Drugmaker Johnson & Johnson Announces 340B Restrictions But Exempts FQHCs & Other Grantees
On March 21, drug manufacturer Johnson & Johnson (J&J) announced restrictions on 340B pricing to contract pharmacies of hospital-based 340B covered entities to take effect on May 2. Like 10 other drugmakers, J&J has decided to exempt community health centers and other 340B “grantees” from these restrictions.
Drugmaker Gilead Announces 340B Restrictions on Hepatitis C Drugs to Contract Pharmacies
Drug maker Gilead announced plans to restrict shipments of its 340B-priced, brand-name Hepatitis C drugs to contract pharmacies. All 340B covered entities, including FQHCs, with contract pharmacies are now required to register with 340B ESP and submit data by May 2, 2022 to continue receiving 340B pricing. Any covered entity that does not have an in-house pharmacy may designate one single contract pharmacy location.
This policy change will have significant financial impacts on many CHCs’ pharmacy programs, and the services supported through 340B savings. Please review NACHC’s toolkit on promising practices to mitigate the impact of manufacturer restrictions developed by health center peers.
While there is no “silver bullet” that will resolve these concerns, we would like to share the following thoughts:
In-house pharmacies: The restrictions currently impact only Gilead’s brand-name Hepatitis C drugs dispensed by contract pharmacies, and do not impact prescriptions for these drugs filled by CHC-owned (aka in-house) pharmacies. However, CHCs are reminded that patients have the right to choose which pharmacy they go to. For more information on this issue, see the excerpt below from the NACHC 340B Manual for Health Centers.
Generic alternatives: There are at least four generic medications available for treating Hepatitis C – two from Gilead, Mavyret from Abb-Vie, and Zepatier from Merck. However, there is a noticeable difference in the level of 340B savings available on the generic versions compared to the Gilead brand names. Also, some state Medicaid plans only cover the brand-name drugs.
Sharing data with 340B ESP: Gilead says it will continue shipping its brand-name Hepatitis C drugs to contract pharmacies at the 340B price if the CHC (or other 340B provider) submits claims-level data to the website 340B ESP. Since September 2020, we have strongly warned CHCs against submitting data to this website due to several risk factors. And while we feel the same today, we are aware of the mounting financial pressure CHCs are feeling and understand if CHCs are weighing providing their claims data. When deciding please consider these points below:
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Most importantly, in the absence of comprehensive Federal anti-pickpocketing legislation, providing this data will lead to CHCs’ losing the 340B savings on those drugs. Drug makers use this data to show PBMs which drugs were purchased under 340B, so they don’t have to pay the PBMs rebates on these drugs. In turn, PBMs “make themselves whole” by reducing reimbursement to the CE for those drugs.
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Providing the data is time-consuming and costly, and CHCs should not be required to incur these costs in order to save drug makers money.
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The more covered entities who submit data to ESP 340B, the more manufacturers will require them to do so (and the harder it is to argue to state and Federal policymakers that we shouldn’t be required to do so).
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Once we provide the data, we have no assurances about how it will be used – and it could likely be used in ways that further harm CHCs or their patients.
Please note that in states like North Carolina that have passed strong “anti-pickpocketing” laws, CHCs that report data to 340B ESP should be protected from “pickpocketing” on drugs dispensed to commercially insured patients. However, they are not protected on drugs dispensed to Medicare Part D patients. This development highlights the urgent need for Congress to pass the PROTECT 340B Act. If that bill were law, CHCs across the country could comfortably share claims-level data with Gilead (and other manufacturers), without concerns about having their savings pickpocketed.
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