it. Health centers are doing a deal with the devil, giving PhRMA the means to kill 340B. NACHC, selfishly, has thrown all nonprofit 340B providers, hospitals, and clinics under the bus. This is a betrayal by the community clinics that invites the fox into the henhouse. We will fight this unholy alliance fiercely.”
--Michael Weinstein, AHF President