EP448 (Part 1): 340B: Where It Started, Where It Is Now, and Who Is Really Benefiting From This Massive Program, With Shawn Gremminger

So, after some pondering, I decided to release this conversation with Shawn Gremminger about 340B in two parts. So, listen to one, listen to both, pick your poison. Shawn Gremminger came up with three really important takeaways relative to 340B, which is a feat unto itself, considering how sprawling this conversation can be. So, if you came here for some concise and actionable takeaways, you have come to the right place.

For a full transcript of this episode, click here.

If you enjoy this podcast, be sure to subscribe to the free weekly newsletter to be a member of the Relentless Tribe.

This first part you are listening to right now zeros in on Shawn’s first takeaway: whether or not the original intent, or the presumed original intent, of the 340B program has actually been met.

Many do not realize that 340B began life as a caterpillar. It originally, actually, was conceived as a lowly bureaucratic fix called "The Medicaid Drug Rebate Amendments of 1992". Shawn covers how this program came about in the Energy and Commerce Committee where this all began. But over the past 15 years, it has gone into a chrysalis and emerged into a 500-pound gorilla that sits in the corner of a lot of rooms, actually—probably more than many people realize. All of that being said, when you’re done listening to this first part of the convo, you should be able to competently assess whether or not 340B does, in fact, adequately help underserved communities get better healthcare—because 340B is supposed to help safety-net healthcare providers stretch scarce resources.

The second part of the show, which is a separate episode called Part 2, is how all of this impacts employers and commercial plans. And there’s two more takeaways there.

So, if you already have the gist of how we got from the beginnings of 340B to where we are in 2024 already and all you want to hear about is why do employers care about what amounts to a low-income program or was purported to be a low-income program, feel free to zip over to the second show and cut to that chase.

If you’re still with me for this Part 1—and I hope you are, because … wow, it’s a wild and tangled journey—here’s an outline of where this first part of the discussion is headed. So, for the sake of posterity and having this introduction transcribed in your inbox, here you go. Here’s the outline.

First, Shawn describes how the program expanded over the years due to the rise of Medicaid enrollments and hospital consolidations, which leads to more hospitals that will qualify for 340B status. Hospitals and others that qualify, by the way, are called covered entities, or CEs. This expansion, and other goings-on (such as hospital systems linking many outpatient clinics to their 340B eligibility, and also for-profit contract pharmacies getting in on the game and exploiting weak patient definitions), all of this has contributed to widespread use, which some may consider misuse, of the 340B program, significantly altering the healthcare market.

Today, 340B is the second-biggest drug buying program in the country, after Medicare Part D, to the tune of $53 billion running through it.

After that, Shawn goes on to point out that there’s no statutory requirement for hospitals to reinvest 340B proceeds into charity care or community services.

So, the program is supposed to allow hospitals to arbitrage dollars and put those arbitrage dollars into charity care, but yeah … there’s no mechanism to track what they’re doing with the money, resulting in a lack of transparency and accountability regarding the financial benefits gained from this program.

And all of this wraps up with Shawn contending that while the original intent of the 340B program might have been well meaning, the current implementation raises serious questions about its effectiveness and fairness. So, significant reform is in order? Mentioned in this episode is Adam Fein, PhD, from the Drug Channels Institute, who has given some comments on 340B. And also a new report out from Neal Masia, PhD, and Health Capital Group.

Shawn Gremminger, my guest today, is the relatively newly installed president of the National Alliance of Healthcare Purchaser Coalitions. But rounding out the why, as in why did I ask Shawn to come on the show today and talk about what is or was supposed to be a program for low-income adults and children, Shawn started his career doing government relations for the Children’s Hospital Association. He spent nine years at America’s Essential Hospitals, which represents the big kind of urban safety-net public hospitals around the country. And since then, he has been in a number of different roles representing consumers and employers.

So, he’s seen this 340B juggernaut from many perspectives, I guess, is the main point. And it’s a big point because it was hard (with a capital H) to find a guest so situated.

Also mentioned in this episode are National Alliance of Healthcare Purchaser Coalitions; Adam Fein, PhD; Drug Channels Institute; Neal Masia, PhD; Health Capital Group; Children’s Hospital Association; America’s Essential Hospitals; Health Resources and Services Administration (HRSA); Vikas Saini, MD; and Judith Garber, MPP.

Also mentioned during this show, the Pet Shop Boys—right, shout-out to Gen X!

You can learn more at National Alliance of Healthcare Purchaser Coalitions and by connecting with Shawn on LinkedIn.

Shawn Gremminger, president and CEO of the National Alliance of Healthcare Purchaser Coalitions, is known for his wide-ranging policy expertise and government relations experience. He brings to the National Alliance a successful record of working with coalitions, employers, and other healthcare purchasers, policymakers, and industry stakeholders toward the mission of achieving high-quality, affordable, equitable healthcare.

Shawn was most recently senior vice president at Reservoir Communications Group, where he led communications and public affairs strategy and execution on a range of relevant issues, including 340B and the drug supply chain, employer-sponsored insurance regulations, and Medicare payment. He has a strong history of healthcare advocacy and public affairs with employers, plans, hospitals, and consumer organizations.

Shawn was previously director of health policy for the Purchaser Business Group on Health, a member of the National Alliance, where he ran efforts to improve quality and affordability for consumers and healthcare purchasers through federal policy. He has held senior leadership roles at Families USA and America’s Essential Hospitals.

Shawn began his career as a lobbyist for the Children’s Hospital Association. He achieved a Master of Public Policy from George Washington University in Washington and a bachelor of arts degree from the University of Mary Washington in Fredericksburg, Virginia.

05:25 Shawn’s three takeaways from the 340B program.

06:04 What is the intent of the 340B program?

08:22 Read the full 32-page report of the Energy and Commerce Committee.

09:17 Why does Medicaid have to get the best price?

13:26 Why was there a shift in how the 340B program looked starting in the mid-2000s?

15:11 Why do more than half of acute care hospitals now qualify for 340B?

18:18 How has hospital consolidation affected 340B?

20:37 What is the misalignment between how a hospital qualifies for 340B and how it benefits said hospitals?

24:11 How is a 340B designed for hospitals to make a profit?

28:45 Why isn’t there a real patient definition in 340B?

31:46 Why is 340B still popular among policymakers?

33:05 Are 340B dollars being used in underserved communities?

33:57 EP394 with Vikas Saini, MD, and Judith Garber, MPP.

 Recent past interviews:

Click a guest’s name for their latest RHV episode!

Elizabeth Mitchell (Summer Shorts 9), Dr Will Shrank (Encore! EP413), Dr Amy Scanlan (Encore! EP402), Ashleigh Gunter, Dr Spencer Dorn, Dr Tom Lee, Paul Holmes (Encore! EP397), Ann Kempski, Marshall Allen (tribute), Andreas Mang