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There is, perhaps, no topic in health policy with a higher importance-to-interestingness ratio than 340B. You all know the stats: this is a ginormous program that operates almost entirely out of the sight of the general public and is the subject of fierce debate among a very small number of people.
That might be changing. There’s a 340B storm briefing, and Mark Cuban is taking notice. Next thing you know, Jon Stewart will be telling contract pharmacy jokes.
There is a lot to unpack here, and I’ll try to take it in order.
J&J told one specific kind of 340B covered entity — disproportionate share hospitals — that it wouldn’t make two of its medicines, Xarelto and Stelara, available through 340B discounts. Instead, the company plans to deliver the 340B price via a rebate, after the covered entities submit paperwork to prove that there aren’t duplicative discounts. This is a pretty radical departure from 340B standard practice, but one that J&J said is specifically allowed by statute.
The hospitals flipped out, asking HRSA, which oversees the program, to intervene and making all kinds of public statements (captured well in 340B Report reporting) about how this will be an administrative PITA and a financial burden, because, rather than getting the money up front, hospitals will have to float the full cost of the drug while they await the rebate.
HRSA weighed in, telling everyone that J&J was in the wrong and should have asked for permission for the change.
The 340B wonks started peeling back the onion, noting that Xarelto and Stelara just got slapped with IRA price controls. CMS has basically asked manufacturers to figure out how to ensure that there are no cases where the 340B discount and the IRA’s MFP aren’t applied to the same prescription, and it sure looks like the J&J policy is designed, in part, to address that concern. That sets up an “HRSA vs. CMS Oversight Crisis,” per this Adam Fein LinkedIn post. Bill Sarraille then riffed off of some of the questions that Adam posed and suggested that we’re going to see a lot more similar efforts from other companies.
Mark Cuban entered the chat.**
My assumption here is that this gets settled by the courts, and I’m not remotely the guy to handicap that process.
As a general heuristic, I tend to believe that courts are more sympathetic to manufacturers on 340B issues than, say, regulators or legislators, because courts are less caught up in the broader issues. Unlike pols, courts tend not to be that worried about hospital finances or political power or historical alliances.
At least, this seems to be how current cases involving whether companies can put up restrictions around contract pharmacies seem to be going: courts have generally been “meh” about preserving longstanding norms that aren’t explicitly baked into that statute.
Again, that’s not me making a prediction about the outcome, only a suggestion to exercise caution around anyone — on either side — who says this will be a slam dunk.
** I’m not just dropping “Mark Cuban” gratuitously. Say what you will, but the dude has a nose for sniffing out places where the health care system is warped by misguided incentives and hamstrung by “this is how we’ve always done it” arguments. Being on Mark’s radar is a leading indicator of disruption. That said, I don’t know what Mark’s interest here is predictive of, other than a lot more attention.
I’m going to go into this in more detail tomorrow — no one needs a 3,000-word newsletter on the Monday before Labor Day — but I wanted to flag that Vox has an article out declaring that the IRA won’t have any impact on innovation. It is dangerously and casually ignorant of a lot of the underlying economics, but I suspect that it’ll be passed around anyway, and I wanted y’all to be aware.
Elsewhere:
This KFF Health News piece about how both presidential candidates are pretty cool to pharma as an industry is worth reading, in part because it includes some worthwhile details on the way that industry is pivoting its campaign contributions and in part because it tries to illuminate Donald Trump’s pharma policy agenda. I say “tries to” because the actual policies that the piece cites — increased generic competition, importation, capping insulin costs — are small-ball ideas that aren’t unique to Republicans. It makes a reference to his past effort around international reference pricing but doesn’t make a case for that being at the top of a Trump agenda.
Novo Nordisk’s CEO, Lars Jørgensen, sat for a broadcast interview with NBC ahead of his sitdown with Bernie Sanders and his Senate committee. There wasn’t a lot of tape of Jørgensen, so it’s hard to know how, exactly, Novo is going to handle the pricing elements. NBC’s edit emphasized Jørgensen’s emphasis on low OOPs (for those with insurance) and the large cost of obesity as a disease.
The WSJ eddy board is still aboard the anti-IRA train, publishing another attack on the law, this time for undermining generics/biosimilars. It’s a legitimate line of attack, though not one that has had much of a profile lately.
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