Oncology leaders are warning against various bills being considered in state legislatures across the country that would prohibit drug manufacturers from limiting the number of 340B contract pharmacies. Experts said that this would only serve to exacerbate the program’s flaws. These concerns were shared during a session at the 2024 Community Oncology Alliance (COA) Payer Exchange Summit in Reston, Virginia.
The 340B Drug Pricing Program was created in 1992 to help eligible hospitals and practices that serve patients in underserved populations by requiring drug manufacturers to provide outpatient drugs at significantly reduced prices. However, critics say that the program does not have adequate oversight and that hospitals purchase discounted medications under the program and charge higher prices. A New England Journal of Medicine study published earlier this year found that price markups at 340B-eligible hospitals were 6.59 times higher than those seen at independent physician practices.
Debra Patt, MD, PhD, MBA, a breast cancer specialist and executive vice president of Texas Oncology in Austin, cited an example of a community oncologist prescribing ribociclib (Kisqali), an expensive oral therapy, which would have a 340B discount of 50%. That prescription would commonly be steered to a pharmacy benefit manager (PBM) and vertically integrated specialty pharmacy for delivery, with the employer that covers the insurance plan paying full price.
“That 50% margin can be split between the PBM and the hospital system. And so, essentially, as an employer using a third-party administrator, you’re funding a great deal of that profit to others in this program that’s driving up premiums,” said Dr. Patt.
In 2024, more than 20 states saw legislation introduced designed to expand the number of 340B contract pharmacies. “There’s a battle that’s been going on between some of the manufacturers and these contract pharmacies, and the states are navigating [it],” said James Lee, director of state regulation and policy for COA.
“They’re hearing from the contract pharmacies who are propping up underserved communities as a shield in this conversation and saying that ‘this is why we have to act on this,’ ” he added.
Both Lee and Dr. Patt said that it is critical for the oncology community to educate state lawmakers on the actual intent of 340B and the consequences these laws may have. One case that Lee noted was in Virginia. The state’s General Assembly passed legislation that would have allowed for more 340B contract pharmacies; however, Governor Glenn Youngkin proposed an amendment to evaluate the 340B program’s use in Virginia.
Governor Youngkin’s recommendation included oversight of the program, listing and identifying pharmacies partnered with 340B entities, and examining how they are using the cost savings. Ultimately, the Virginia Senate rejected Governor Youngkin’s amendment by a vote of 21–19, and he vetoed the bill altogether in May.
“This is the first time we’ve really seen an executive move forward with a policy proposal on this, and I think it’s something that is exciting because we may see this replicated in other states as we move forward and discuss this issue further,” said Lee.
Dr. Patt reported various industry relationships.