THE IMPACT OF 340B REIMBURSEMENT CUTS ON CANCER CENTERS

THE IMPACT OF 340B REIMBURSEMENT CUTS ON CANCER CENTERS

PRESENTERS Jeff Davis Senior Advisor and Of Counsel Baker Donelson Cheryl L. Willman, MD Director and CEO UNM Comprehensive Cancer Center Sandra F. Durley, PharmD Senior Associate Director, Ambulatory Care Pharmacy Services UI Health

340B PROGRAM BACKGROUND Enacted by Congress on a bipartisan basis Requires drug manufacturers to sell outpatient drugs at discounted prices to safety-net providers Public and nonprofit hospitals qualify for 340B if they serve high volumes of low-income patients or are located in rural locations 340B hospitals include large academic medical centers, freestanding children s and cancer hospitals, and rural facilities 340B hospitals use program savings to support care for low-income and rural patients

340B AND CANCER CENTERS Many academic cancer centers are affiliated with or are a part of a 340B hospital Nearly 80% of National Cancer Institute (NCI)-Designated Cancer Centers are affiliated with 340B hospitals 340B hospitals use 340B-discounted drugs in outpatient facilities where physicians are under the control of the hospital's medical director If a cancer center is part of a 340B hospital, it is likely that it is accessing chemotherapy products at discounted rates of 50-60% Low-income cancer center patients are able to access affordable clinical and pharmacy services because of the 340B program

340B HOSPITALS SUPPORT CARE FOR LOW-INCOME CANCER PATIENTS 340B hospitals treat over 60% more low-income cancer patients than non- 340B hospitals and physician practices Source: https://www.340bhealth.org/files/lowincomeoncology.pdf 340B hospitals report using program savings to maintain and improve access to affordable infusion services and operate infusion clinics In rural areas, 340B allows patients to access infusion services close to home without driving hundreds of miles to access cancer care

COMMUNITY ONCOLOGY CONCERNS The Community Oncology Alliance (COA) says hospitals abuse the 340B program and supports legislation that would limit the program Source: https://www.communityoncology.org/340b/ COA has suggested 340B causes hospitals to acquire private oncology practices, shifting cancer care into more expensive settings hospitals note this is a national trend driven by many reasons unrelated to the 340B program Dr. Debra Patt, Executive Vice President, Texas Oncology and member of COA board of directors, testified before the House Energy and Commerce Health Subcommittee in July 2018 supporting changes that could narrow 340B Source: https://docs.house.gov/meetings/if/if14/20180711/108524/hhrg-115- IF14-Wstate-PattD-20180711.pdf

DRUG INDUSTRY CONCERNS Drug manufacturers attribute 340B growth as a cause for increased drug prices, express concern that 340B hospitals do not provide high levels of charity care, and support legislative proposals that would limit the 340B program 340B is a small share of the drug market and cannot plausibly cause high drug prices; 340B discounts are less than 2% of drug manufacturer revenues Source: https://www.healthaffairs.org/do/10.1377/hblog20180807.985552/full/ 340B disproportionate share (DSH) hospitals provide more charity care than non-340b hospitals Source: https://www.gao.gov/assets/700/692587.pdf 340B hospitals provide unreimbursed care in other ways as well, including through treatment of underinsured patients and Medicaid patients; 340B DSH hospitals are 38% of hospitals but provide 60% of uncompensated and unreimbursed care Source: https://www.340bhealth.org/files/340b_report_03132018_fy2015_final.pdf

POLICIES AND PROPOSALS LIMITING 340B Medicare reduced reimbursement to certain 340B hospitals for separately payable Part B drugs by nearly 30 % in 2018 Outpatient Prospective Payment System (OPPS) final rule, claiming the policy reduces drug costs Medicare proposed continuing the payment cut and extending it to additional locations in 2019 OPPS proposed rule Comments due to CMS September 24 and can be submitted on www.regulations.gov The Administration suggested possible program changes that could limit the 340B program s size as part of efforts to reduce high drug prices Current legislative proposals that would shrink the size of the program include: Changing hospital eligibility criteria Taking away the ability to use 340B drugs for patients in certain situations, including limiting to uninsured patients only Placing a moratorium on hospital registrations

CANCER CENTER PERSPECTIVE THE UNIVERSITY OF NEW MEXICO COMPREHENSIVE CANCER CENTER The University of New Mexico NCI-Designated Comprehensive Cancer Center (UNMCCC) is a component of the UNM Health System and the UNM Health Sciences Center UNMCCC is a hospital-based or provider-based cancer center All inpatient clinical activities and our separate outpatient cancer center and clinical trials program are components of UNM Hospital, New Mexico s primary public safety-net hospital that participates in the federal 340B program Mudjekewiss: Spirit Keeper of the West

NEW MEXICO AT-A-GLANCE New Mexico is one of the nation s poorest states: a substantial number of New Mexicans, particularly its minority populations, are poor (nation s highest rate of childhood poverty), rural (30/33 NM counties are RUCC 5-7 or 7+), and underserved (20% medically uninsured) Patients served by UNMCCC are reflective of the New Mexico catchment area: UNMCCC in ABQ provides care for 60% of NM cancer patients: 48% from the 4 surrounding counties; 52% from every county in the State 52% are racial/ethnic minorities; predominantly Hispanic, American Indian 55% are from medically underserved rural counties and American Indian Nations with high rates of poverty, unique patterns of cancer incidence and poorer survival, and tremendous cancer health disparities 13% remain uninsured despite ACA and a federal Medicaid Waiver Through a statewide collaborative clinical trials network with community systems and providers, UNMCCC impacts nearly 90% of NM patients

EXCELLENT OUTCOMES, HIGH COST Excellent outcomes for cancer patients require access to clinical trials and new cancer treatment modalities (precision medicine, targeted therapies, immunotherapies, experimental therapies) which are often of very high cost Underserved and minority patients more frequently present with advanced disease and have unique cancer patterns, with increasing frequencies of poor prognosis cancers UNMCCC provides care for all New Mexicans, regardless of their ability to pay, treating a large number of Medicare (47.3%), Medicaid (14.9%), and uninsured patients (13%) In its outpatient clinics in Albuquerque, UNMCCC provides uncompensated care that exceeds $10 million annually The 340B program saves UNMCCC $10 million annually in drug purchases and has been a critical factor for the development of a comprehensive center in one of the nation s poorest states

FINANCIAL IMPACT ON UNMCCC As mandated by Congress when it created the 340B program in 1992, net savings from drug purchases are to be reinvested in the development of comprehensive treatment, research, teaching, and community outreach programs that assure that all cancer patients have equal access to the same quality of cancer care As noted, the UNMCCC saves $10 million annually in drug purchases through 340B Under the new CMS rule effective 1/1/18, UNMCCC experienced a 27.5% reduction in CMS reimbursement for cancer drugs purchased under the 340B program a $9.8 million annual loss effectively fully eliminating the intended benefit of the 340B program Within the NCI Cancer Centers program, the new CMS rule excluded 10 PPS-exempt cancer hospitals in 8 states, while adversely impacting 52 NCI centers in 33 states and DC These disproportionately impacted cancer centers are often in health systems that play a critical role in bringing cancer research, clinical trials, and high-quality cancer diagnosis and treatment to patients who are more frequently minority, poor, uninsured, and underserved Thus, the CMS rule significantly exacerbates cancer health disparities and threatens equal access to state-of-the-art cancer care for cancer patients across the nation

PHARMACY PERSPECTIVE UNIVERSITY OF ILLINOIS HOSPITAL & HEALTH SCIENCES SYSTEM UI Health provides comprehensive care, education, and research to train healthcare leaders and foster healthy communities in Illinois and beyond. A part of the University of Illinois at Chicago (UIC), UI Health is a clinical enterprise that includes a 465-bed tertiary-care hospital, 21 outpatient clinics, and 11 federally qualified Mile Square Health Centers. The health system also includes the academic and research activities of the seven UIC health science colleges: College of Applied Health Sciences; College of Dentistry; School of Public Health; Jane Addams College of Social Work; and the Colleges of Medicine, Pharmacy, and Nursing. UI Health is dedicated to the pursuit of health equity.

POPULATION SERVED AT UI HEALTH The UI Health primary service area includes the poorest and most vulnerable Chicago communities Inadequate access to healthcare: Lack of insurance/underinsured Unable to afford insurance Unable to afford medication Medicaid/Medicare comprised 68% of outpatient clinic visits in FY17 68% of outpatients African American/Hispanic in FY17 Source: University of Illinois Community Assessment of Needs (UI-CAN) 2016: Toward Health Equity http://hospital.uillinois.edu/documents/about/2016chna_v6.pdf

UI HEALTH 340B PARTICIPATION ONE LEGAL ENTITY, TWO 340B-COVERED ENTITIES University of Illinois Hospital FQHC 28 child sites Cancer Clinic

MEDICATION ASSISTANCE PROGRAM (MAP) MAP assists UI Health patients who are uninsured or underinsured transition into long term prescription coverage. Provides access to necessary maintenance medications at discounted copays to minimize hospital readmission Reviews medication therapy for appropriateness, possible interactions, and possible lower-cost alternatives MAP assists with the following applications: Social Security Extra Help Pharmaceutical Manufacturer Patient Assistance Programs (PAP) Medication/Disease state based copay foundations Medicare Part D consults available upon request Provides referrals to UI Health Financial Case Management Unit for Medicaid applications

340B PATIENT STORY N.L. N.L. is a 9-year-old second grader who enjoys art class and is undergoing treatment for a brain tumor with a chemotherapy regimen of thioguanine/procarbazine/lomustine/vincristine. The majority of N.L. s current treatment is covered by her Illinois Medicaid HMO, except for the thioguanine (Tabloid). In spite of many weeks trying to get it covered, the plan treated the medication as non-formulary and would not make an exception. With five other children at home, N.L. s family is unable to afford the $330 retail cost. Through the 340B program, NL is able to receive thioguanine at 340B cost. This has greatly reduced her symptoms related to the tumor, including visual disruption, balance difficulties, and nausea/vomiting. Although NL has a long road ahead of her, she is currently tolerating this new regimen, and seems to have some stabilization of her disease. 9/11/18 Update: Patient has started school and is generally well, with no evidence of tumor progression.

340B PATIENT STORY I.H. Around Christmas of 2017, I.H., an uninsured 30-year-old man with no prior medical conditions, began to experience blurry vision, neck pain, and frequent headaches. When his symptoms began to worsen after New Year s Day, he went to the ER. After a battery of tests, there was no clear cause for his symptoms, so I.H. was transferred to UI Health for neurosurgical evaluation. At UI Health, I.H. was diagnosed with acute promyelocytic leukemia (a form of acute myeloid leukemia). He was started on treatment in the hospital but, upon discharge, he was still without prescription insurance and was referred to the Medication Assistance Program. Using 340B discounts, the Medication Assistance Program was able to provide $5,700 worth of medication to I.H. for only $20. I.H. wanted nothing more than to get well. Having access to medication, in a timely manner, helped I.H. retain the remission that he achieved in the hospital.

FY18 340B DRUG SPENDING Total 340B Purchases $48,690,853 $23,166,620 48% $25,524,233 52% Oncology Purchases All Other Clinics

IMPACT OF MEDICARE PART B PAYMENT REDUCTION Projected Revenue Loss: $2.2 million reduction in revenue 82% from clinic infused Oncology medications ($1.8M of $2.2M) All Other Part B Drug Charges 18% Oncology Clinic Infused Medications 82%

CONCLUSION Participation in the 340B Drug Discount program enables covered entities to provide access to low-cost medications and expand patient care services Cancer medications are expensive and comprise a significant portion of the 340B drug budget The Medicare Part B payment reductions have a negative financial impact on 340Bcovered entities Oncology medications represent a large percentage of payment reductions Continued payment reductions or changes that limit the 340B program may affect ability to continue to offer patient care services that are funded through 340B savings

AACI 340B DRUG PRICING PROGRAM IMPACT SURVEY 18 AACI cancer centers responded 17 cancer centers are 340B-eligible For 340B-eligible cancer centers: The impact of the cuts in the first quarter of 2018 were in the millions of dollars Patient populations impacted included racial and ethnic minorities, low-income individuals, and medically underinsured and uninsured individuals Impact of 340B Reimbursement Cut to Main Cancer Center and Network Practice Sites: 4 of the responding centers indicated they had to lay off staff 5 of the responding centers indicated they have slowed or suspended faculty recruitments 3 of the responding centers indicated they have reduced or suspended education and training programs 4 of the responding centers indicated they reduced or suspended community engagement 2 of the responding centers indicated there has been an impact to patient support services

HOW CANCER CENTERS CAN HELP Write an op-ed in your local newspaper highlighting the importance of 340B to cancer centers and to the patients you serve Write a letter to your Senators or Congressional representative on the importance of the 340B program, specifically expressing support for how the 340B program has allowed the cancer center to improve access to patient care Connect via social channels on the importance of access to care via the hashtag #Protect340B Share your story: 340B Health is collecting narratives on how the 340B program has been instrumental in advancing cancer care Need supplemental educational resources on the 340B program? Contact Jennifer Pegher at AACI: jen@aaci-cancer.org