340B Insight Podcast
Episode Twenty-Three: How State Policy Affects 340B
March 22, 2021
This week we are joined by Amanda Sellers Smith, the assistant counsel for 340B Health. While 340B is a federal program, it is intertwined with Medicaid and states’ oversight of the health care marketplace. Amanda discusses how states are protecting 340B covered entities from discriminatory reimbursement, why changes to state Medicaid policy can affect 340B in multiple ways, and how listeners can advocate for 340B at the state level. Before the interview with Amanda, we recap the results of the newly released 340B Health annual survey of 340B hospitals. (Transcript)
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How States Can Protect 340B Hospitals Some pharmacy benefit managers (PBMs) have attempted to cut reimbursement for covered entities on 340B drugs. This ignores the intent of 340B drug pricing to enable covered entities to buy drugs at a discounted price and be reimbursed at the regular reimbursement rate. However, the 340B statute does not protect against PBMs making discriminatory reimbursements. Some states, including Utah, Ohio, Montana, and West Virginia, have passed anti-discriminatory laws. Regarding the ongoing issue of drug manufacturers’ refusals to provide 340B discounts on drugs dispensed at community pharmacies, Amanda explained that state officials can serve as key, high-profile advocates to the federal government.
The Intersection of 340B and Medicaid The intersection of Medicaid and 340B policy has become the most significant 340B policymaking area in states. Congress decided that when a drug is purchased at the 340B price, the drug is not subject to the Medicaid rebate. This leads to debate on whether covered entities or states should receive the benefit. States want the financial benefit of Medicaid drug rebates, and some states transfer the pharmacy benefit from Medicaid managed care into Medicaid fee-for-service. This transfer ties reimbursement to actual acquisition costs, and 340B covered entities no longer can negotiate the higher Medicaid reimbursement rate. This is happening in states such as California and New York. Other states are choosing a single PBM to administer the Medicaid managed care program. These policies are not focused on 340B, but covered entities in Ohio and other states have shared concerns with state policymakers that a single PBM for Medicaid managed care means the PBM has the power to set reimbursement at a rate that results in cuts to 340B savings. Another major trend is the use of mandatory carve-outs, where the state declares certain or all 340B drugs to be ineligible for Medicaid patients. Examples of states pursuing these policies include South Dakota, Massachusetts, and Louisiana.
How to Advocate at the State Level Amanda recommends providers demonstrate to state lawmakers why the 340B drug pricing should remain with covered entities. Every state’s legislature operates differently, but advocacy work can be done through sharing how 340B savings are aligned with program intent and are used to benefit the community. It also is important to engage with local media, state Medicaid agencies, and anyone in charge of state-level advocacy within a covered entity.
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