Rep. Collins wants to Redefine the 340B Patient Definition

Understanding the WHY!

I just reviewed a report on pending legislation from representative Collins (R-NY) that would redefine the 340B patient definition to only allow 340B pricing to be used for uninsured patients. Of course, this was not the intent of congress when 340B was passed in 1992. In fact, we have heard from law makers who crafted the bill, and they clearly state that part of the intent is to allow covered entities to stretch scarce resources to help more patients in need. As our firm has supported compliance efforts for many covered entities over the past 5 years, we have seen how the program has allowed for expansion of services for both uninsured, underinsured, and vulnerable patients. It has allowed for the creation of programs in rural communities where patients have limited ability to travel long distances to obtain the clinical services they need. I witnessed first-hand the clinical improvements of patients when a 340B hospital helped cover their drug cost so they could remain compliant on critical diabetes medication. So, you might be wondering, what is driving this need for redefining the 340B patient definition?

Before we get into my thoughts on why this legislation is being introduced, let’s examine who benefits from this change if it is passed. If 340B pricing can only be used for uninsured patients, then a significant portion of current 340B savings would go away. The net result is drug companies would add to their multi-billion-dollar financial bottom line. So, why do it then? Why take dollars away from government and non-profit hospitals and clinics that care for our most vulnerable patients? Why risk being the cause of a contraction of healthcare services that would likely result in more patients going without care they need, which will likely lead to overall higher healthcare cost? I think the answer is in an article the USA Today put out on 10/12/17 titled, “Ethics investigators suggest Rep. Chris Collins may have engaged in insider trading.” This company is the biotech company where he was a board member and one of the largest shareholders. Also, in June 2017 it was reported that Rep. Collins lost $17 Million in this same biotech stock. Wait! What? We have a representative that is trying to pass legislation that only benefits drug companies and he was on the board and the largest shareholder of a drug biotech company, and who is also not opposed to increasing the profits of said company by providing potential insider trading information to boost stock prices? In a word, YES! Sometimes you put it all together and it becomes clear, but it is not right. Isn’t this the type of legislation we want to avoid as a country, as a proud nation founded on morale principles? Who is Rep. Collins really looking out for here?

If you are a covered entity or see the blatant disregard for ethical congressional decision making, I strongly encourage you to talk to your senators and representatives that may be voting on this in the near future. Rep. Collins was reported (by Luthi in Modern Healthcare on 1/17/18) as saying, “We’re going to move this very quickly. This is not going to stall out for six months or something.” Therefore, time is of the essence. The impact to thousands of clinics and hospitals that make up our healthcare safety net would be devastating. It is times like these that require all of us to do more than we normally do, to rise up and take a stand. To let our elected officials know we see you, and we will help everyone else see you too. We see the good and the bad, and now ask the question, how will you vote on this piece of legislation?

340B Mega-Guidance – Now What?

Our Top Three Concerns with the 340B Mega Guidance

340B Mega Guidance Comments NeededOver the last month, many of our clients have been asking for input on the 340B Mega-Guidance (officially titled: 340B Drug Pricing Program Omnibus Guidance). We have also been onsite conducting external 340B audits and are already assessing the impact of the Mega-Guidance if it is finalized in its current form (which has some significant consequences). In case you have been hiding under a rock, here is a link to the official document: 340B Drug Pricing Program Omnibus Guidance.

For focus, we are going to address the three (3) areas of the 340B Mega Guidance that we feel will have the most impact. We strongly recommend all affected parties provide comments to HRSA on how this would impact your covered entity. (We will cover additional areas in the next post)

1) Covered Outpatient Drug Two-Part Limiting Definition Test (pg. 22): This one is tough! The primary focus is concerned around bundled drugs being non-covered outpatient drugs. What is interesting is that it focuses on Medicaid reimbursement, and only mentions other third party payors as part of a contrasting statement at the bottom of page 22.

The two-part limiting definition states that a drug is a non-covered outpatient drug and not eligible for 340B pricing if it is 1) “provided as part of, or incident to and in the same setting as the services listed in section 1927(k)(3),” which are just about every outpatient area you can think of; and 2) the drug can be paid by Medicaid as part of the service “and not as direct reimbursement for the drug.”

The guidance then states that this limiting definition to exclude drugs from 340B purchasing does not apply when “a drug is provided as part of a hospital outpatient service which is billed to any other third party [not Medicaid] or directly billed to Medicaid.

It seems clear in the preceding wording that the definition is based on Medicaid reimbursement. However, the exclusion states how Medicaid is billed. We definitely need some clarification on which one it is. We feel that basing it on reimbursement is very difficult as every state Medicaid can have different formularies for what is separately reimbursed. Covered entities may attempt to bill separately and that is how drugs have accumulated up to this point. We are also concerned if it is solely based on reimbursement that ACO/Medical Home models (i.e., capitated patient payment systems) could fall into a “bundled payment system” and all drugs administered to patients in these service models would be non-covered outpatient drugs. This would adversely incentivize covered entities to not enter into ACO or ACO like agreements. Also, think about CAH hospitals and how they are cost-based reimbursed by CMS. Would these drugs also not count since there is no direct reimbursement for the drug, rather a percentage reimbursement based on actual cost? This would result in a negative impact on CMS as they are paying for care based on actual cost. Finally, how do we even accumulate on a model that requires us to know the ultimate reimbursement of a patient? It is very tough indeed.

Please think about the impact on your covered entity and provide comments as appropriate.

2) Infusion Services Orders Need to Be Written from a Qualified Location and Provider (pg. 26): “The dispensing of or infusion of a drug alone, without a covered entity provider-to-patient encounter, does not qualify an individual as a patient for purposes of the 340B Program.” This one is pretty straight forward. If the order for the infusion services drug was not written from a qualified location by a qualified provider for a qualified patient, then you cannot use 340B. In fact, if you are subject to the GPO Prohibition, you need to use WAC. Ouch!

I think back to my DSH hospital. We had agreements with our providers (e.g., oncology clinic providers), but they were technically a different business unit of our parent organization, and therefore not a qualified child site or location. We felt that our infusion service visit was the qualified visit as we provided care and had at least in part joint responsibility of care for that infusion. If the patient coded, it was our infusion clinic that provided the care for that patient. This scenario is clearly not going to be okay with the current language. The hard part is that this infusion center is where we provided charity care and took insurance plans that many providers were unwilling to take due to reimbursement issues. To have to buy these drugs on WAC is a significant concern.

If your site has an infusion center that services patients that do not have orders written from qualified locations, you may want to assess the impact on your program and share your perspective with HRSA.

3) Outpatient versus Inpatient Status for Qualification (pg. 27): “… an individual cannot be considered a patient of the entity furnishing outpatient drugs if his or her care is classified as inpatient.” It also states that “An individual is considered a [qualified 340B] patient if his or her health care service is billed as outpatient to the patient’s insurance or third party payor.”

This is the section that many people are interpreting that patients who discharge from the hospital as inpatients could not have their drugs filled as 340B. The other interpretation is that accumulation systems need to accumulate based on how a drug is billed, or more accurately, how it is reimbursed by payors. Once again, like the non-covered outpatient drug issue, we don’t always know when we are dispensing the drug what the insurance status will be. We know what the patient’s status is at the time the drug is being dispensed.

An interesting test is this: If a covered entity were to use a physically separate inventory (i.e., 340B, GPO, and WAC if it is a DSH), the pharmacy technician would fill the patient’s order using a specific inventory based on the patient’s status at that exact point in time. They would not be factoring in Medicare’s 72 hour rule or a two-midnight rule, as they don’t have a crystal ball to know if the patient is going to be admitted as inpatient or not.

The discharge prescription part is really concerning. At my previous hospital, we were attempting to identify patients at high risk of medication non-compliance and providing a financial support process for their discharge medications. CMS has recognized the importance of medication adherence and teaching at discharge as well, and now include it as part of their “Core Measures” for success. Many hospitals have instituted a discharge prescription program to ensure patients leave the hospital with all of their needed medications. For GPO Prohibition hospitals, they would now need to buy their inpatient discharge medications at WAC. Once again, adversely incentivizing hospitals to create such programs that have a significant impact on readmissions to the hospital (a significant cost for healthcare as a whole).

Please assess how this may impact your covered entity, and provide comments as appropriate.

There are other areas of concern, and some areas we feel are positive (e.g., GPO Prohibition exemptions). We will continue the discussion, but wanted to start with these three first. Please provide your comments to HRSA, and please remember that the deadline is October 27th, 2015. Below are the information and ways on how to submit comments:

You may submit comments, identified by the Regulatory Information Number (RIN) 0906-AB08, by any of the following methods. Please submit your comments in only one of these ways to minimize the receipt of duplicate submissions. The first is the preferred method.

Federal eRulemaking Portal: Follow instructions for submitting comments. This is the preferred method for the submission of comments.

Email: Include RIN 0906-AB08 in the subject line of the message.

Mail: Krista Pedley, Director, Office of Pharmacy Affairs (OPA), Health Resources and Services Administration (HRSA), 5600 Fishers Lane, Mail Stop 08W05A, Rockville, Maryland 20857.

340B Mega Guidance & Coalition Notes

The Wait is Over

340B Mega Guidance340B Mega Guidance: Well played by the government. We had some news about delays and later than September, and BOOM, 340B Omnibus Guidance is published in August (love it). First, if you did not already see it or know it came out, the 340B Mega Guidance is out for comment and you can read the 90 page document here: My preference is to click on the pdf link to the right on the page and get the pdf. If this link stops working and you want the pdf, contact us and we will send you the copy.

We are currently digesting all of the document and determining impact to covered entities based on our experience with HRSA 340B audits and our own external audits we have conducted. Our plan is to get a more detailed analysis out early next week for your reading pleasure. My initial read through highlighted the following critical changes/clarifications:
– Patient Definition and the providers and location is much stronger, tight contract pharmacy filtering is needed.
– Inpatient hospital discharge prescriptions may not count (this will likely have some significant comments).
– Morford Letter language regarding follow-up care is officially dead.
– Infusion Services orders written externally (i.e., non-qualified area) are likely an issue.
– Non-covered outpatient drug language may require a re-look at purchasing of products and how they are billed and reimbursed.
– Responsibility for care is “medical” and not financial, so anyone doing the employee is a patient approach for 340B needs to really consider if they meet the new enhanced patient definition.
– MCO Medicaid officially mentioned as part of Duplicate Discount.
– One other article already written mentioned contract pharmacy entirely could be an issue, but I did not read it that way. We will follow-up on this.

More to come as we analyze it!

340B Conference Notes:

Wow, I feel like a slacker for taking so long on these. It has been on my to do list, but client work had to come first (did I mention I am almost a diamond for frequent flyer status for the year, and I don’t always fly that airline). So, this is not a detailed analysis of every session, rather the key points and learning I gleaned that I feel are important for covered entities.

HRSA Audit numbers: as of the conference, 135 audits conducted FY2015, on track for the 200 audit goal (I’ll say so, our team has been on site for 6 this year). Since 2012, this makes 363 audits by HRSA. This includes over 4000 child sites and over 9000 contract pharmacies. Once again, complexity (many child sites) and many contract pharmacies increase your risk of an audit.

Track & Trace: HRSA has had regular meetings with FDA. No resolution at conference time on how Track & Trace and contract pharmacy will sit with the FDA. It is currently not an exemption. My colleague wrote an article based on Gregg Dodgett, 340B Health, and Jason Atlas, Apexus, presentation at the conference. You can find it here: Bottom line is you should plan on having a mechanism to get the right Track & Trace documents to your contract pharmacy(ies). We partnered with Drug Track IQ to make sure we had a solution available for our clients. Check it out if you are still not sure what to do (there is a free white paper on what you need to do). The FDA enforcement of dispensers starts on November 1st, 2015.

Apexus 340B by the numbers: I really like Chris Hatwig’s myth buster numbers. Regarding the exponential growth of covered entities in the recent years, he said that it is due the child site enrollment and that the actual number of DSH hospitals have actually decreased. In fact, I believe the specificity of what to enroll as a child site that HRSA has expected has more to do with the increase than anything else. If you remember, some sites with child site hospitals would just enroll the hospital as a child site. Today, you enroll every single department, service line, cost center on your cost report that is visible if it has a different physical address compared to the parent entity (if it administers 340B drugs or writes prescriptions that are captured as 340B). So each child site hospital now has numerous separate child listings. Definitely could be the cause for the apparent increase in registrations.

Another myth:Total 340B spend – We know that a lot is made about the growth in the 340B program, however, it is still only 1.5 to 3% of total purchases. So, it may seem like huge growth, but percentage wise as compared to the total drug spend, it is still a small fraction of drug purchases.

To not go too long on this post (sorry, you might be thinking it is too late for that), other hot topic areas covered are manufacturer pay back, self reporting, and auditable records. We will cover in a future post. Next will be our concerns with the Mega Guidance. Stay compliant my friends! -Rob Nahoopii

340B Update – What Has the First 3 Months of 2015 Brought us!

US Congress 340B HearingIt appears that 2015 went off with a bang for the 340B Program. Here are some notes from 340B University, 340B Coalition Conference, the March U.S. Congress 340B Hearing, and our own experience conducting 340B audits in the field and working with covered entities.

340B Audits: We are aware of seven (7) covered entities who are going through a HRSA 340B audit in the next month or just completed one in the last month. Definitely feels like an increase from the past year. We learned at 340B University and Coalition Conference that although HRSA planned on closer to 400 covered entity audits in 2015, the number has been reduced to 200. At least one note we have says 33 audits occurred in January. At that rate, 200 definitely looks possible, but I suppose keeping up with 33 audits a month is a lot of work. Take home message: Semper Paratus – Always Ready! We must keep our 340B programs in a state of constant readiness. If you don’t know how, then ask. Plausible deniability will not work in a HRSA audit (translated – saying you didn’t know you had to do that will still result in a finding).

Mega Guidance: The substitute for the Mega Regulation will be guidance. Commander Pedley has confirmed that this will be released in June (of this year for you smart alecks). It will be released for comment, so please be prepared to read it and provide comment as needed. Update: I have not seen the formal notice, but there may be a delay in the Mega Guidance.

HRSA IT Updates: You likely have seen additional enhancements to the HRSA database. I like them (thanks HRSA). For 340B pricing transparency, HRSA is adding 340B pricing by the end of 2015. Currently, you can see 340B pricing if you are a registered covered entity with Apexus through your login. However, this is information provided by wholesalers, and is the best thing we currently have. Actual 340B ceiling pricing from HRSA will help us confirm we have the right pricing loaded with our wholesalers.

340B U – Utah Representing: I have to just throw it out there. I had a lot of fun at this last 340B University (just prior to the Winter Conference in SF). We had Kevin Jones (a.k.a., K-Jo), Intermountain Healthcare 340B Program Director (previous DOP at Primary Children’s Medical Center). We also had our Peer-to-Peer colleague and pharmacy Director, Donovan Smith (a.k.a., D-Smitty). For the record, I just made those nicknames up. The three of us are from Utah and it was great. If you have not been to a 340B University in the last year, I recommend you check the Apexus website for the next 340B University near you. We provide a lot of real world examples and pearls that you can implement at your covered entity. Plus, there is a ton of networking opportunity, which is also true of the Coalition meeting as well.

340B Hearing by Energy and Commerce Committee: I thought the hearing went well. Commander Pedley, OPA Director, and Diana Espinosa, Deputy Director of HRSA, spoke well and I definitely think they have the support of congress to obtain some rule making authority if they seek it through legislation, especially around patient definition. I also have a new favorite congress person. The congresswoman from Florida, Kathy Castor, 14th District, was great. You can tell she gets the importance of the 340B Program by her statement, “the 340B program saves lives.” Amen sister! If she is reading this, Thank You. There is of course some work to be done on compliance and potentially changes to some parts of the program, but I think we all knew that already.

Secret Sauce: If you are still reading, then I want to thank you with a pearl from our compliance programs and audits. If you have contract pharmacy, then you should regularly (annually) check to ensure your contract pharmacy agreements (CPAs) include all of the contract pharmacies listed on your OPA database record. This is often reviewed by HRSA auditors, and changes by the contract pharmacy chains may not be accompanied by an addendum. For instance, you may have a chain of contract pharmacies that has added central fill stores. These are registered and your AO approves them. You need to ensure a CPA addendum adds these stores to your contract.

I hope you have enjoyed this one, and remember . . . Semper Paratus!

Aloha, -Rob

2016 HHS Budget – 340B Impact

2016 HHS Budget

340B HHS Budget 2016The 2016 Department of Health and Human Services (HHS) budget has been submitted to President Obama. HHS invests in scientific research, health care, disease prevention, early education, social services, and children’s well-being, to support healthier families, stronger communities, economic opportunity, and a thriving America. HRSA (and the 340B Program) fall into this category.

340B Drug Pricing Program: The Budget provides $17 million in budget authority for the 340B Drug Pricing Program, which represents an increase of $7 million above FY 2015. In addition, it proposes a new user fee totaling $7.5 million as a long-term financing strategy to support the program’s activities. These fees represent 0.1 percent of each purchase of 340B drugs from entities participating in the 340B Program to pay for the operating costs of the program. These fees will be collected by the Secretary based on sales data that shall be submitted by drug manufacturers and shall be credited to this account, to remain available until expended.

In recent years, HRSA has significantly increased its commitment to program integrity and compliance (covered entities should plan on being audited very soon!). As additional covered entities and associated sites join the 340B Program, HRSA has nearly doubled its program audits, instituted annual recertification for all entities, and increased its proactive education and technical assistance. Nearly 26,000 covered entities across the country currently participate in the 340B Program. It is estimated that covered entities participating in the 340B Program spend an estimated $7.5 billion on covered outpatient drugs.

See the full articles here:
Fiscal Year 2016 – Budget In Brief
Budget Justifications 2016

As always, please let us know if you have any questions or need some help with your 340B Program. Also, if you are interested in having your covered entity site receive a full independent audit of your 340B operations, come see us at Turnkey Pharmacy Solutions.

Richard Iverson, PMP


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:

340B Program June Update – Grassley, Sequester, GPO Exclusion, HgA1c

Senator Grassley statement, sequester impact on OPA, GPO Exclusion clarification marches on, and HgA1C improvement is statistically significant!

340B Did You KnowThe above list has one thing in common . . . 340B. Some of the items are not so good, while at least one is fantastic (in my view). Before we get into the topics for this month’s article, I did want to reach out and see if any of you were able to attend 340B University earlier this month at ASHP SM? I had the opportunity to present “Mixed-Use Settings” and want to hear your input on how I did and what you would like to learn more about. I know I have said it before, but you NEED to attend 340B University at least annually. If you have staff that are critical for your 340B compliance, then they too need to attend 340B University at least annually. We have made it part of our Policy that this needs to take place. In any case, it was great to participate at 340B University and hear a lot of questions and network with a lot of other sites to learn about what they have been doing and what they are struggling with.

Senator Grassley (R-Iowa): I want to start off by saying that I believe the senator has good intentions. He has taken a very strong stance on the 340B program that involves the concept that hospitals are “making sizeable profits at the expense of Medicare, Medicaid, and private health insurance.” SNHPA has in turn responded to the statement by explaining why this is not necessarily the case. I tend to have an opinion (don’t we all have one?) somewhere in the middle. There is potential for impact on insurers (government and private) with the 340B program, and we as covered entities need to ensure we are conscious of this and ensure that we are mitigating any potential issues. One thing I find to be true as we continue to use some of our savings to favorably impact patient care is that through 340B savings and leveraging 340B pricing, we can show positive impact to healthcare in general. At the end of this article I will share some preliminary data presented at a recent pharmacy residency conference related to improving HgA1C in diabetes patients through a 340B voucher program implemented at my DSH facility.

The sequester impact on the OPA is not a small one. The once planned 200 to 400 audits from OPA for 2013 is likely less than 100 now. Our colleagues at OPA are under tremendous pressure to certify, recertify, and audit the covered entity sites in the 340B program. Losing resources to achieve this task did not help. Time will tell if the resources will be replaced and the OPA is appropriately resourced to meet their goals and objectives. I do have to say thank you to the OPA staff, I know the two weeks of open enrollment are extremely busy, and we had a couple of sites and enrollments to complete and they were very helpful in ensuring it was all done correctly.

GPO Exclusion clarification marches on! Well, we are in June and the absolute drop deadline for the GPO Exclusion clarification about triple-split for mixed use areas is on August 7th (2013, just in case you were hoping for a different year). I have said it before and will say it again (although some may call it blaspheme). . . I think the GPO Exclusion clarification is a good thing. Seriously, I do, but it still makes it time intensive and a bummer that I saw a spike in GPO/WAC purchases by $100K in April/May. It does help us (is force us a better word) become more compliant, which is exactly what we all should be doing. The reason I saw a spike in purchase is because I did not have any GPO accumulations for the first bunch of orders, which means you will have WAC/Non-GPO purchases. However, providing you do not shift products around (buy different NDCs), this should shift back down to a lower impact over time. It has also provided me the opportunity (I am sure I can come up with other wording here as well) to look deep into our charge practice to ensure we are billing everything we administer to patients. I know this sounds like a no brainer, but in a DRG type setting you sometimes do not scrutinize billing practices as much as you ought to. I am sure we will discuss this further in future articles.

HgA1c: Okay, now for the fun part. My pharmacy resident presented at Western States pharmacy residency conference some data about our 340B voucher program for patients in our diabetes clinic that could not afford their insulin. For some time we have had many anecdotal stories about the patients we have helped, and it is motivating to hear the positive impact the program has had on our patient’s lives. It is even better now to tie data to it. We saw many patients with pre-HgA1c values that were double digit drop to 7’s and 8’s (for non-clinical folk, that is a good thing). HgA1c represents how controlled your blood sugars have been over the past few months. Scores in the double-digit range for long periods of time will often result in kidney failure, cardiovascular complications, and other macro/micro vascular disease progression. In other words, it is catastrophic for healthcare costs (think of the cost to our healthcare system for kindey failure, amputations, blindness, cardiovascular disease . . . we are talking about some of the highest drivers of healthcare cost) and the patient (these are life changing diabetes related conditions that not only decrease life expectancy, but drastically decrease quality of life). The beautiful part from a research standpoint is that we showed a statistical difference in HgA1c for our small patient population (we needed to have pre and post scores in this short study period). It is likely that we were under powered in the study and still had statistical difference (that is saying something right there). We continue to look for ways to leverage our 340B savings for our vulnerable patients. I strongly encourage you to do the same.

This was a long one, and if you made it this far, I thank you for staying with us. Aloha, -Rob

340B Program and Webinar Update

340B Program Blog and Webinar Highlights

We have been busy rolling out 340B contract pharmacies and additional qualifying sites within our health-system. In addition, we have ramped up our consulting efforts and have been working with clients and creating business partnerships that we feel provide significant benefits to our clients. We’ll have more information on this in the future, but if you are interested in seeing if we can help you with your 340B program, you can find out more and contact us at Turnkey Pharmacy Solutions. On to the update: In case you missed the SNHPA 340B Webinar yesterday on “New 340B Developments,” let me fill you in on the highlights.

The webinar was moderated and partially presented by Bill von Oehsen (SNHPA’s General Counsel and previous president), and Ted Slafsky also presented. There were multiple components to the webinar: Legislative updates, 340B program . . . (I’ll call them pearls, or in some cases BOMBS!), and benefits of SNHPA.

Legislative Updates: If you live in North Carolina you will already know, but Senator Grassley’s office has sent letters out to three of North Carolina’s 340B hospitals (UNC, Duke, and Carolinas Medical Center) requesting information on their participation in the 340B program. It appears the issue of how much a 340B facility charges for drugs purchased under 340B is being questioned. This of course has led to speculation of legislation being drafted to dictate how 340B savings need to be used. My perspective – I can understand the misconception that hospitals charge too much for medication. However, government and non-profit hospitals typically shoot to charge in an average or below average range to avoid scrutinization from for-profits for under charging. What I find interesting is that if a 340B hospital were to charge much less for outpatient medications we would be hearing a different complaint. There would be allegations of Robinson Patman Act violations for creating unfair competition. It feels like someone will always be unhappy and what looks like a solution will result in even more issues. The savings from the program are rarely passed on to all outpatients, rather to patients in need, as the program intent states. The other interesting information that came out from the webinar is that there were about 50 OPA audits done this year (5 were targeted), and Bill stated he expects closer to 200 OPA audits next year. Take home message: if you aren’t ready for an audit, then get started now. The first place to start is a robust set of policy, procedure, and audit guides (we are close to rolling out a robust Turnkey product at a low cost for you do-it-yourselfers).

Ready for the bombs? There were two of these for me in the webinar.

1) That all 340B Contract Pharmacy arrangements should be done with the intent of expanding access to charity care patients and indigent patients (they seem to be the same people, but I always hear them being stated separately). My first thought was, hmmmm. The more I thought about it, the more it makes very good sense. You see, we entered into contract pharmacy as a mechanism to capture more savings that we could funnel into in house charity care programs and projects. However, I once was lost, and now am found; and I see the light (no, it is not the oncoming train of an OPA Audit . . . I hope)! So, we are going back to ensure the expanded access to charity care through contract pharmacy arrangements in fact does exist for all of our sites.

2) A three wholesaler account system for hospital based administered meds split billing. WHAT!!! I actually had this discussion in a meeting back in April with Apexus and Chris Hatwig. If Chris ever reads this, I thought you were a little off of your rocker when you mentioned it, and now I want to apologize, you are still the man! Apparently, the OPA is potentially looking at a split billing processes for 340B and to identify a more stringent way to comply with the GPO exclusion for DSH, PEDs, and CAN 340B hospitals. The idea is that you buy all drugs on WAC (without 340B or GPO pricing), then you split to either a 340B account or a GPO account for accumulated products and purchase anything else on WAC. My perspective: It sounds sort of okay until you think about the logistics of how you deal with this as an existing hospital with inventory. Say my 400 bed hospital is sitting on $1.5 million of inventory, what do I do with my inventory, credit and rebill the whole dang thing? I actually asked this question on the webinar and Bill agrees that this is a problem that would need to be addressed. He also recommended that we not do anything or act upon this topic as the OPA has not come out and made a hard stance . . . yet. So, hold for now but start thinking about it.

340B Program Blog Updates: We are entering into another heavy period of 340B information (December has ASHP Midyear Clinical Meeting; January has the Winter 340B Coalition Conference). For December’s ASHP Midyear Clinical meeting, Apexus is having an all day Sunday 340B University Workshop and it is free. I will be there and I also get to present a little bit in the 340B University, so I am excited for that. If you are there, come and say hi. Rich Bucher and I are also presenting at the Winter Coalition Conference. Rich is presenting on contract pharmacy in the Wednesday workshops and I will be speaking and be on a panel for 340B charity care expansion and use of 340B savings (as most people know, a passionate topic for me) on Friday. If you are there, definitely come pay us a visit. In any case, as usual, plan on some heavy articles coming out for both those meetings from us. We know many of you cannot make the meetings, and we are happy to share what we learn to help all of us better use the 340B program and be more compliant with expectations from the OPA and our legislatures.

340B Inpatient Expansion – What Happened to it?

Inpatient discounts were in some PPACA (Obamacare) drafts, so what happened to them?

Disclosure: We choose not to affiliate with either republican or democrat views regarding 340B. We have seen both opposition and support from both parties. In this article we are attempting to share what we have found.

Background: The 340B drug discount program requires pharmaceutical manufacturers participating in the Medicaid program to agree to provide front-end discounts on covered outpatient drugs that are purchased by so called “covered entities”, as defined in Section 340B of the Public Health Service Act (42 U.S.C. §256b). Covered entities include disproportionate share hospitals (DSHs), children’s hospitals and cancer hospitals exempt from the Medicare prospective payment system, sole community hospitals, rural referral centers, and critical access hospitals (CAHs). Support for expanding these front-end discounts to inpatients of covered entities has been widely supported by groups such as the American Hospital Association, National Rural Health Association, National Association for Children’s Hospitals, and National Association of Public Hospitals and Health Systems.

What Happened: A provision intended to expand these front-end discounts to inpatients was removed from the final health reform legislation (PPACA). Some have characterized emails recently uncovered as part of an investigation by the House Energy and Commerce Committee as reflecting the White House’s opposition to expanding 340B front-end discounts, and PhRMA’s influence in Washington, despite lobbying efforts by entities such as the American Hospital Association and others. Such an interpretation would seemingly not only make the expansion of 340B front-end discounts to inpatients in the near future seem unlikely, but also call into question whether the favorable interpretation of the “orphan” drug exclusion will be able to be retained.

To see copies of the House Energy and Commerce Committee memorandums, click on the following links: memorandum 1 and memorandum 2.