Katko urges against HHS changing drug pricing program

U.S. Rep. John Katko (R-NY) joined a bipartisan contingent of lawmakers in requesting that the U.S. Department of Health and Human Services (HHS) resist changing the 340B Drug Pricing Program from a discount model to a rebate model.

Such a change would cause a significant increase in the cost of prescription medications just as many residents are experiencing increased economic strain due to the COVID-19 pandemic, according to the congressman.

“With lawmakers from both sides of the aisle, I’m urging HHS to prevent pharmaceutical companies from implementing changes that would damage the 340B program,” Rep. Katko said. “Especially during this pandemic, we must be resolute in our defense of the 340B program to ensure underserved communities have access to the medications they need, at affordable prices.”

Rep. Katko reiterated that stance in a recent letter sent to HHS Secretary Alex Azar. U.S. Rep. Abigail Spanberger (D-VA) was among the 215 other lawmakers who signed the letter.

Section 340B of the Public Health Service Act requires drug manufacturers to enter into a pharmaceutical pricing agreement with HHS in exchange for having their drugs covered by Medicaid and Medicare Part B, according to the lawmakers, who wrote that they “are deeply concerned by reporting that Kalderos, a third-party vendor, is working with pharmaceutical manufacturers seeking to change how covered entities receive 340B drugs by shifting from a discount to a rebate formula.”

Kalderos on Sept. 8 announced the launch of 340B Pay, a software system it claims “allows manufacturers, covered entities and Medicaid agencies to work together to effectuate discounts compliantly and efficiently,” according to the letter.

“This platform could make participation in 340B more difficult for covered entities, effectively reshaping the 340B program in a way that only serves manufacturers’ and these third-party vendors’ financial interests,” the members wrote. “These tactics open the door for significant compliance issues, threatening to put manufacturers in violation of their statutory obligation to provide 340B pricing.”

Rep. Katko and his colleagues requested that Secretary Azar answer several questions by Nov. 30, including whether Kalderos, any other third-party vendor, or any drug company has sought input from HHS regarding the use of a rebate model for covered entities, and what guidance HHS has provided these companies regarding the use of such a model.