Proposal Looks to Expand Access to Affordable Insulin and Epinephrine; Impact Unclear

Last week, the Trump Administration released a proposed rule that would require federally-qualified health centers (FQHCs) to offer insulin and injectable epinephrine to certain Americans at the drugs’ 340B-discounted price. 340B is the program that requires pharmaceutical manufacturers to offer discounted drugs to qualifying entities. In short, the program establishes a “ceiling price” equivalent to a drug’s net Medicaid price (average manufacturer price (AMP) less the statutorily required discounts); manufacturers are free to set a 340B price below the ceiling price. Because 340B prices are exempt from Medicaid drug rebate calculations, a discounted 340B price does not impact a manufacturer’s broader pricing strategy, at least from a mathematical standpoint.

Entities eligible to purchase drugs at a 340B discount may dispense those drugs to any qualified patient. If that patient has health insurance, the entity may bill the insurance plan as normal and may keep the additional funds generated because of the 340B discount. Entities are supposed to use those funds to continue to offer services to underserved communities, but there is no requirement that they do so.

The proposal would be limited to FQHCs, one type of 340B entity. According to the Health Resources and Services Administration (HRSA), there are currently 13,000 FQHCs that serve over 30 million Americans.

FQHCs would be required to offer injectable insulin and epinephrine at or below the 340B-discounted rate to patients with incomes below 350% of the federal poverty level (FPL). In 2020, that would equal a household income below $44,660 for an individual and $91,700 for a family of four. FQHCs would be able to charge a “minimal administrative fee” as long as the fee does not block access to services.

Patients would also either need to be uninsured, covered by a plan with a “high cost sharing” requirement, or be enrolled in a high-deductible health plan (HDHP) and have an unmet deductible.

“Patient” would be defined as someone who receives services other than the dispensing of either insulin or injectable epinephrine from the FQHC (e.g. that would include patients who see a clinician at the FQHC for management of their condition but would not include a patient who sees a clinician working outside the facility for management of their condition, unless the patient receives other services at the FQHC as well).

• HRSA is proposing to define “high cost sharing” as a copayment/coinsurance that would be greater than 20% of the 340B-discounted price.

• The Internal Revenue Service establishes the limits for HDHPs each year; for 2020 and 2021, a health plan with a deductible of at least $1,400 for an individual or $2,800 for a family is considered a HDHP.

Potential Impact on Patients

The proposal could have a positive impact on patients, particularly those who are insured, but struggle to afford insulin and/or injectable epinephrine. For those patients that do not currently seek care at a FQHC, however, it would require the patient to be aware of the program, locate a FQHC, and possibly switch to a qualifying prescriber within the FQHC.

The impact is also limited in scope to two drug classes, and does not address other drugs that patients may or may not have difficulty affording.

Potential Impact on FQHCs

FQHCs could see additional patients because of this policy. However, they may also see reduced funding if they are no longer allowed to charge “market rates” to health plans. The proposal does not specify, but it is likely that the FQHC would be required to set the reimbursement rate equal to the 340B price in order to be able to meet the requirements of the rule related to cost-sharing for insured patients.

Potential Impact on Manufacturers

From the perspective of an insulin or injectable epinephrine manufacturer, there is a risk that sales would shift from the commercial book of business to the 340B book of business.

The proposal is subject to a 30-day public comment period, meaning that a final rule could be issued before the end of the year.