340B University & Happy Holidays

Merry Christmas & Happy New Year

Happy HolidaysDespite our crazy travel schedule lately, I was able to carve out a weekend to attend 340B University in Anaheim, California on December 7th. 340B University is sponsored by Apexus, who is the prime vendor for the 340B program. Apexus’ mission is to leverage their resources and expertise to deliver maximum value to 340B stakeholders, as well as to contract for the lowest sub-ceiling drug prices. Plus, it is free to attend!! I strongly encourage all 340B Stakeholders to attend this at least once, or even better once a year.

Rob Nahoopii, Turnkey’s illustrious CEO, is on the 340B University faculty, and gets to present on various topics 5 or 6 times a year. There always seems to be a little friendly competition among the faculty to see who can grade out the highest. Not surprisingly, Rob frequently comes out on top!

Although the presentations generally cover the basics of the program, each time I go, I feel that I learn something new. Since my background is Finance related, I enjoy the discussions about 340B pricing. Several panel members remind us that the 340B price is one of the most difficult formulas used in the crazy world of pharmaceutical pricing.

Another interesting discussion centered on auditing. One scenario that was asked was if a covered entities Internal Audit department was sufficient to conduct audits. Both panel members like the idea of having internal audit help, but both highly recommended a fresh set of eyes to review your program, and bring in a competent, external company to review your program.

Rob and I are on a plane now, coming back from an audit of 3 covered entities in North Carolina. It certainly has been a crazy year. We have truly enjoyed meeting new people, seeing new places, and sharing our knowledge of the 340B program. This year, we have completed over 40 audits, and have visited 20 states. If we can be of assistance in your 340B journey, please reach out to us. From all of us at Turnkey Pharmacy Solutions, we wish you all Happy Holidays!!

Rich Iverson


Orphan Drug Interpretive Rule

340B Orphan Drug Sign
SUMMARY: Effective July 21, 2014, Health and Human Services (HHS) has issued an “Interpretive Rule” regarding section 340B(e) of the Public Health Service Act (PHSA), “Exclusion of Orphan Drugs for Certain Covered Entities.” This new section of 340B law was added when Section 7101 of the Affordable Care Act added several new categories of eligibility for 340B Program participants, allowing them to have access to 340B drug pricing. Several new entities have benefited from this, including Critical Access Hospitals, Sole Community Hospitals, and Rural Referral Centers, among others.

EXCLUSION OF ORPHAN DRUGS FOR CERTAIN COVERED ENTITIES: For these covered entities, the term ‘covered outpatient drug’ shall not include a drug designated by the Secretary under section 526 of the Federal Food, Drug, and Cosmetic Act for a rare disease or condition.

As a reminder, this Rule was vacated by U.S. District Court for the District of Columbia on May 23, 2014, on the grounds that HHS does not have the authority to issue the Rule as a substantive rule.

INTERPRETIVE RULE: HHS interprets section 340B(e) of the Public Health Service Act as excluding drugs with an orphan designation only when those drugs are transferred, prescribed, sold, or otherwise used for the rare condition or disease for which the drug was designated under section 526 of the Federal Food, Drug, and Cosmetic Act (FFDCA).

WHAT’S NEXT?: Now that this issue has settled down (hopefully), will manufactures add 340B pricing back as quickly as they took it away? Some have already. Our team has seen first-hand how important these savings are to the covered entities that we support.

At the 340B Coalition Conference last week, OPA Leadership admitted that the Orphan Drug issue has taken a front seat, and has delayed the Mega-Reg ruling. We are hopeful that this will be coming in the very near future.

See links to the HRSA Website regarding the ruling.

Federal Register Notice: Availability of Interpretive Rule

Interpretive Rule: Implementation of the Exclusion of Orphan Drugs for Certain Covered Entities Under the 340B Program

As usual, if you have any questions regarding the 340B program, please reach out to our team at Turnkey Pharmacy Solutions. We are here to help!

-Rich Iverson


The US Health Resources and Services Administration (HRSA) has finally posted the final rule defining the orphan drug exclusion from the 340B program.

340B UpdateAs you may know, Section 7101 of the Affordable Care Act allowed Critical Access Hospitals, Sole Community Hospitals, and Rural Referral Centers to participate in the 340B drug pricing program. However, the very same legislation carved out Orphan Drugs, meaning they cannot be purchased at a 340B price. Since that legislation, there has not been clarity on how the Orphan Drug exclusion should be interpreted. Some think the Orphan Drugs should be excluded for all indications, while some feel that they should only be excluded for the Orphan Drug indications. This week, HRSA’s final ruling states that the exclusion only applies to the condition or rare disease for which the Orphan Drug was designated.

The ruling is good news for the covered entities looking to expand their savings opportunities; however, these sites will need a robust system to track the orphan drug and the patient’s disease or condition.

For example, Remicade can now be purchased on the 340B program for non-orphan drug indications. The orphan drug indications for Remicade are for Crohn’s disease and pediatric ulcerative colitis (UC). All other indications and disease states qualify for the 340B drug purchase.

You can read the entire ruling here: https://www.federalregister.gov/articles/2013/07/23/2013-17547/exclusion-of-orphan-drugs-for-certain-covered-entities-under-340b-program

340B Webinar on Compliance and Audits

340B Webinar on Compliance and Audits from Nov 28th

Last week, I listened in on a SNHPA sponsored Webinar called “340B Compliance and Audits: Lessons from 2012 and Preparing for 2013.” The webinar was hosted by Bill von Oehsen, SNHPA General Counsel and Maureen Testoni, SNHPA Assistant General Counsel.

A couple things to begin: SNHPA has just passed it 20th year of service. They helped craft the original 340B legislation and continue to be a strong advocate of the program. Currently, there are over 17,000 covered entities, and over 13,000 contract pharmacies!

Maureen Testoni led off the discussion talking about the many challenges to the program. Obviously, there are many. Congress, Pharma, independent pharmacists and oncologists claiming un-fair competition, stockpiling of 340B drugs, and are indigent patients truly benefiting from the program.

Probably the biggest news coming out of the webinar surrounds auditing by HRSA. In 2012, there were around 50 audits that were done. Only 4 final reports have been issues, and no adverse findings were disclosed. Word on the street is that there may be close to 400 audits performed in 2013. Be prepared!!

SNHPA has been in contact with several hospitals that been audited. Maureen shared some lessons learned. First, you must have policies and procedures! She also really supports self-audits and external audits (so do we, see our website Turnkey Pharmacy Solutions). Manufacturers are starting to audit as well. These seem to be mostly based on higher than usual utilization of OP drugs. Genentech is the first to audit.

SNHPA has just released several new documents as of today. They are calling them Policy Guides. Eventually, they will have 6. Right now there are 2: a general 340B guide, and a duplicate discount guide. Each policy guide will cover a compliance topic: Duplicate Discount, Registration/recertification, patient definition, diversion, GPO exclusion, and contract pharmacy, plus the general 340B policy. These can serve as starting points for your own policies and procedures.

Maureen also discussed duplicate discounts. Currently these only apply to fee for service Medicaid and not Managed Care Medicaid. Each site needs an aligned strategy whether you are carving in or carving out.

Bill began his talk by discussing what the critics are saying: Has the 340B program strayed from its purpose, should it be limited to only uninsured, do all eligible 340B sites deserve to be in the program, has HRSA been too lax in its oversight, are sites manipulating the program, are sites stretching the definition of patients, are sites altering clinical pathways ( discharging patients too soon to get them to an OP status), is the program contributing to the drug shortage issue, and are sites abusing the contract pharmacy model. That is a lot of issues!!

Bill recommended several steps for covered entities and to congress. He called the covered entity recommendations Stewardship Principles. I agree with Bill on all of these:
• Invest in 340B savings for indigent patients
• Have a meaningful hospital charity policy and extend to pharmacy
• Use contract pharmacy revenue carefully (Improve services for indigent patients)
• Don’t use for cosmetic purposes
• Don’t alter clinical pathways
• Purchases should only meet public health need (Don’t stockpile)

Bill also has a few recommendations for HRSA as well:
• Elevate OPA within HHS
• Clearer patient definition
• Set standards for private nonprofit eligibility
• Implement PPACA integrity issues
• Finalize orphan drug regulation
• Continue audits and extend to manufactures
• OIG guidance of anti-kickback laws for contract pharmacy

Bill also had several recommendations for Congress:
• Provide adequate funding for 340B program
• Promote transparency of how savings are being used. Through audits? Reports? Other?
• Study impact of Medicaid expansion in 2014
• Cap number of sites?
• Alter eligibility criteria? (If so, must be coupled with IP extension)

He also highly recommends sharing your success stories. Here is a great story: http://www.snhpa.org/public/documents/cfm/utah_valley_rmc.cfm

340B Registration Dates and Changes

Starting on October 1st we have new 340B registration rules from the OPA

New rules regarding registration for covered entities 340B entities, OP facilities, and contract pharmacies have been changed. This change begins with the October 1st submission. In the past, covered entities were able to submit 30 before the quarterly due date.

Federal Register /Vol. 77, No. 142 /Tuesday, July 24, 2012 /Notices 43343 correspondence issued by HRSA on the subject.

(A) Registration Period for New Covered Entities and for the Addition of Outpatient Facilities

The registration period for 340B Program registration of new covered entities and the addition of outpatient facilities shall be limited to the following:

  • January 1–January 15 for an effective start date of April 1;
  • April 1–April 15 for an effective start date of July 1;
  • July 1–July 15 for an effective start date of October 1;
  • October 1–October 15 for an effective start date of January 1.

In situations where the 15th falls on a Saturday, Sunday, or Federal holiday, the deadline will be the next business day. Covered entities will not be able to submit registrations outside of these date parameters listed above except when the Secretary has declared a Public Health Emergency. In addition to the complete on-line registration, any required supporting documentation must be submitted on the same day as on-line registration is completed. Incomplete packages will not be considered. For more information on what constitutes a complete package, visit the Office of Pharmacy Affairs (OPA) Web site at www.hrsa.gov/opa.

(B) Registration Period for Contract Pharmacies

The registration period for 340B Program registration of contract pharmacies shall be limited to the following:

  • January 1–January 15 for an effective start date of April 1;
  • April 1– April 15 for an effective start date of July 1;
  • July 1–July 15 for an effective start date of October 1;
  • October 1–October 15 for an effective start date of January 1.

In situations where the 15th falls on a Saturday, Sunday, or Federal holiday, the deadline will be the next business day. The contract pharmacy registration process is not complete unless the registration form has been completed in its entirety and the original, signed copy is received by OPA. Signed contract pharmacy registration forms are due to OPA within 15 days from the time online registration was completed. Incomplete packages will not be considered. For more information on what constitutes a complete package, visit the OPA Web site at www.hrsa.gov.opa.

340B Audits Are Here!


The Patient Protection and Affordable Care Act (PPACA) mandated that GAO address questions related to the 340B program. GAO examined: (1) the extent to which covered entities generate 340B revenue, factors that affect revenue generation, and how they use the program; (2) how manufacturers’ distribution of drugs at 340B prices affects covered entities’ or non-340B providers’ access to drugs; and (3) HRSA’s oversight of the 340B program.1


After the GAO report was published, GAO recommended 4 main issues to HRSA to resolve and understand:

  1. Conduct selective audits to deter potential diversion.
  2. Provide a more specific definition of a “patient”.
  3. Issue eligibility guidance to hospitals that are not publicly owned.
  4. Further specify 340B nondiscrimination policies for distribution restriction.


What is our company doing? 

  • Reviewing our 340B policies and procedures.
  • Tightening up our audit procedures.
  • Preparing pharmacy directors on expectations of an audit.
  • Gathering all appropriate documents (cost reports, Medicaid exclusion documents, DSH% reports, contracts, audit reports), and centralizing to one Team Space location.


We are hoping to gain some more insight to the audit process at the Winter Conference in San Diego later this month.  Oh yeah, and warm weather!


1 GAO-11-836 – Manufacturer Discounts in the 340B Program Offer Benefits, but Federal Oversight Needs Improvement