The SUSTAIN 340B Act: A Summary and Guide for Reviewing and Providing Comments

SECTION 1

As reflected in the acronym title, stakeholders should view the SUSTAIN Act as a statement of support for the 340B Program as it stands today, with an intent to ensure that covered entities – particularly hospital covered entities – continue to benefit from the 340B Program as originally intended when it was established by US Congress in 1992.

SECTION 2

This section formally codifies the 340B Program’s statement of the intent to allow participating covered entities to “stretch scare Federal resources” in order to provide healthcare services in their communities. This language is materially consistent with the version of the statement of intent that has long been held out by the government as the 340B Program’s purpose. Codifying this statement should be viewed as favorable to covered entities.

SECTION 3

This section addresses the ongoing litigation and uncertainty surrounding the use of contract pharmacies to dispense 340B drugs purchased by covered entities to their patients by formally establishing the concept of contract pharmacy dispensing within the 340B Program.

In reviewing and providing comments on this section, stakeholders should carefully review the inferences in the RFI related to the purpose of contract pharmacy arrangements and the various ways in which they may operate to improve access to 340B drugs. The concept of contract pharmacies as a tool for expanding access to 340B drugs should be read in connection with the proposed statutory changes and, most notably, the requirement in Section 8 to apply the covered entity’s patient financial assistance policy to drugs dispensed under contract pharmacy arrangements. In their RFI responses, commenters should also consider providing more information and data that supports their use of multiple contract pharmacies in wide-ranging geographic locations, including, for example, payor restrictions on use of pharmacies, such as requirements to use mail-order pharmacies and manufacturer limited distribution models that may result in requirements to contract with specific pharmacies to access certain drugs.

As it relates to the proposed statutory language, stakeholders should evaluate the following elements and propose specific provisions or alternative language, as necessary, to balance the concerns expressed in the RFI as it relates to the stated intent of the 340B Program:

• Registration and recertification frequency

• Requirements for reporting changes to contract pharmacy arrangements

• Language indicating that locations other than those of the covered entity could enter into contract pharmacy arrangements

• Patient freedom of choice language and whether additional language may be appropriate to ensure that parties other than the covered entity cannot interfere with patient choice

• Provisions related to the nature and scope of services that a contract pharmacy could provide to covered entity patients

• Whether to codify specific methods and models of contract pharmacy operations (e.g., replenishment or virtual inventory models)

• The 10-year record retention period

• Whether the penalty provisions for manufacturer violations of the requirements to sell covered outpatient drugs at or below the 340B ceiling price are reasonable and appropriate

SECTION 4

Section 4 is reserved for the definition of “patient” but is currently blank, so the RFI requests feedback on an appropriate definition under the 340B Program. Stakeholders should contemplate the following components of a definition and propose specific statutory language that is consistent with the 340B Program’s intent, including elements that are appropriate for codification and those that should be established by regulation or guidance:

• The relationship between the healthcare practitioner providing services to a patient and the covered entity

• Indicia of a patient relationship between an individual and a covered entity, such as patient registration status, formal documentation of healthcare services and incurring costs associated with services provided to the individual

• How long “patient” status continues following an initial visit to establish a patient relationship between an individual and a covered entity

• The definition/type of services that represent healthcare services necessary to establish a patient relationship

• How to determine which covered entity may purchase 340B drugs for an individual if they have a properly established patient relationship with more than one covered entity simultaneously

SECTION 5

Section 5 establishes several requirements for a hospital covered entity location to be considered a “child site.” Although the RFI explicitly notes that the Gang of Six’s intent is to apply the Medicare provider-based rules as the basis for identification of a child site, rather than codify a cross-reference to the Medicare provider-based rules, the draft SUSTAIN Act includes a restatement of the material components of the Medicare provider-based rules and additional requirements that may be duplicative of other federal and state laws that already apply to covered entities and the provision of healthcare services. The language in the draft SUSTAIN Act and the RFI suggest that additional education may be necessary as to the nature of “child sites” and whether any child site could or should be operated independently of a covered entity.

In providing comments and proposed revisions, stakeholders should consider:

• Whether a uniform definition of “child site” should be applied to all covered entity types and, if not, how the definition should vary between entity types

• Whether it’s necessary to individually codify specific elements of the Medicare provider-based rules as part of the “child site” definition or whether the same end goal could be accomplished with a cross-reference to the Medicare provider-based rules (42 CFR 413.65) and reliance on other federal and state laws governing the provision of healthcare services (g., state scope of practice laws, state licensure laws, Medicare Conditions of Participation/Coverage, Medicare enrollment rules, federal grants rules, requirements of the specific federal grants and contracts conveying 340B eligibility on grantee and contractor entities)

• Whether to establish in statute the specific date on which a child site is eligible to purchase, prescribe, administer and dispense 340B drugs as a location of the related covered entity

• Whether to establish in statute any registration-specific requirements (e.g., whether it’s appropriate to require that each specialty service provided at a particular covered entity location be registered as a separate child site)

SECTION 6

Calls for additional “transparency” have been a consistent theme in proposals for updates to the 340B Program, generally focused on additional data reporting by covered entities as to the use of savings generated by access to discounted 340B pricing. The RFI does not include any specific requests for additional information about this section or any of the following sections.

In evaluating the proposed requirements, all of which are additional requirements to be imposed on covered entities, stakeholders should consider:

• The additional burdens that the data reporting may impose on covered entities, including the costs associated with such reporting that may divert limited resources that could otherwise be used for direct patient care services

• Whether the proposed metrics are directly relevant to the 340B Program’s intent and allow for meaningful comparison of metrics across covered entity types and to noncovered entity providers

• Whether the requested information has already been reported to the federal government or is in other publicly available materials such that the data could be obtained without burdening covered entities with duplicate reporting requirements

• Whether the requested data can be provided. For example, is the Gang of Six’s understanding that certain data is available at the child site level correct, particularly given the potential misunderstanding as to the nature of child sites generally being separate address locations of the covered entity and not independently-operated entities?

• Whether the proposed metric of the delta between the wholesale acquisition cost and 340B ceiling price is the appropriate metric to quantity the value of the benefit that accrues to a covered entity by virtue of participation in the 340B Program. For example, should Medicaid claims paid at actual acquisition costs that do not generate any revenue be excluded from this calculation?

SECTION 7

Section 7 would more specifically establish requirements for audits of covered entities and manufacturers and impose additional penalties and timeframes for implementing corrective actions resulting from audit findings. This section includes requirements related to vendors hired by covered entities that suggest that previous comments submitted in response to the Gang of Six’s prior 340B Program RFI involved concerns that vendors retained by covered entities to assist with responding to Health Resources and Services Administration (HRSA) audits are not cooperative with HRSA RFI necessary to audit covered entities. Notably, the RFI indicates that this section would also establish requirements for covered entity patient financial assistance programs that would be applied at all locations of a covered entity and to 340B drugs dispensed through contract pharmacy arrangements. However, the patient financial assistance program requirements appear in Section 8 of the draft SUSTAIN Act.

In evaluating the proposed statutory provisions related to program integrity, stakeholders should consider:

• The extent to which the proposed provisions differ from current audit requirements

• Whether the rules associated with the audit process should be codified in statute or are more appropriate for notice and comment rulemaking, including whether guidance provided to audit contractors should be made publicly available and subject to comments from stakeholders

• Whether the proposed provisions related to penalties for noncompliance and time periods to implement corrective action are reasonable and whether they should be specifically articulated in statute or are more appropriate for establishment in notice and comment rulemaking

SECTION 8

To address concerns related to ongoing allegations that covered entities are violating the 340B prohibition on duplicate discounts and 340B purchasing restrictions by drug manufacturers that purport to be necessary to prevent such duplicate discounts, this section would establish a new duplicate discount data clearinghouse to be operated by a federal contractor entity. The proposed duplicate discounts to be identified by the new clearinghouse are materially broader than the current scope of the 340B duplicate discount prohibition and would include Medicare, commercial payor contractual discounts and discounts associated with the Medicaid Drug Rebate Program.

As referenced above, the patient financial assistance program requirements are included in this section of the proposed legislation, not Section 7 as indicated in the RFI.

Stakeholders should evaluate the proposed language as it relates to:

• Transparency as to the operations of the clearinghouse, including whether the rules governing the clearinghouse should be established in notice and comment rulemaking

• The scope of “duplicate discounts” subject to review, including whether it’s appropriate to include non-Medicaid duplicate discounts

• Options for non-hospital covered entities to submit information on an aggregated and retrospective basis while not allowing for such an option for hospital covered entities

• Requiring that covered entities be responsible for the repayment of Medicaid duplicate discounts and whether such responsibility is appropriate in all circumstances. For example, should covered entities be responsible for the repayment of duplicate discounts when the state Medicaid program or a Medicaid managed care organization caused the duplicate discount to occur?

• Codifying specific requirements for covered entity patient financial assistance programs and applying them at all covered entity locations and contract pharmacies, including:
  • Whether the proposed financial assistance program requirements are either duplicative of or inconsistent with other existing federal or state laws governing patient financial assistance programs
  • Whether the proposal to require application of covered entity patient financial assistance policies could be implemented upon enactment of the requirement
  • The amount of time post-enactment necessary to establish and implement the proposed patient financial assistance program requirements

SECTION 9

Following efforts at the state level to prevent discrimination against 340B covered entities and contract pharmacies by health plans and pharmacy benefit managers, this section of the SUSTAIN Act would establish similar protections in federal law.

In evaluating this section, stakeholders should consider:

• Whether the proposed protections appropriately address restrictions currently imposed by payors, as well as restrictions that could be imposed in the future, and, if not, what additional protections should be included

• Whether the penalties imposed on pharmacy benefit managers should be imposed on other payors subject to the anti-discrimination provisions

SECTION 10

Consistent with annual requests from HRSA in connection with the US Department of Health and Human Services’ (HHS) budget proposal to Congress, this section imposes a “user fee” program intended to generate funding to administer the 340B Program. As proposed, the user fee funds would supplement and not supplant funds otherwise appropriated for operating the 340B Program.

In reviewing the user fee provisions, stakeholders should focus on:

• The 340B “savings” metric used for calculating the user fee and whether it’s a reasonable estimate of the financial benefit to covered entities participating in the 340B Program

• The appropriate amount of the user fee (currently proposed to be .01% of “savings” under the 340B Program, as calculated in the same manner proposed in Section 6, which may overstate actual 340B savings)

• The enumerated uses for the user fees and whether any specific uses should be added or removed

SECTION 11

This section requires certain studies and reports to be undertaken by MACPAC and HHS for duplicate discounts and contract pharmacy dispensing fees. Stakeholders should consider whether there are additional studies and reports that may be appropriate.

SECTION 12

Section 12 would provide for additional funding from 2025 to 2029 to engage in audits and other program integrity and enforcement activities. The amount currently proposed is $3 million per year.

SECTION 13

Likely in recognition that one of the frequent criticisms of the current 340B Program is that it fails to define key terms necessary for its operation, this section would add definitions for “child site” and “contract pharmacy.”

In reviewing this section, stakeholders should evaluate:

• Whether the proposed definitions of “child site” and “contract pharmacy” reflect current program operations and use of these terms

• Whether additional defined terms should be added (e.g., notably absent is a definition for “patient”)

• Whether defined terms set forth in proposed changes to statutory provisions outside of the 340B Program should be explicitly added, specifically “340B drug” is defined elsewhere in the draft SUSTAIN Act but has not been proposed to be added as a defined term in the 340B Program

SECTION 14

This section would establish that the proposed changes in the SUSTAIN Act would be effective upon enactment. Stakeholders should evaluate whether this is reasonable and whether any specific provisions should have delayed effective dates to allow for time to comply with the requirements.