Reported Executive Action on Drug Pricing Could Impact 340B Program and Contract Pharmacies

By , Published On: June 28, 2017

According to multiple reports, the Trump Administration is preparing to issue an Executive Order designed to address high drug costs.  One purported draft that circulated widely last week indicates that the 340B program could be addressed in any such order.

The purported draft order contained the following provision:

The Secretary of Health and Human Services shall ensure that resources provided by the program established by Section 340B of the Public Health Service Act are directed in such a way they primarily benefit the lower income or otherwise vulnerable Americans for which the program was intended, including by rescinding or revising regulatory or other administrative actions that have allowed benefits of the program to accrue to other populations or entities other than the safety net healthcare providers that the program was intended to strengthen.

The directive – to rescind or revise regulatory or other administrative actions that have benefited those other than safety net providers – likely describes HRSA’s contract pharmacy guidance.  The guidance arguably benefits pharmacies because they receive compensation for providing dispensing services.  Other leaked documents have indicated that the contract pharmacy program is under fire from the administration’s “Drug Pricing and Innovation Working Group,” which is led by a former lobbyist for drug company Gilead.

The provision also contains seemingly conflicting descriptions of the intent of the 340B program.  It first states that the program is intended to primarily benefit low-income and vulnerable Americans but later affirms that the program is intended to strengthen safety net healthcare providers.  The former is the intent offered by critics of the 340B program who want to see it act more as a patient assistance program, and the latter appears to refer to the congressional intent often cited by the Health Resources and Services Administration (HRSA) and supporters of the program that it was intended to enable covered entities to “stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.”

The purported draft order is just that – a draft that is purported to be a White House document.  It might not be authentic. The final product, if one is issued, might not resemble the draft.  In any event, the inclusion of a reference to the 340B program in such a document means that the program is likely being considered in the context of executive action to tackle rising drug costs.

For more information, or if you have any questions regarding this topic, please contact Jason Reddish (jreddish@ftlf.com), Michael Glomb (mglomb@ftlf.com), or the Feldesman Tucker Leifer Fidell LLP attorney with whom you regularly work.