1. 1 340B Contract Pharmacy Lisa Scholz, PharmD, MBA Senior Director, Health Resources and Services Administration Pharmacy Services Support Center June 17, 2010 Kansas City, MO NRHA Medication Use

2. Considering the Contract Pharmacy Option –An overview. –Implementing 340B contract pharmacy. –More than one pharmacy? –Alternative Method Demonstration Projects. –Multiple Contract Pharmacy Final Guidelines

3. History  1992: 340B Legislation--Contract Pharmacy not part of original legislation  1996: Entities expressed need to contract with a separate pharmacy; Contract PharmacyFederal Register Notice finalized to provide guidance  2007: Multiple contract pharmacy guidance notice; based on AMDPs received  2010: Multiple contract pharmacy guidance finalized

4. Current Trends

5. What The Guidelines Said 1. Entity purchases drug 2. Ship-to-bill-to 3. Pharmacy provides ALL services (one pharmacy per entity) 4. Freedom to choose 5. Contractor provides reports 6. No drug resell or transfer 7. Not for Medicaid 8. Subject to audits, copy of contract shared w/ drug manufacturer upon request 9. Separate records for 340B 10. Medicare/Medicaid anti-kickback statute followed 11. Follow all other laws 12. Must submit self-certification form

6. What The Guidelines Did NOT Say 1. Exactly what records should we keep? 2. How should the money be transferred? 3. How should we negotiate a dispensing fee for the pharmacy? 4. Is it OK to negotiate a fee based on percentage of drug reimbursement? 5. Can a contract pharmacy bill 3 rd party on behalf of entities? 6. What does “an arrangement to prevent duplicate discounting” between Medicaid and the entity really mean? 7. Can I contract for some services and not others? 8. What constitutes an electronic inventory? 9. Must I use NDC-to-NDC replenishment? 10. What do we do with the inventory when we terminate a contract? 11. How should we deal with back-orders when we need to replenish? …and then there is more…

7. In a nut shell… –Covered entity desires to increase patient access to affordable medications. –Entity contracts with pharmacies of choice. –Entity purchases and owns the medications. –The contract pharmacy provides professional, administrative, and clerical services. –Detailed receiving/dispensing records. –Diversion prevention tracking system.

8. Contract Pharmacy DRUGS Entity buys the drugs from wholesaler Pharmacy places drug order with wholesaler Wholesaler ships drugs to the pharmacy Pharmacy dispense drugs to patients MONEY Entity pays wholesaler Entity/patient pay pharmacy Entity Wholesaler Pharmacy Patient

9. Entity Considerations  Patient Access, Unique population factors  Program cost vs. revenue  Sliding Fee Scale  Formulary  3 rd Party Capture Rate  Pharmacy providers: neighborhood vs. chain vs. DSH  Entity administrative capacity, Vendors?  “Comprehensive” Pharmacy Services or “patchwork” pharmacy services  Negotiation for a “win-win” partnership

10. Contract Pharmacy Considerations  Patient traffic in store  Program cost vs. revenue  Understanding 340B compliance  Record-keeping and reporting  Supporting entity mission/philosophy re: Sliding Fee Scale, Formulary  3 rd Party and Medicaid  Working with a vendor  Negotiation for a “win-win” partnership

11. Implementation –Contact PSSC for Contract Pharmacy Action Plan –Form a Pharmacy Project Team. –Review 340B Program requirements and prohibitions. –Establish Project mission and philosophy. –Complete 340B Program application. –Compile and review practice metrics. –Complete pharmacy needs assessment. –Evaluate potential contract pharmacies. –RFP if needed.

12. Implementation –Select a wholesaler. –Sign Prime Vendor Program agreement. –Develop an audit plan. –Develop a formulary system. –Establish Pharmacy & Therapeutics Committee. –Develop a Policy and Procedures Manual. –Utilize financial decision analysis tool to compare costs/savings. –Choose pharmacy and negotiate contract.

13. Implementation –Submit contract pharmacy application online and mail in hard copies! –Finalize and distribute formulary; involve contract pharmacy. –Educate Staff. –Educate Patients. –Go Live! –Monitor and evaluate. –Expand your pharmacy services.

14. What if? –What if we would like to have more than one contract pharmacy per site? –What if we have an in-house pharmacy that we would like to supplement? –What if I want to form a local network of 340B entities? –What if…..?

15. Alternative Method Demonstration Project –HHS Secretary approved in June 2001. –Goal is to demonstrate and evaluate new methods of accessing 340B drug discounts to serve greater numbers of indigent and uninsured people. –Non-funded projects. –No application deadlines/funding cycles.

16. Alternative Method Demonstration Project Statistics- Dec 2001-Dec 2009 50 Alternative Method Demonstration Project Proposals 37 approved 28 Multiple contract pharmacy 8 Networks 1 Voluntarily Withdrawn 7 currently under review 7 multiple contract pharmacy 6 not approved 3 failed established criteria 3 voluntarily withdrawn

17. Alternative Method Demonstration Project –Review the information at http://www.hrsa.gov/opa/alternativemethods.htm http://www.hrsa.gov/opa/alternativemethods.htm –Review the description of approved Projects at http://www.hrsa.gov/opa/altmethodsummaries.htm http://www.hrsa.gov/opa/altmethodsummaries.htm –Prepare and submit a proposal to OPA.

18. Alternative Method Demonstration Project: Proposal  Proposal evaluation criteria: –In depth description of why current methods are not adequate. –Detailed description of method. –Methods of evaluation. –List of participating covered entities. –Duration of project.

19. Alternative Method Demonstration Project: Proposal  Proposal evaluation criteria: –Detailed description of inventory control and dispensing. –Compliance with 340B statutory and Program requirements. –Drug Diversion. Medicaid and the duplicate discount. Auditing. Patient eligibility.

20. Alternative Method Demonstration Project: Proposal  Information needed for multiple contract pharmacies and supplemental contract pharmacies: –Contract pharmacy registration form (s) on file. –340B drugs will not be used for Medicaid prescriptions unless arrangement with State Medicaid Agency. –Contractor provides customary reports. –Third party billing procedures.

21. Alternative Method Demonstration Project: Proposal  Information needed for network entities: –Description of pharmacy compensation and processes. –Type of inventory and description of inventory controls. –Why were the particular pharmacies chosen. –Description of procedures for handling discrepancies.

22. Alternative Method Demonstration Project: Proposal  General information to consider: –Do patients have freedom of pharmacy choice? –Do all aspects of proposal meet Board of Pharmacy requirements? –Include all contracts/agreements with parties involved. –Does proposal violate Anti-kickback statute? –Include a statement acknowledging that if approved, it is subject to audit by manufacturers and Healthcare Systems Bureau.

23. Contract Pharmacy Federal Register Notice Publication Published March 5, 2010 U.S. Department of Health and Human Services Health Resources and Services Administration Healthcare Systems Bureau Office of Pharmacy Affairs

24. Introduction  The Contract Pharmacy (CP) Federal Register Notice (FRN) was published by the Office of Pharmacy Affairs (OPA), which administers the 340B Drug Pricing program, on March 5, 2010 with an effective date of April 5, 2010. It replaces all previous 340B Program guidance addressing Contract Pharmacies.

25. Introduction  This FRN is the result of the successful pilot that was implemented in 2001 that allowed a single entity to have multiple contract pharmacies, or both an in-house pharmacy and one or more Contract Pharmacies under an Alternative Methods Demonstration Project (AMDP).

26. Introduction  This FRN permits a Covered Entity (CE) to purchase drugs for multiple contract pharmacies or in-house pharmacies. The covered entity must continue to:  Ensure against diversion  Ensure against duplicate discounts  Maintain readily auditable records  Meet all other 340B requirements

27. Covered Entity Basics  A covered entity is a health center, clinic, health department, grant receiving organization, or hospital that purchases drugs.  A covered entity is not a pharmacy. A pharmacy is listed in the database either as: -shipping address for an in-house pharmacy location or -a contract pharmacy.

28. Covered Entity Basics Covered entities will be given a unique 340B ID number and for each 340B ID, the OPA will permit each site:  One physical address  One billing address  Multiple shipping addresses  Multiple contract pharmacies  Multiple Medicaid/NPI numbers

29. Covered Entity Updates  OPA strongly recommends covered entities separately register all of their satellite sites (clinics, health center sites, etc.) that will be using 340B drugs.  Patients of a covered entity may access 340B drugs at any covered entity listed in-house pharmacy or contract pharmacy.

30. Important Considerations for Covered Entity  Covered entities need to assess how they will purchase 340B drugs before requesting multiple shipping addresses or registering multiple contract pharmacies. Some considerations include: -Purchasing arrangements with one or more 340B IDs and wholesaler accounts -Billing arrangements -Shipping locations for in-house pharmacies -Contract pharmacies

31. Important Considerations for Covered Entity  If dispensing 340B drugs to Medicaid patients, covered entities must report all Medicaid/NPI numbers that are used in Medicaid Reimbursements, including those for contract pharmacies.

32. Executing the FRN  OPA will continue to accept forms for single contract pharmacies and multiple contract pharmacies (effective April 5 th ).  Contract pharmacy registration process is also available on-line at www.hrsa.gov/opa.  Covered entities shall report to OPA all contract pharmacy arrangements that reflect their contracts between CE-CP locations by utilizing the Contract Pharmacy Registration form.

33. Executing the FRN  The OPA database will list the contract pharmacy arrangements between covered entities and their contract pharmacies.  Purchasing 340B drugs will only be permitted if the CE-CP relationship is identified in the OPA database.

34. Covered Entity Requirements 1. The basic requirements for Covered Entity did not change. They will continue to purchase, maintain ownership, and assume all responsibility for their drugs.

35. Covered Entity Requirements 2. CEs may now pursue multiple contract pharmacy arrangements only if procedures and written agreements: - Are in place to meet all 340B requirements - Identify all CP locations that will be utilized - Specify the responsibilities of parties involved in providing comprehensive pharmacy services

36. OPA Database The database will be used to:  Confirm the CE is eligible to purchase outpatient drugs under the 340B program  Validate the CEs billing address  Validate the CEs shipping addresses  Collect Medicaid billing information to prevent duplicate discounts

37. What does the Contract Pharmacy FRN mean for… All stakeholders…  Multiple CPs will increase patient access to the 340B drugs.  CEs will no longer be limited to one CP per site.  The OPA database will provide information to manufacturers for verification of the CEs eligibility to purchase 340B drugs and their shipping addresses.

38. What does the CP FRN mean for… Covered Entities must….  Inform patient of freedom to choose their pharmacy provider - In order to receive 340B drugs, eligible patients of the CE must go to any in-house or contract pharmacy locations  Provide to OPA a copy of their contract pharmacy service agreements upon request  Recertify their CE and CP information upon OPA’s request

39. What does the Contract Pharmacy FRN mean for… Contract Pharmacies:  Must adhere to all Federal, State and local laws and requirements  Must provide the CE with reports consistent with customary business practices  Must assure all 340B records will be accessible from pharmacy’s own operation and readily available for audits

40. Contract Pharmacies:  Remain subject to audits by outside parties  May provide other services to covered entity or patients at option of covered entity

41. Additional Contract Pharmacy Responsibilities The Contract Pharmacy must work with the Covered Entity:  To establish and maintain a tracking system suitable to prevent diversion  To develop a system to verify patient eligibility  Prevent duplicate discounts for Medicaid prescriptions

42. What does the Contract Pharmacy FRN mean for… Manufacturers:  Request from OPA a copy of a CEs CP service agreements  Request permission from OPA to perform audits on a CE site  Use the dispute resolution process to resolve discrepancies or to request permission to perform audits  Use the OPA database to validate CE information

43. Contract Pharmacy Registration Form Forms are available at: http://opanet.hrsa.gov/OPA/Registration/RegistrationMain.aspx  Must submit Page 1: The Contract Pharmacy Registration Form -Form reflects contract relationship between Covered Entity site and Contract Pharmacy location

44. Contract Pharmacy Registration Form  May submit Addendum A: Multiple sites of the CE -Addendum allows for multiple sites to be included with same CP relationship with CP listed on the main form  May submit Addendum B: Multiple locations of a chain pharmacy -Addendum allows for multiple chain pharmacy locations to be included with same CP relationship with CE listed on main form

45. Contract Pharmacy Registration Form OPA requires receipt of complete and signed original CP registration forms prior to them being added to the OPA database. Faxing will expedite the process, but original documents must still be received.

46. Contract Pharmacy Registration Form 1. Documents must be completely filled out, signed, and mailed in. Manually completed documents will require at least 15 business days for OPA to process after their receipt. 2. The on-line CP registration process will reduce the wait time to approximately 10 business days. Once the CE submits the documents on-line, they must still mail in the signed documents to OPA. OPA will approve the on-line submission upon receipt of the signed documents.

47. Contract Pharmacy Registration Form 3. To add more than 20 CE-CP relationships, please request a data upload from OPA by e-mailing opastaff@hrsa.gov.

48. Case Example This applies to the following 3 situations. A Covered Entity (CE) has:  5 clinic sites  4 in-house pharmacies OPA strongly recommends: The CE register its 5 clinic sites that will use the 340B drugs.  The CE should add their 4 in-house pharmacies as shipping addresses by using the change request forms available at: http://opanet.hrsa.gov/opa/Login/MainMenu.aspx

49. Situation 1 Central Purchasing & 1 Site with Multiple CPs The covered entity (CE) wants central purchasing and also wants the same site to enter into CP arrangements with 3 independent pharmacies to improve patient access.  The CE must first be registered with the CE registration form and added to the OPA database. CP Forms needed? The CE must submit: 3 CP registration forms with the 340B ID of the CE site making purchases.

50. Situation 2 Multiple Purchasing & Single CP at Multiple Sites The CE wants multiple purchasing with its 5 sites and also wants all sites to enter into CP arrangements with 1 independent pharmacy to improve patient access.  All CE sites that will purchase 340B Drugs and enter into CP arrangements must be registered with a CE registration forms.

51. Situation 2 Multiple Purchasing & Single CP at Multiple Sites CP Forms needed? The CE must submit 1 CP Registration Form with one of the 340B IDs of the CE sites making the purchases. Also included should be a completed Addendum A listing the 4 other 340B IDs making purchases for the CP.

52. Situation 3 Multiple Purchasing & Multiple CPs for Multiple Sites The CE wants multiple purchasing with 5 sites and also wants all sites to enter into CP arrangements with 1 chain pharmacy that has 5 local sites to improve patient access.  All CE sites that will purchase the 340B Drugs and enter into CP arrangements must be registered with CE registration forms.

53. Situation 3 Multiple Purchasing & Multiple CPs for Multiple Sites CP Forms needed? The CE must submit 1 CP Registration Form with one of the 340B IDs on the main form + Addendum A listing the other 340B IDs also making purchases for the CP + Addendum B listing all applicable information on the additional chain pharmacy sites.

54. Additional Information HRSA’s Pharmacy Services Support Center (PSSC) Free Technical Assistance to CE’s. Contact the Call Center:  1-800-628-6297  PSSC@aphanet.org Website:  http://pssc.aphanet.org

55. 340B Prime Vendor Program (PVP) participants should update their profile with their additional CP information. Go to the PVP website, www.340bpvp.com.  Log on to the secured site  Select to update your facilities’ information Include: - Address changes -Verify Contract pharmacy additions -Staff changes -Verify wholesale/distributor changes  For additional assistance with the PVP, call their Customer Service line at 1-888-340-BPVP (2787). Additional Information

56. Thank You