Major shifts to the 340B drug pricing program could be on the horizon, along with new regulations, legal battles and congressional scrutiny. In this Leadership Dialogue conversation, Tina Freese Decker, president and CEO of Corewell Health and 2025 AHA board chair, joins Aimee Kuhlman, vice president of advocacy grassroots and government relations at the AHA, and Paulette Davidson, president and CEO of Monument Health, to unpack what’s at stake. They explore potential regulatory changes for 340B, the lifeline it provides for rural hospitals, and how upcoming changes could alter the financial landscape for the hospitals that anchor their rural communities.

Tom Haederle

Tina Freese Decker

Tina Freese Decker

the 340B drug pricing program. So for more than 30 years, 340B drug pricing program has provided financial help to hospitals serving vulnerable communities to manage rising prescription drug costs. The program was established by Congress with bipartisan support, and had a clear purpose to require pharmaceutical manufacturers participating in Medicaid to sell outpatient drugs at discounted prices. This helps health care organizations that care for a disproportionate share of uninsured and low income patients to stretch limited resources and reinvest savings into expanding access to more patients.

Tina Freese Decker

The hospitals that are eligible to participate in the 340B program are the safety nets within their communities, as you'll hear from our guest today. Eligible hospitals use the savings generated from their participation in the 340B program in many ways to advance access to care. Free or discounted medications for low income patients, providing financial assistance, establishing additional clinics to meet community needs, or creating new community outreach programs.

Tina Freese Decker

So as we jump into this conversation, let me introduce our wonderful guests. We have AHA's vice president of advocacy, grassroots and government relations, Aimee Kuhlman. Aimee leads this work for AHA on Capitol Hill. We are also very pleased to be joined by Paulette Davidson, CEO of Monument Health. Monument health is based in Rapid City, South Dakota and is composed of five hospitals and over 40 clinics serving 12 rural communities.

Tina Freese Decker

So I look forward to hearing from Paulette, who can share firsthand her perspective of the very real impact of the 340B program has on their ability to provide needed services to their communities. Aimee and Paulette, thank you so much for joining us today. So, Aimee because this is your passion area, can you give us a quick overview of the latest activity on 340B?

Tina Freese Decker

Tell us where things stand right now.

Aimee Kuhlman

Unfortunately, there is a lot going on in the 340B around. So I'll start on the regulatory side and then work my way down to legal as well as what we're seeing on the Hill. On the regulatory side, I think the area that we're watching the closest right now is the rebate model. Earlier this year, HRSA announced a 340B rebate model pilot program that will provide certain drugmakers the option to provide the 340B discounted prices for certain drugs under a rebate model.

Aimee Kuhlman

Now, currently, most 340B entities are able to purchase 340B drugs at that discounted rate upfront. But under this model certain drugs will have to be purchased at the wholesaler acquisition cost, and then those covered entities will have to provide certain claims data to drug manufacturers in order to request a rebate from the drug manufacturer for the difference.

Aimee Kuhlman

Now, the AHA raised significant concerns regarding the implementation of a rebate pilot program. In essence, 340B hospitals will be forced to provide drug manufacturers with an interest free loan, and we estimate there will be significant operational expenses associated for hospitals and the implementation of a rebate model. The pilot will only cover a handful of drugs to begin,

Aimee Kuhlman

but HRSA has left the door open to expanding the program in the future, depending on the performance of this pilot. Now, this would be really a dramatic and potentially devastating change in how the 340B program works, which is why the AHA asked HRSA to abandon the pilot program, or at the very least to delay the implementation of it

Aimee Kuhlman

to get a better sense of the financial impact this model will have on 340B hospitals. Unfortunately, HRSA decided to move ahead and the pilot is expected to begin January 1st of next year. We are currently talking to our members and reviewing the approved plans to determine what our next steps will be in advocacy, as well as providing some technical assistance to our members as they prepare for January 1st of next year.

Aimee Kuhlman

Also on the regulatory side, I want to flag that we are eagerly awaiting the final hospital outpatient perspective payment system rule. That rule is expected any day now. There are several issues that could potentially be addressed in that final rule that will have an impact on 340B hospitals. So we are anxiously awaiting that. On the legal front, I would say that litigation continues in the federal courts across the country, and more states are passing laws to protect their hospitals' access to 340B discounts at contract pharmacies and drug companies continue to seek to challenge them.

Aimee Kuhlman

And the AHA has been actively engaged with the state hospital associations and relevant attorney general offices to support these efforts for states who are defending these important laws against litigation efforts by drug companies and pharma. And we are committed to continuing to aid states in these efforts throughout the country. Finally, on the legislative front, there continues to be significant interest from members of Congress in providing oversight of the 340B program.

Aimee Kuhlman

There's also a number of members of Congress who have introduced various pieces of legislation or shared draft legislative text that looks at implementing certain reforms around the program. Most recently, we saw in the past month the Senate HELP Committee hold a hearing that examined the program's growth and its impact on patients. And there was certainly at that hearing a significant interest in ensuring that there is more transparency within the program.

Aimee Kuhlman

Members of Congress want to know how the money that hospitals receive from their participation in 340B is helping patients. But I also want to flag that there was significant support for the program from both sides of the aisle. It is clear that members of Congress appreciate and understand that there is value in the 340B program, but there is a desire for more transparency.

Aimee Kuhlman

We expect that we'll continue to see interest from Congress as we move to the new year, especially if the rebate model is indeed implemented.

Tina Freese Decker

Wow Aimee, that was really a well done overview of what's going on, and there's so much that's going on. Thank you so much for that. I also know there's a lot of misinformation that makes its way into the public narrative, which explains, you know, some of the efforts to fundamentally change how the 340B program works. What misinformation are you seeing? What are some of the biggest concerns that you have, and how is AHA pushing back, sharing what the right information is, depending on what we are doing, which is trying to get care to the people that most need care?

Aimee Kuhlman

Yeah, well, unfortunately, opponents of the program are spreading some misinformation about the program, how it works and what it is intended to do. And this has long been the case and the AHA has for years been advocating and pushing back on all of the various false narratives. I'd say some of the larger ones that we've heard over the years is that the program has grown too much, it's ballooned too much, and isn't really serving its intended purpose.

Aimee Kuhlman

We have done a number of reports and posts, etc., for our members on our website that help them in pushing back on these false narratives. While the program has grown, most of that growth is because Congress chose to expand the program, allowing new types of hospitals to come into eligibility several years back. So that's part of it. And when you look at the underlying growth and you see the amount of savings associated with the program, that is the direct result of the prices that drug companies set.

Aimee Kuhlman

In reality, the amount of savings that hospitals receive is due to the cost that drug companies are setting. We also have a 340B Advocacy Alliance that I would encourage all of our members, if you're not already a part of, if you are a 340B hospital, please join. That is the way that we communicate to our 340B interested members regularly

Aimee Kuhlman

about the latest on 340B and all of our advocacy efforts to push back on some of these false narratives.

Tina Freese Decker

Thank you Aimee. So, Paulette, we've just heard a lot from Aimee on what's going on, what the AHA is doing. As a leader of a hospital that participates in this program. I want to get your perspective. Can you give us a few examples of where your 340B savings go, and how vital the program is to your community?

Paulette Davidson

The 340B Prescription Drug Program is a vital lifeline for our ability to care for our region. Last year, we provided over $123 million of care, uncompensated care, and community benefit for our region. You know, our 340B savings last year was about $84 million. And you can see clearly we're doing more than what the overall savings of the program were bringing to us.

Paulette Davidson

For example, we operate our neonatal intensive care unit - 28 bed unit and a 350 mile radius. But we know all the costs of operating that neonatal intensive care unit aren't covered by what we received for that care. We invested through the $340, $6 million to that program last year. Very similar to behavioral health. We have a behavioral health acute care hospital where we care for children and adults.

Paulette Davidson

And again, what we receive for reimbursement for providing those services in this region do not cover the cost. Another $6 million came from our $340 into that program. We're also investing in other not for profit community organizations throughout the region to help with our community benefit plan, really bringing care to everyone and raising the ability to care for everyone in the region.

Paulette Davidson

Transportation is a huge issue out here in western South Dakota. We provided over $800,000 in free transportation, getting patients to and from a doctor's appointment or when they're discharged from a hospital. It takes hours at times to get someone home and they don't have transportation. I would say one of the biggest helpful things we've been able to do is keep those local small town pharmacies open.

Paulette Davidson

Many throughout South Dakota. We're seeing a lot of those small retail pharmacies close, unable to continue to perform those needed services. And through our contract with their 340B prescription drugs, we're able to give uninsured or underinsured patients almost free medicines to help them stay healthy and stay out of the hospital. We have four critical access hospitals. They undoubtedly would struggle if those dollars weren't redirected into those small communities to keep those hospitals open.

Paulette Davidson

I could go on and on. We have an amazing cancer program where we're providing specialized oncologic drugs that people can take orally, or they can come in and get infusions for. Many of those drugs are provided to those patients free or at no cost. The needs are endless, and we are a great example like other health systems hospitals in our country, of how we take those dollars - and those are dollars coming directly from pharmaceutical corporations,

Paulette Davidson

they're not taxpayer dollars, they are dollars that we're using - and we're doing good as the program was designed to, to create that lifeline for those vulnerable patients in our communities.

Tina Freese Decker

Paulette, you outlined in very good detail about what would happen if we do lose this funding, because it would have such a detrimental effect, especially for our rural providers. When you think about communicating all the value that's provided, do you have a transparency process of how you share in those numbers that you just quoted with your community?

Paulette Davidson

We do. We take time. We educate all of our community leaders through just relationships, of course. My leadership team serves on other service organizations boards, and we talk about the importance of 340B. We work with our congressional delegation most importantly, so they understand how important it is to preserve and protect the 340B program as it was designed.

Paulette Davidson

And we talked about the repercussions. We talk about what we do with the dollars and we invite our congressional delegation to come and visit and actually see the programs. Come to our cancer center, see how we're using those dollars. Come to our dialysis centers, see who we're actually impacting through those services. Come to our specialty pharmacy and see the number of patients that are actually getting free to no cost drugs because of this program.

Paulette Davidson

And so when we can show our mayors and we can show our state representatives and we can show our federal delegation what we're doing, I think it's unifying. This past year in our own state we had push back in allowing our organization and other organizations in South Dakota to contract with those small retail pharmacies. And fortunately, we were able to educate our legislature and explain how and why we need to do this.

Paulette Davidson

And our legislature protected our ability to contract with those local pharmacies. And so I think talking with all your stakeholders and showing how you're using the dollars and that it's not taxpayer dollars, really can tell the right story.

Tina Freese Decker

Those are great best practices for all of us to deploy. Thank you. So, Aimee any predictions on how this is going to play out from a legislative, regulatory or legal perspective and what we could expect is next?

Aimee Kuhlman

Yeah. Great question. You know, as we move into next year, I think looking at the rebate model, how it gets implemented on the regulatory side, and I know folks on the Hill will be eagerly watching that as well. So that's something that I would flag. On the legislative front, I would say again, there is continued interest in providing oversight and looking at potential ways to reform the program to address some of the concerns that have been raised, not just by drug companies, but by providers as well, especially around contract pharmacy, and potentially as well with the rebate model.

Aimee Kuhlman

So we expect to see additional hearings and perhaps additional legislation to look at reforming the program. On the legal front, obviously the contract pharmacy cases will continue. And of course, our legal team is always ready to engage as needed on any other issues that may come up in the 340B world.

Tina Freese Decker

Thank you Aimee. Paulette, any last thoughts that you have as a field and independently what we should be doing?

Paulette Davidson

I think we should continue to work with our congressional delegation, continue telling the stories. This is about caring for people and our ability to provide those vital resources as far as health care in all of our communities. And I think if we can put a face with this program, meaning our neighbors, our family members, our community members, that's our job to continue to tell the right story, because that's what resonates with people that care.

Aimee Kuhlman

Aimee?

Aimee Kuhlman

if I could just echo what Paulette said is that it's been really inspirational just to listen to her talk about her system and how they're using 340B to better the lives of the patients and communities that they're serving. That really is what it's all about. And it is so important that hospitals that participate in this program are talking to their elected officials and making sure they understand what they're able to do because they have access to the program and what it would mean if this program or to be taken away or severely limited in some sort of manner for the patients that they're serving.

Aimee Kuhlman

And putting that face on it is so incredibly important and such a critical part of our advocacy.

Tina Freese Decker

You're right. It's a vital program. We are doing everything we can to protect it. We also want to make sure that we can do everything we can to continue to provide care and improve the health in each of our communities. So, Paulette, thank you so much for joining us to share your important perspective and for all you're doing to take care of people in South Dakota.

Tina Freese Decker

And, Aimee we appreciate all the work that you and the AHA team do on our behalf. And thank you all for listening to us. We will be back next month for one last dialog with me and the incoming AHA board chair, Dr. Marc Boom. Have a wonderful day.

Tom Haederle

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