Getting Started in the 340B Program Safety Net Hospitals for Pharmaceutical Access William von Oehsen President/General Counsel (202) National Rural Health Association June 17, 2010 © 2010 Safety Net Hospitals for Pharmaceutical Access

Overview About SNHPA 340B provisions in health reform Contract pharmacy opportunities Patient definition 340B-1 proposal SNHPA’s programs and services Upcoming 340B /SNHPA events SNHPA Rural Hospital Advisory Committee Q & A SNHPA Bill von Oehsen (202)

Who is SNHPA? Non-profit organization representing and supporting 500+ hospitals and health systems in 340B – including rural hospitals Board Chair is CEO of network of rural hospitals Took lead role in including hospitals in the 340B law – including rural hospitals Advocates on federal legislative and regulatory issues related to drug pricing and other pharmacy matters affecting safety-net providers Educates members on 340B policy developments in Congress and regulatory agencies SNHPA Bill von Oehsen (202)

Health Reform and 340B Most significant changes since 1992 Impacts all 340B stakeholders Both positive and negative implications SNHPA Bill von Oehsen (202)

Expansion to New Entities Now eligible: ◦ Free-standing children’s hospitals ◦ Some free-standing cancer hospitals ◦ Critical access hospitals ◦ Sole community hospitals and rural referral centers with 8%+ Medicare DSH adjustment All new covered entities must either be publicly owned or be a private nonprofit contracting with a state or local government to provide indigent care SNHPA Bill von Oehsen (202)

Key Issues for Rural Hospitals ● Application forms not available yet but start getting prepared! ● SNHPA can assist with meeting state or local government contracting requirement ● Requirement to withdraw from GPO does not apply to CAHs, SCHs or RRCs between % ● Unclear about hospitals above 11.75% SNHPA Bill von Oehsen (202)

Contract Pharmacy Opportunities/Challenges “Ship to/bill to arrangement” Multiple contract pharmacy guidelines went into effect on April 5 Particularly helpful for rural hospitals lacking an outpatient pharmacy Significant opportunity to expand Rx access and increase revenue New compliance challenges, including an “expectation of” annual independent audits SNHPA Bill von Oehsen (202)

Inpatient Discounts Hospitals currently pay 25-50% more for inpatient drug products Goal: Extend 340B to inpatient setting Stand-alone bills pending: H.R. 444 and S B inpatient provisions passed Senate as part of health care reform Became law for 7 days Removed in reconciliation bill SNHPA continuing to push for passage SNHPA Bill von Oehsen (202)

Orphan Drug Exemption “Orphan drugs” excluded from 340B for newly- eligible entities ◦ Won’t impact DSH hospitals but highly problematic for rural and other new providers ◦ Over 300 such drugs, many for multiple uses ◦ SNHPA, NRHA and others challenging exclusion ◦ Children’s hospitals fix in House jobs/tax bill ◦ Need your help! SNHPA Bill von Oehsen (202)

Larger 340B Discounts Increased Medicaid rebate % likely to yield steeper 340B discounts: ◦ Brand name drugs: 15.1% to 23.1% ◦ Clotting factor and pediatric drugs: 15.1% to 17.1% ◦ Generic drugs: 11% to 13% Change in AMP formula will likely shrink discount SNHPA Bill von Oehsen (202)

Medicaid and Medicare Changes Drugs prescribed through Medicaid managed care plans now eligible for rebates ◦ 340B providers exempt ◦ Preserves 340B savings on managed care drugs Medicare Part D coverage gap or “donut hole” fixed ◦ Seniors will get 75% discount for “donut hole” drugs ◦ Seniors in “donut hole” will receive $250 towards Part D drugs in 2010 SNHPA Bill von Oehsen (202)

New Integrity Provisions: Impact on Drug Industry OPA and HHS must make 340B ceiling prices available HHS must: ◦ Develop a system to ensure accurate drug pricing, including spot checks and inquiries into pricing changes ◦ Establish process for manufacturers to issue refunds including for routine adjustments to AMP and best price Stronger sanctions against manufacturers SNHPA Bill von Oehsen (202)

New Integrity Provisions HHS must issue regulations by 10/2010 to establish formal dispute resolution process ◦ Should improve process for resolving disputes ◦ Hospitals must use this process to recover alleged overcharges by manufacturers ◦ Manufacturers must use this process to address diversion claims SNHPA Bill von Oehsen (202)

New Integrity Provisions: Impact on Covered Entities Annual recertification of OPA database information Fines for intentional violations HHS must issue new detailed guidance on Medicaid billing requirements SNHPA Bill von Oehsen (202)

GAO Report Government Accountability Office (GAO) to prepare report for Congress by 9/2011 on 340B program: ◦ Should the program be expanded given that millions of uninsured patients will gain coverage? ◦ Does it hinder access at non-340B facilities? ◦ Are providers using savings “to further program objectives?” SNHPA Bill von Oehsen (202)

16 Patient Definition Significant restrictions proposed in 2007 guidance: ◦ Would end use of 340B medicines to fill prescriptions written outside hospital walls ◦ Imposes major burden on pharmacists to research multiple eligibility criteria for assessing patient status SNHPA Bill von Oehsen (202)

17 Patient Definition SNHPA has worked with broader 340B Coalition to block proposal Key members of Congress have communicated their concerns to HRSA 340B Coalition has offered an alternative to HRSA that all covered entity groups support SNHPA Bill von Oehsen (202)

340B-1Proposal A proposed, limited inpatient discount program included in tax extender bill Would apply to only 1/3 of 340B-eligible hospitals with ≥ 20.2% DSH adjustment All CAHs, SCHs & RRCs would be eligible Extends inpatient discounts for drugs: ◦ Administered or dispensed to uninsured patients, and ◦ For which hospitals collect no reimbursement HRSA must implement program by January 2011 Represents compromise between congressional leadership and drug industry Hospital groups cut out of discussions until the very end SNHPA Bill von Oehsen (202)

340B-1 Proposal Several troubling provisions: ◦ HRSA must implement entire program by regulation, including definition of “patient” and duplicate discount provisions ◦ Mandatory OIG inspection of all qualifying hospitals, whether enrolled or not ◦ OIG inspection to focus on diversion and duplicate discounts ◦ Stiff penalties – fines, automatic recoupment, easier termination ◦ Easier to be audited by manufacturers Could give HHS discretion to combine 340B and 340B-1 SNHPA Bill von Oehsen (202)

20 How You Can Help! Contact your lawmakers how the extension about importance of extending 340B Urge them to expand 340B to inpatient setting Emphasize considerable savings for you hospital and for Medicaid (over $1 billion) Highlight the substantial administrative burden of dual inventories Ask for co-sponsorship of H.R. 444 and S Attend SNHPA Legislative Day (7/22/10) SNHPA Bill von Oehsen (202)

21 Membership Benefits Free technical assistance calls with attorneys and other professionals with decades of 340B experience Inventory management guidance Comprehensive comparison tools Pricing clearinghouse Identify and recover overcharges Free regional roundtables SNHPA Bill von Oehsen (202)

Membership Options Small Hospital membership: $975 ◦ For hospitals w/25 or fewer beds ◦ Three (3) technical assistance calls Membership dues range from $5,500- $7,500 Affiliate membership: $500 ◦ For hospitals not yet enrolled in 340B SNHPA Bill von Oehsen (202)

SNHPA Membership Benefits Biweekly electronic bulletin Free subscription to The Drug Discount Monitor Best practice tools “Survival Kit” State and federal policy tracking tools Patient assistance programs information Medicare Part D Resources Center Members-only listserv Significant discounts on membership for small hospitals 23 SNHPA Bill von Oehsen (202)

Upcoming Events 14 th Annual 340B Coalition Conference Co-hosted by Apexus July 19-21, 2010 Washington, DC *Special breakout sessions for rural providers SNHPA Legislative Day July 22, 2010 Contact Jaimie Vickery at (202) or 24 SNHPA Bill von Oehsen (202)

Upcoming Events Complimentary Webinar “340B for Newly Eligible Hospitals” July 7, :00-2:30 PM (Eastern) Questions? Contact Anna Mangum or (202) SNHPA Bill von Oehsen (202)

SNHPA Rural Hospital Advisory Committee Open to rural hospital members Meets every other month via telecon to provide input into new programs for rural hospitals Co-chairs (SNHPA Board members): ◦ Dr. Charles Hart, CEO, Regional Health, Inc. (SD) ◦ Brad Atherton, Director of Pharmacy, John D. Archbold Memorial Hospital (GA) To join, contact Anna Mangum at or (202) SNHPA Bill von Oehsen (202)

SNHPA Resources SNHPA 1501 M Street, NW, 7th Floor Washington, DC Phone: Fax: SNHPA Newsletter Drug Discount Monitor (free for members) 340B Career Resource (member discounts) 27 SNHPA Bill von Oehsen (202)

Contact Information Bill von Oehsen President/General Counsel (202) snhpa.org Ted Slafsky Executive Director (202) Anna Mangum Director, Programs and Membership (202) Rob Recklaus Director of Government Relations (202) SNHPA Bill von Oehsen (202)