On August 28, 2015, the Health Resources and Services Administration ("HRSA") published the 340B Drug Pricing Program[1] Omnibus Guidance (the "Proposed Guidance") in the Federal Register.
On August 28, 2015, the Health Resources and Services Administration ("HRSA") published the 340B Drug Pricing Program[1] Omnibus Guidance (the "Proposed Guidance") in the Federal Register. The Proposed Guidance will be open for public comment for sixty (60) days before becoming a final rule. In the interim, it is important for stakeholders to familiarize themselves with the Proposed Guidance and its likely impact on 340B program compliance. The areas of change highlighted below are only a portion of the changes expected to be finalized by the end of October. However, they are significant enough to warrant a close look at your 340B Program administration and arrangements with other providers.
HRSA proposes a new six-part test (which is significantly stricter than the 1996 three-part test) to establish whether an individual is a "patient" eligible for 340B drugs. If any of the elements are not met, the patient will not be eligible to receive 340B drugs. Under the Proposed Guidance, an individual will be a patient of the covered entity if the following conditions are met (bold and underlined provisions represent new requirements under the Proposed Guidance):
The Affordable Care Act extended Medicaid drug rebate eligibility to certain Medicaid Managed Care Organization ("MCO") drugs. Therefore, in order to prevent duplicate discounts, covered entities must elect to either "carve-in" or "carve-out" Medicaid MCO patients in addition to FFS patients.[2] The Proposed Guidance indicates that covered entities must have an appropriate process to identify 340B claims.
A contract pharmacy must be registered on the 340B database prior to dispensing drugs to eligible covered entity patients. The Proposed Guidance states that covered entities must now attest that the contract pharmacy arrangement complies with certain 340B Program requirements prior to the contract pharmacy being listed on the 340B database.
In the Proposed Guidance, HRSA emphasizes that it expects covered entities to conduct quarterly reviews and independent annual audits of each of its contract pharmacy locations. The covered entity should then report any violations found through such investigations. Further, HRSA maintains its position that it may remove non-compliant contract pharmacies from the 340B Program.
Additionally, the Proposed Guidance places an emphasis on the possibility of duplicate discounts increasing for contract pharmacy arrangements. HRSA has taken the stance that "it will be presumed that the contract pharmacy will not dispense 340B drugs to Medicaid FFS or MCO patients." Therefore, if a covered entity wishes to purchase 340B drugs for its Medicaid FFS and MCO patients and use a contract pharmacy to dispense those drugs, the covered entity must "provide HHS a written agreement with its contract pharmacy and State Medicaid agency or MCO that describes a system to prevent duplicate discounts."
[1] 340B Drug Pricing Program was created in 1992 and requires pharmaceutical manufacturers to provide a substantial discount on certain outpatient drugs to qualifying covered entities.
[2] Covered entities may choose whether to dispense 340B drugs to Medicaid fee-for-services ("FFS") patients and bill state Medicaid the reduced price ("carve-in") or dispense non-340B drugs to Medicaid FFS patients and bill state Medicaid non-340B prices ("carve-out"). When a covered entity chooses to "carve-in" its Medicaid billing number and/or NPI number is listed on the Medicaid Exclusion File in a way that alerts the State program not to request a rebate from the manufacturer for those drugs.
Andrea H. Brisbin
J. Harvey Cleveland IV
Meghan G. Riordan