What State and Local Governments Can Teach Us About Understanding of 340B

This was not the week I was promised, so it’s a late-arriving Curve today. Your patience, as always, is appreciated.

I’m about to throw a whole bunch of links to state- and local-level 340B activity. I’m fascinated by how those levels of government approach 340B because you can see the educational process happening in real-time. 

I don’t want to besmirch the dedicated, civic-minded policymakers in statehouses and city council buildings across the country, but many of those folks are encountering 340B for the first time, and seeing how they process information about 340B is probably predictive of how the larger public -- which is still largely in the dark on 340B -- will react as they learn more. 

Some specifics: 

Minnesota: We’ve talked a lot about the Minnesota 340B report, which was formally presented to the state legislature earlier this week. It’s a good-but-not-perfect piece of work, hampered somewhat by (now corrected) gaps in the information request. 

But it’s prompting the right kinds of questions, as is evident from the video from the meeting. One state senator asked about the impact of 340B on competition, because 340B tends to warp the system in such a way that competition is diminished. Another asked about the impact on Medicaid, which indirectly ends up paying more because of that warping. 

And there were a lot of thoughts about the PBM-340B nexus, including this, from Sen. Glenn Greunhagen: “Anywhere PBMs are close to a government program, or even commercially I find a lot of corruption. The more I learn the more corruption there is.”

Utah: The state is weighing rules that would protect contract pharmacies, and Utah ran an analysis on what it would cost the state’s insurance programs if more prescriptions were moved through 340B contract pharmacies. You can quibble with some of the assumptions, but the low bound of the estimate is about $1.9 million. 

#theydidthemath

The numbers here are really not what’s important. It’s the idea that the expanded use of 340B is not simply a wealth transfer from manufacturers to hospitals. There is a lot of collateral damage. And, in the case of Utah, that expansion will mean collateral damage of about $2 million. (That is in addition to the $4 million in rebates already lost under the current 340B regime.)

Minneapolis: The City of Minneapolis, having heard about all of the weirdness of 340B, commissioned its own report on how the city’s health care interests might intersect with the program. 

Unsurprisingly, the overlap is minimal, but the way that the issue was framed by the city, as a newcomer to 340B, was illuminating, per my original point. The city’s auditor took a deep dive and concluded that it was a weird, controversial program with rapid growth, limited oversight, and “some evidence of exploitation by bad actors.”

That feels like a pretty good summary to me!

I read this Health Affairs Forefront piece, like, three times to try to understand the argument. At its core, it makes the case that the IRA price could encourage drug development, and because it feels so contrary to everything that classical economics suggests -- and everything that commercial reality demands -- I wanted to make sure that I understood it.

But I still couldn’t make heads or tails of the hypotheticals posed, so I threw it to the LinkedIn community, which has done a decent job of trying to explain both the underlying theory as well as all of the ways that it is off-base. 

ELSEWHERE: 

• Here’s a useful resource: the always-plugged-in Rachel Sachs from Wash U’s law school has a Health Affairs Forefront piece reviewing 2024 and offering some thoughts on what to expect in 2025. I don’t think that you’ll be surprised by what she sees coming, but it’s affirming to know someone really smart has the same expectations for next year. 

• Another useful resource: Manatt published a list of possible legislation that might get dropped into the big do-everything-but-mostly-taxes bill that everyone expects later this year. It includes a lot of stuff, including a bunch of things that feel like longshots, but it’s helpful to have everything in one place.

• As a general rule, it’s been fairly rare that companies have talked, on a brand-by-brand basis, about medicines selected for Medicare “negotiations.” So this piece by Endpoints was a nice surprise. It quotes a senior AstraZeneca exec dropping a handful of tidbits on the status of Calquence, including the company’s intention to participate in the process and its belief that the medicine was inappropriately selected.

Cost Curve is produced by Reid Strategic, a consultancy that helps companies and organizations in life sciences communicate more clearly and more loudly about issues of value, access, and pricing. We offer a range of services, from strategic planning to tactical execution, designed to shatter the complexity that hampers constructive conversations. 

To learn more about how Reid Strategic can help you, email Brian Reid at [email protected].