1. B ASICS OF 340B Lynn Ford Purchasing Program Coordinator Texas Association of Community Health Centers October 7, 2014

2. Learning Objectives

3. Pharmacy Outline Overview of 340B What is it? Who can use it? What is covered by it? Why use it? How to use it? Important points to remember Overview of TACHC’s 340Better pharmacy program What makes it unique?

4. OVERVIEW OF 340B

5. What is 340B? History of 340B/PHS Pricing 1991-Congress passed Medicaid-Best-Price Medicaid Best Price had effect of raising costs to all entities, including CHC’s 1992-Congress provided relief in the form of PHS pricing=§340B Establish formula for calculating 340B/PHS price on quarterly basis Exemption in law to allow for contracts below 340B for eligible entities without an impact on manufacturer’s best price.

6. 340B/PHS Pricing Initially, not many health centers using pricing As a result HRSA has added statements to Notice of Grant Awards encouraging the use of 340B pricing THIS IS NOT A MANDATE TO USE HRSA’s PRIME VENDOR APEXUS

7. Notice of Grant Award “Encouraging those grantees not participating in the 340B Program to determine whether their drug purchasing practices meet Federal requirements regarding reasonable and cost effective purchasing.” Federal Register/Vol. 65, No. 27

8. Reasonable Cost Effective Purchasing “Cost is reasonable if in its nature or amount it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the costs.” Cost Principles for Non-Profit Organizations, Circular A-122

9. Who Can Use 340B? 340B Eligible Entities (27 types) Federally Qualified Health Centers (FQHC) FQHC Look-Alikes (FQHC/LA) Ryan White Programs (Parts A, B, C, D) Title X Family Planning Clinics Sexually Transmitted Disease/Tuberculosis Programs (STD/TB) Comprehensive Hemophilia Treatment Centers Urban / 638 Tribal Programs Disproportionate Share Hospitals out-patient clinics (DSH)

10. Eligible Entities and Health Care Reform Expanded category of eligible entities: Children’s Hospitals Free-Standing Cancer Hospitals Critical Access Hospitals Rural Referral Centers Sole Community Hospitals www.hrsa.gov/opa for database of all eligible entities ( 26,848 total number of entities) www.hrsa.gov/opa

11. Who at Center Is Eligible for 340B? A patient of the health center is eligible for 340B pricing (Federal Register October 1996): Maintains records of the patient’s health care Patient receives health care services from the health center and script is for such services Patient is seen by either an employee of the health center or a contractor (referral must be documented) The health care received by the patient is consistent with services supported by the grant funding Medicaid, Medicare, un/under-insured, commercial, etc. are all eligible (employees too if a patient) Patient is NOT eligible for 340B if only receiving service for dispensing of drug

12. Definition of Patient Pending New/updated definition of ‘patient’ proposed in 2007 via 72 Federal Register 1543 Clarified previous Federal Register Notice of October 1996 Provided specific guidance and examples-not in effect A clear and enforceable definition to help ensure against diversion and support 340B program integrity, though some eligible entities viewed the language too restrictive Expecting a definition anytime now

13. What Is Covered By 340B? Covered out-patient drugs purchased through the 340B drug pricing program Includes both prescription and over-the-counter (OTC) drugs prescribed by provider Vaccines, glucose meters and strips, syringes, vials, etc. do not fall under 340B pricing No double-discounts from manufacturer (no Medicaid rebate and 340B)

14. Why Use 340B Very discounted pricing on pharmaceuticals If patients cannot afford medication, then have wasted provider’s and patient’s time and money 340B can be overwhelming, but TACHC is here to help guide you through the maze

15. How To Use 340B Must be an eligible entity for 340B ALL sites must be listed in OPA database CORRECTLY (if in EHB needs to be in OPA database) Decide if going to have pharmacy in-house and/or contract with retail pharmacy “bill to/ship to” Sign up with a GPO (TACHC’s 340Better is a GPO) Set up a wholesaler/distributor contract

16. Wholesaler/Distributor A wholesaler is a centralized firm (ordering, invoicing, deliveries, etc.) that delivers drugs via warehouses from drug manufacturers under contract for a percentage of co st (“distribution fee”) Examples: Cardinal Health (TACHC contract) McKesson AmerisourceBergen Other regional/local wholesalers

17. Important Points To Remember Contract pharmacies Office of Pharmacy Affairs (OPA) requirements: Integrity Registration windows Annual recertification Audits

18. Contract Pharmacies Since 2010, can use multiple contract pharmacies or supplement in-house pharmacies Health centers ultimately responsible: Register ALL sites with OPA Both clinic sites and retail pharmacy sites Prevent diversion to ineligible patients Ensure against duplicate discounts Conduct oversight/annual audit Meet all 340B requirements: www.hrsa.gov/opa for details www.hrsa.gov/opa CHC retains legal title to all drugs purchased under 340B, CHC must order and pay for all 340B drugs

19. OPA’s Health Center Integrity Effective October 1, 2012: new clinic site registration windows Updates to existing sites available online, now automated process (a few exceptions require paper form) Annual recertification HRSA conducted audits www.hrsa.gov/opa

20. Registration Window Effective October 1, 2012 For NEW sites Applicable to both clinic sites and contracted retail pharmacies Existing sites can be modified online (a few exceptions exist)

21. Annual Recertification OPA is now requiring each health center to recertify annually their information in OPA database Applicable to both clinic sites and contracted retail pharmacy sites Health center’s responsible to ensure accuracy!! Email sent to Authorizing Official (per EHB), not pharmacy contact, with username and password OPA database info. EHB info. ALL INFO. MUST MATCH EXACTLY

22. Audits HRSA conducted audits Random and targeted Focus on: Patient eligibility status where a patient is seen by a provider of the health center in the last 12 months with their medical record supporting the diagnosis consistent with the prescription written. Policies and procedures for procurement, inventory, distribution, dispensing, billing, diversion prevention and duplicate-discount prevention. Internal controls that are in place to maintain compliance with 340B standards.

23. TACHC’S 340BETTER PHARMACY PROGRAM

24. History of TACHC’s 340Better Program TACHC started program in 1987 (TX only) TACHC participated in development of 340B federal legislation (1991 and 1992) Became national program in 1999: 340Better 670+ centers in 37 states using program 340Better is currently about $55 million in annual sales 340B purchases last year about $6 billion

25. 340Better GPO All health centers treated equally!! TACHC’s 340Better pharmacy program serves as a GPO: All health centers treated equally!! To utilize, must be 340B eligible Bulk purchasing “Physician Dispensing” “Bill to/ship to” (contracting with retail pharmacy arrangement) A health center must choose ONE GPO, cannot utilize multiple GPOs Cost analysis available

26. Cardinal Health New distribution fee: -2.50% Need average of $15,000/month to be eligible for 5 deliveries/week Semi-monthly payment terms still in effect 5 Deliveries/Week1 Delivery/Week Previously-0.20%-1.50% Now-2.50%

27. Evaluating a Wholesaler & GPO 340B price is a federally determined cost, the same across the country. Examine the wholesaler’s distribution fee percentage - 340Better: ALL centers treated the same Delivery schedule - 340Better: 2 options (daily or weekly) Minimum order requirements - 340Better: no fees Value added services - 340Better: Order Express, www.cardinal.com, entelligence, interfaces, CSOS, LeaderNet, Mobile Solutions, Account Source Rx www.cardinal.com Payment terms - 340Better: semi-monthly

28. Cardinal’s Divisions

29. Cardinal’s Order Express New, best-in-class web ordering application Easy to use Enhanced features and capabilities Advanced search capabilities Advanced contracting ranking capabilities CSOS order functionality Goal is to move all current cardinal.com users to Order Express

30. Lower Product Costs 340B pricing automatically and continually TACHC has contracts BELOW 340B with manufacturers for high volume/high cost products from January to December that will not increase during the year TACHC has contracts with a total of 23 manufacturers for contract pricing around 1770 different items/SKUs Contract products are targeted by participating centers (TACHC P&T Committee)

31. 340Better Full-Service Guaranteed Returns (reverse wholesaler) RGIS (inventory counting service) Kirby Lester (robotic dispensers) Works with AmeriCares and Direct Relief for donations Rx Security (secure prescription pads and paper) Still working on a PBA vendor

32. How To Use TACHC’s 340Better Verify health center listed fully and correctly in OPA database Complete Registration Form (available at www.340Better.org)www.340Better.org Return it to Lynn Ford at TACHC Lynn then coordinates with Cardinal for local Cardinal representative to coordinate with health center Complete Cardinal paperwork to establish account Once account is established, receive login for Order Express Place orders and dispense medications to patients

33. MORE TACHC PURCHASING PROGRAMS

34. More for Member….. LABORATORY: LabCorp DENTAL: Henry Schein Dental MEDICAL SUPPLIES: NACHC/CHV’s ViP program Henry Schein Medical and PSS/McKesson Medical Able to service ALL health centers equally (national programs) Cost analysis available for all programs All TACHC members eligible; not as strict federal or state eligibility requirements like pharmacy

35. Contact TACHC Office TACHC is able to answer questions and verify eligibility for any of the programs Assistance with cost analysis Updated website: www.340Better.orgwww.340Better.org FOR COMMUNITY HEALTH CENTERS BY COMMUNITY HEALTH CENTERS!

36. For More Information: Lynn Ford at the TACHC Office Phone: (512) 329-5959 E-Mail: lford@tachc.orglford@tachc.org www.340Better.org