Quick Summary:
- Requires Federally Qualified Health Centers to provide 340B prices for insulin and epinephrine to patients
- Does not modify any other aspects of 340B
Deeper Dive:
Citing high list prices for insulin and epinephrine and noting the “life-saving” nature of these medications, this Executive Order (EO 13937) requires the Secretary of HHS to make sure that grants to Federally Qualified Health Centers (FQHCs) are available only if the FQHC provides 340B prices to patients using those medications. The pricing pass-through requirement will also apply to FQHC sub-grantees. Individuals eligible for the 340B pass-through pricing are patients of the entity without insurance, those with high cost-sharing, and those with an unmet deductible.
Insights:
In recent years there has been much consternation over the scope of the 340B program, which has grown exponentially over the past few years. Generally, manufacturers have been pushing for reform to limit the growth of the program and others argue that 340B prices should be available to any patient—not just those who obtain regular care from the 340B entity. While this Order sounds like something the 340B expansion advocates support, its impact is less far-reaching than it seems.
The Order does not change the fundamental operation of the 340B program—it is focused on how much patients pay for these medications at FQHCs. Under the current rules, the availability of 340B-priced medications is limited to patients of the covered entity. People who only receive prescription medications and no other care from the FQHC do not meet the definition of “patient of the entity”. Without a change in the definition of “patient”, this Order itself does not expand eligibility for 340B prices for people using insulin and/or epinephrine.
Yet, sweeping regulatory changes to the 340B program rules are not expected. In 2018, after some successful lawsuits challenging HRSA’s (the agency that manages the 340B program) authorities, the agency asked Congress to provide it with additional authority. Congress responded that HRSA has all the authority it needs. Since the 2014 federal court decisions vacating its regulatory changes, HRSA has shifted from issuing formal regulations related to 340B to issuing “guidance.”
For example, in 2015, the agency released proposed guidance that included “clarification” of the definition of an eligible patient, which would be determined on a prescription-by-prescription basis. That proposed guidance’s definition of “patient” was similar to the agency’s previous definition, but with some difference: the patient must have received a health care service from a provider with the 340B entity and the medication must have been prescribed by a provider with the 340B entity. Under the proposed 2015 definition, an individual who only fills a prescription at a 340B entity without seeing any of the entity’s providers would still not qualify for 340B prices. That updated definition of “patient” was not implemented because the proposed guidance was later withdrawn by the Administration.
The primary impact of this Order will be on the cost-sharing amounts that FQHCs can collect from patients. Current federal rules require FQHCs to make efforts to be reimbursed for services provided to their patients who have health care coverage. They also must make efforts to collect payment from patients but cannot deny care if the patient is unable to pay. In addition, FQHCs must have a sliding-scale cost-sharing schedule based on the patient’s income. When this Order is implemented, it is possible patients of FQHCs with higher incomes could see lower cost-sharing, depending on where they normally fall on the clinic’s sliding fee scale. However, sale/utilization of medications at 340B prices are not expected to increase.
Timing:
HHS submitted an interim final rule implementing this Executive Order to the Office of Management and Budget (OMB) on September 1, 2020. While there are no additional details on the content of the interim final rule publicly available yet, the rule has been classified as not “economically significant,” indicating it is not making sweeping changes to the 340B program and it could likely be implemented fairly quickly.
When the interim final rule is released, we will review it and share our perspective. In the meantime, stay connected with Viking Healthcare Solutions for market access strategies and industry insights.
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