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- [00:01]
A
Welcome to Advancing Health. There are major changes coming in 2026 for the 340B drug pricing program, which for more than 30 years has helped hospitals serving vulnerable communities to manage rising drug costs and direct savings generated by the program back to patient and community needs. In this month's Leadership Dialogue podcast, we get a briefing on what these changes could mean from two healthcare experts who've been watching closely.
- [00:27]
B
Foreign. Thank you everyone for joining us today. I'm Tina Fries Decker, President CEO of corewell Health and the Board Chair of the American Hospital Association. In our last episode, Stacy Hughes walked us through some of the key priorities that the AHA has for the remainder of 2025. Today, we're going to spend some time diving deep into one of those pressing issues, the 340B drug pricing program. So for more than 30 years, 340B drug pricing program has provided financial help to hospitals serving vulnerable communities to manage rising prescription drug costs. The program was established by Congress with bipartisan support and had a clear purpose to require pharmaceutical manufacturers participating in Medicaid to sell outpatient drugs at discounted prices. This helps healthcare organizations that care for a disproportionate share of uninsured and low income patients to stretch limited resources and reinvest savings into expanding access to more patients. The hospitals that are eligible to participate in the 340B program are the safety nets within their communities. As you'll hear from our guests today, eligible hospitals use the savings generated from their participation in the 340B program in many ways to advance access to care, free or discounted medications for low income patients, providing financial assistance, establishing additional clinics to meet community needs or or creating new community outreach programs. So as we jump into this conversation, let me introduce our wonderful guests. We have AHA's Vice President of Advocacy, Grassroots and Government Relations, Amy Kuhlman. Amy leads this work for AHA on Capitol Hill. We are also very pleased to be joined by Paulette Davidson, CEO of Monument Health. Monument Health is based in Rapid City, South Dakota and is composed of five hospitals and over 40 clinics serving 12 rural communities. So I look forward to hearing from Paulette who can share firsthand her perspective of the very real impact that the 340B program has on their ability to provide needed services to their communities. Amy and Paulette, thank you so much for joining us today. So Amy, because this is your passion area, can you give us a quick overview of the Latest activity on 340B? Tell us where things stand right now.
- [02:36]
C
Unfortunately, there is a lot going on in the 340B realm. So I'll start on the regulatory side and then work my way down to legal as well as what we're seeing on the hill on the regulatory side. I think the area that we're watching the closest right now is the rebate model. Earlier this year, HRSA announced a 340B rebate model pilot program that will provide certain drug makers the option to provide the 340B discounted prices for certain drugs under a rebate model. Now, currently most 340B entities are able to purchase 340B drugs at that discounted rate up front. But under this model, certain drugs will have to be purchased at the wholesaler acquisition cost and then those covered entities will have to provide certain claims data to drug manufacturers in order to request a rebate from the drug manufacturer for the difference. Now, the AHA raised significant concerns regarding the implementation of a rebate pilot program. In essence, 340B hospitals will be forced to provide drug manufacturers with an interest free loan. And we estimate there will be significant operational expenses associated for hospitals and the implementation of a rebate model. The pilot will only cover a handful of drugs to begin, but HRSA has left the door open to expanding the program in the future, depending on the performance of this pilot. Now, this would be really a dramatic and potentially devastating change in how the 340B program works, which is why the AHA asked HRSA to abandon the pilot program or at the very least to delay the implementation of it to get a better sense of the financial impact this model will have on 340B hospitals. Unfortunately, HRSA has decided to move ahead and the pilot is expected to begin January 1st of next year. We are currently talking to our members and reviewing the approved plans to determine what our next steps will be in advocacy, as well as providing some technical assistance to our members as they prepare for January 1st of next year. Also on the regulatory side, I want to flag that we are eagerly awaiting the final hospital Outpatient Prospective Payment System rule. That rule is expected any day now. There are several issues that could potentially be addressed in that final rule that will have an impact on 340B hospitals, so we are anxiously awaiting that. On the legal front, I would say that litigation continues in the federal courts across the countries, and more states are passing laws to protect their hospitals. Access to 340B discount at contract pharmacies, and drug companies continue to seek to challenge them. And the AHA has been actively engaged with the state hospital associations and relevant Attorney General offices to support these efforts. Or states who were defending these important laws against litigation efforts by drug companies and pharma. And we are committed to continuing to aid states in these efforts throughout the country. Finally, on the legislative front, there continues to be significant interest from members of Congress and providing oversight of the 340B program. There's also a number of members of Congress who have introduced various pieces of legislation or shared draft legislative text that looks at implementing certain reforms around the program. Most recently, we saw in the past month the Senate HELP Committee hold a hearing that examined the program's growth and its impact on patients. And there was certainly at that hearing significant interest in ensuring that there is more transparency within the program. Members of Congress want to know how the money that hospitals receive from their participation in 340B is helping patients. But I also want to flag that there was significant support for the program from both sides of the aisle. It is clear that members of Congress appreciate and understand that there is value in the 340B program, but there is a desire for more transparency. We expect that we'll continue to see interest from Congress as we move to the new year, especially if the rebate model is indeed implemented.
- [07:46]
B
Wow, Amy, that was really a well done overview of what's going on. And there's so much that's going on. Thank you so much for that. I also know there's a lot of misinformation that makes its way into the public narrative which explains, you know, some of the efforts to fundamentally Change how the 340B program works. What misinformation are you seeing? What are some of the biggest concerns that you have? And how is AHA pushing back? Sharing what the right information is defending on what we are doing, which is trying to get care to the people that most need care?
- [08:19]
C
Yes, well, unfortunately, opponents of the program are spreading some misinformation about the program, how it works, and what it is intended to do. And this has long been the case. And the AHA has for years been advocating and pushing back on all of the various false narratives. I'd say some of the larger ones that we've heard over the years is that the primary program has grown too much, it's ballooned too much and isn't really serving its intended purpose. We have done a number of reports and posts, et cetera, for our members on our website that help them in pushing back on these false narratives while the program has grown. Most of that growth is because Congress chose to expand the program, allowing new types of hospitals to come into eligibility several years back. So that's part of it. And when you look at the underlying growth and you see the amount of savings associated with the program, that is a direct result of the prices that drug companies set. In reality, the amount of savings that hospitals receive is due to the cost that drug companies are setting. We also have a 340B advocacy alliance that I, I would encourage all of our members, if you're not already a part of, if you are a 340B hospital, please join. That is the way that we communicate to our 340B interested members regularly about the latest on 340B and all of our advocacy efforts to push back on some of these false narratives.
- [10:06]
B
Thank you, Amy. So, Paulette, we've just heard a lot from Amy on what's going on, what the AHA is doing. As a leader of a hospital that participates in this program, I want to get your perspective. Can you give us a few examples of where your 340B savings go and how vital the program is to your community?
- [10:26]
D
The 340B Prescription Drug Program is a vital lifeline for our ability to care for our region. Last year we provided over $123 million of care, uncompensated care, and community benefit for our region. You know, our 340B savings last year was about $84 million. And you can see clearly we're doing more than what the overall savings of the program were bringing to us. For example, we operate our neonatal intensive care unit, 28 bed unit, in a 350 mile radius. But we know all the costs of operating that neonatal intensive care unit aren't covered by what we received for that care. We invested through the 340B dollars, $6 million to that program last year. Very similar to behavioral health. We have a behavioral health acute care hospital where we care for children and adults. And again, what we receive for reimbursement for providing those services in this region do not cover the cost. Another $6 million came from our 340B dollars into that program. We're also investing in other not for profit community organizations throughout the region to help with our community benefit plan. Really bringing care to everyone and raising the ability to care for everyone in the region. Transportation is a huge issue issue out here in western South Dakota. We provided over $800,000 in free transportation, getting patients to and from a doctor's appointment or when they're discharged from a hospital. It takes hours at times to get someone home and they don't have transportation. I would say one of the biggest helpful Things we've been able to do is keep those local, small, small town pharmacies open, many throughout South Dakota. We're seeing a lot of those small retail pharmacies close, unable to continue to perform those needed services. And through our contract with our 340B prescription drugs, we are able to give uninsured or underinsured patients almost free medicines to help them stay healthy and stay out of the hospital. We have four critical access hospitals. They undoubtedly would struggle if those dollars weren't redirected into those small communities to keep those hospitals open. I could go on and on. We have an amazing cancer program where we're providing specialized oncologic drugs that people can take orally or they can come in and get infusions for. Many of those drugs are provided to those patients free or at no cost. The needs are endless. And we are a great example, like other health systems hospitals in our country of how we take those dollars. And those are dollars coming directly from pharmaceutical corporations. They're not taxpayer dollars. There are dollars that we're using and we're doing good as the program was designed to, to create that lifeline where for those vulnerable patients in our communities.
- [13:52]
B
Paulette, you outlined in very good detail about what would happen if we do lose this funding because it would have such a detrimental effect, especially for our rural providers. When you think about communicating all the value that's provided, do you have a transparency process of how you share in those numbers that you just quoted with your community?
- [14:12]
D
We do. We take time. We educate all of our community leaders through just relationships. Of course. My leadership team serves on other service organizations boards and we talk about the importance of 340B. We work with our congressional delegation, most importantly so they understand how important it is to preserve and protect the 340B program as it was designed. And we talk about the repercussions, we talk about what we do with the dollars and. And we invite our congressional delegation to come and visit and actually see the programs, come to our cancer center, see how we're using those dollars, come to our dialysis centers, see who we're actually impacting through those services, come to our specialty pharmacy and see the number of patients that are actually getting free to no cost drugs because of this program. And so when we can show our mayors and we can show our state representatives and we can show our federal delegation what we're doing, I think it's unifying this past year in our own state, we had pushback in allowing our organization and other organizations in South Dakota to contract with those small retail pharmacies. And fortunately, we were able to educate our legislature and. And explain how and why we need to do this. And our legislature protected our ability to contract with those local pharmacies. And so I think talking with all your stakeholders and showing how you're using the dollars and that it's not taxpayer dollars really can tell the right story.
- [16:01]
B
Those are great best practices for all of us to deploy. Thank you. So, Amy, any predictions on how this is going to play out from a legislative, regulatory, or legal perspective and what we could expect is next?
- [16:13]
C
Yeah, great question. You know, as we move into next year, I think looking at the rebate model, how it gets implemented on the regulatory side, and I know folks on the Hill will be eagerly watching that as well. So that's something that I would flag on the legislative front, I would say, again, there is continued interest in providing oversight and looking at potential ways to reform the program to address some of the concerns that have been raised, not just by drug companies, but by providers as well, especially around contract pharmacy and potentially as well with the rebate model.
- [16:57]
B
So.
- [16:58]
C
So we expect to see additional hearings and perhaps additional legislation to look at reforming the program on the legal front, obviously, the contract pharmacy cases will continue. And of course, our legal team is always ready to engage as needed on any other issues that may come up in the 340B world.
- [17:20]
B
Thank you. Amy Paulette, any last thoughts that you have as a field and independently, what we should be doing?
- [17:27]
D
I think we should continue to work with our congressional delegation, continue telling the stories. This is about caring for people and our ability to provide those vital resources as far as healthcare in all of our communities. And I think if we can put a face with this program, meaning our neighbors, our family members, our community members, that's our job, to continue to tell the right story, because that's what resonates with people that care.
- [18:00]
C
Amy, I could just echo what Paulette has said. It's been really inspirational just to listen to her talk about her system and how they're using 340B to better the lives of the patients and communities that they're serving. That really is what it's all about. And it is so important that hospitals that participate in this program. Program or talking to their elected officials and making sure they understand what they're able to do because they have access to the program and what it would mean if this program were to be taken away or severely limited in some sort of manner for the patients that they're serving and putting that face on it is so incredibly important and such a critical part of our advocacy.
- [18:49]
B
You're right. It's a vital program. We are doing everything we can to protect it. We also want to make sure that we can do everything we can to continue to provide care and improve the health in each of our communities. So, Paulette, thank you so much for joining us to share your important perspective and for all you're doing to take care of people in South Dakota. And Amy, we appreciate all the work that you and the AHA team do on our behalf, and thank you all for listening to us. We will be back next month for one last leadership dialogue with me and the incoming AHA board chair, Dr. Mark Boo. Have a wonderful day.
- [19:22]
A
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