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Continuing Changes in the 340B Space: New Restrictions and Shifting Alliances


As detailed further in our article on the current state of the 340B Program and what to expect in 2023, a growing list of manufacturers have taken the step of significantly restricting 340B pricing for fills completed by contract pharmacies. Over the last few weeks, the number and scope of these restrictions have only continued to grow. Most notably, on February 15, 2023, Johnson & Johnson ("J&J") released an updated policy with the most restrictive terms yet, limiting 340B hospitals to receiving 340B pricing at only one contract pharmacy location within 40 miles of the hospital, effectively eliminating the possibility of utilizing most mail order or specialty pharmacies for J&J 340B fills via a contract pharmacy arrangement. Moreover, if a hospital covered entity wants to obtain 340B pricing for a single contract pharmacy location, J&J now requires such hospitals to submit 340B claims data to 340B ESP for the hospital’s entity-owned pharmacies (if applicable). This is the first such manufacturer policy to require claim data submission outside of the contract pharmacy space.

 While the policy does not directly impact a covered entity’s ability to receive 340B pricing at entity-owned retail pharmacies, the policy could (from a covered entity perspective) set a troublesome precedent for increased manufacturer oversight of in-house pharmacy arrangements and begins to blur the lines between contract and entity-owned retail pharmacies. Indeed, there are signs that these restrictions could be the new normal - Amgen, Abbvie, Pfizer, Glaxo-Smith Kline, and Novartis have already followed suit and introduced updated policies that are substantively similar to J&J’s, and more manufacturers could follow in the coming weeks and months.

Importantly, the majority of these policy updates only impact hospital covered entities and do not limit the ability of grantee covered entities to utilize all of their registered contract pharmacy locations for 340B fills of J&J medications. This hospital vs. grantee distinction still holds for a majority of current manufacturer policies, as most still exempt grantee covered entities from their contract pharmacy pricing restrictions.

This separation of hospital vs. grantee covered entities is beginning to manifest in advocacy efforts. On March 9, 2023, the Pharmaceutical Research and Manufacturers of America, the National Association of Community Health Centers, and the National Hispanic Medical Association announced the formation of a new joint advocacy group (340B ASAP) and issued a 10-point plan to reform the 340B program and support what they believe to be “true” safety-net providers (i.e., grantee covered entities), largely at the expense of participating hospitals.

340B ASAP’s plan includes, but is not limited to the following core principles: (1) update the 340B patient definition with strong safeguards, requiring more frequent visits with a provider in order for the covered entity to be eligible for 340B pricing; (2) update and strengthen 340B hospital eligibility requirements, including quantitative metrics that appropriately identify hospitals treating a disproportionately large share of low-income patients on an outpatient basis; and (3) facilitate public reporting on 340B program data, requiring further reporting to the U.S. Department of Health & Human Services (HHS).Overall, these recent policy proposals are an indication that covered entities are gradually being divided from an advocacy perspective, with hospitals on one side and non-hospitals on the other side. Several hospital advocacy groups have come out strongly against 340B ASAP’s stated core principles, stating that the principles represent significant concessions to the pharmaceutical industry without much in the way of return for covered entities, while also introducing unfair restrictions on hospitals that would not be applicable to grantee sites. Notably, some grantee organizations also feel that the 340B ASAP principles go too far, and that 340B covered entities would be better served by maintaining a united front in the fight against manufacturer behavior. The ultimate consequences of these policy divisions remain to be seen—however, the philosophical differences emerging between covered entity types is certainly notable.

If you have any questions related to the rapidly changing 340B space or are interested in discussing strategies to best navigate these 340B program changes, please reach out to our 340B attorneys:

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