National Alliance of Healthcare Purchaser Coalitions – Federal 340B Drug Pricing Program Reform

Legislation and Regulatory Changes to Watch

Shawn Gremminger, CEO, National Alliance

The National Alliance is advocating for reform of the federal 340B drug pricing program, which requires pharmaceutical manufacturers participating in Medicaid to sell outpatient drugs at steeply discounted prices to the clinics and hospitals that serve uninsured and Medicaid patients. According to the law, the qualifying health care providers may sell the medications to patients at market rate and keep the difference between what they paid and what they received in reimbursement from the patient’s insurance plan. The law intended for the participants to use the surplus to provide low-cost drugs to patients in need and expand services for low-income communities. However, since enacted in 1992, the program has grown exponentially to over $50 billion annually and employers are now covering much of the cost. The National Alliance supports legislation to tighten eligibility and require participants to publicly report how they use the funds or limit their use to enhance access to care and expand services in underserved communities.

Regarding proposed legislation, the National Alliance supports efforts to improve transparency and accountability of pharmacy benefit managers (PBMs). Similarly, it advocates requiring all rebates and discount-generated revenue are passed on to the plan sponsors (employers). Meanwhile, the National Alliance is watching regulatory changes on the horizon. The Department of Health and Human Services (HHS) is expected to adopt new rules to strengthen enforcement of the Mental Health Parity and Addition Act (MHPPA), a law that prevents group health plans and health insurance issuers that provide mental health or substance use disorder (MH/SUD) benefits from imposing less favorable benefit limitations on those benefits than on medical/surgical benefits. While the National Alliance supports greater access to mental health services, it wants to ensure that employers will not be penalized for failing to provide services because of the lack of mental health workforce or resources in any area.