The President’s 2020 Budget Keeps 340B Program in the Spotlight

On March 11, 2019, the President delivered his proposed 2020 budget to Congress. While a President’s budget proposal is the beginning of a lengthy budget process, this proposed budget nonetheless keeps the 340B Program in the national focus and delineates the President’s position on desired 340B Program changes.

Specifically, the President’s proposed 2020 budget requests the following 340B Program changes:

• Grant the Health and Human Resources Administration Office of Pharmacy Affairs (“HRSA OPA”) broad regulatory authority for the 340B Program to set enforceable standards of program participation;
• Require all 340B Program covered entities to report on use of program savings;
• Establish and collect user fees from 340B Program participating covered entities to pay for 340B Program administrative costs;
• Modify Medicare Part B payment for drugs hospitals purchased through the 340B Program and require a minimum level of charity care for hospitals to receive a payment adjustment related to uncompensated care (essentially endorsing the significant Medicare Part B payment reductions for 340B drugs implemented in the contested CMS regulations described in detail here); and
• Remove transitional pass-through payment for drugs, biologicals, and biosimilars from the outpatient prospective payment system (“OPPS”). Eliminating pass-through payment for drugs, biologicals, and biosimilars will lower patient out-of-pocket costs by making them eligible for the reduced 340B payment level, while also effectively reducing reimbursement for covered entities.

While most of these proposals are old news to 340B Program stakeholders, their inclusion in the President’s 2020 budget suggests that there is still momentum to implement these proposals. This momentum continues despite recent legislative and judicial setbacks over the preceding months, as we have outlined in a recent article. Nonetheless, the future of these proposals is uncertain during this divided Congress.

For more information on the President’s proposed 2020 budget and how it might affect your 340B program participation, please contact your Quarles & Brady attorney or:

• Brenda M. Maloney Shafer: (602) 229-5774 / brenda.shafer@quarles.com
• Richard B. Davis: (414) 277-5844 / richard.davis@quarles.com