1. 340B: Overview of the Program and Legislative Update
Lelan Stice, PD, MBA

2. Disclosures
Administrative Director of Jefferson Regional Medical Center, a 340B covered entity.
Owner of Doctor’s Orders Pharmacy, a contract pharmacy in the 340B program.

3. What is the 340B Program
340B is federally-administered drug pricing program for “covered entities” (CE)
340B allows for purchase of drugs at or below the “ceiling price” set by regulation
340B is not a rebate program
340B is not Taxpayer funded

4. History of 340B –Alphabet Soup
340B was enacted in 1992 as part of Public Law , the Veterans Health Care Act (VHCA)
The program is named for Section 340B of the VHCA
340B is managed by the Office of Pharmacy Affairs (OPA), which is part of the Health Resources and Services Administration (HRSA)
Manufacturers participating in the Medicaid program must also offer 340B pricing – Pharmaceutical Pricing Agreement (PPA)

5. History and A little more SOup
340B’s original scope was to limit the cost of covered outpatient drugs to certain federal grantees and designees. Indian Health Service, Ryan White Clinics, FQHC’s, PPH,…
Disproportionate share hospitals (DSH) meeting certain criteria were added prior to passing
2010 ACA added Rural Hospitals, Children’s Hospitals, and Free Standing Cancer Clinics
Today, the majority of 340B purchases are made by DSH hospital entities
340B limits the cost of covered outpatient drugs sold to 340B covered entities by defining a ‘ceiling price’ for covered drugs (Allows for sub-ceiling price negotiation)

6. And Some more History HRSA Established Contract Pharmacy (CP) model
Most grantees had little or no pharmacy services
Initially a one to one ratio
Many to one CP model was proposed
Tested under Alternative Methods Demonstration Projects (AMDP)
Most hospitals use this model today

7. Last of the history lesson
Prime Vendor Program (PVP)
Established in the original Act
Original PVP was Amerisource Bergen
2007 Apexus was formed and awarded PVP
Negotiate Sub-ceiling and WAC pricing
Provide Education and Help Desk
Manage Overpricing by Manufacturers

8. What was 340b intended to do
The purpose of the 340B program is to stretch the power of scarce federal dollars flowing to entities that form a health care ‘safety net’ for some of the most vulnerable patient groups
There is no required use of program savings, but uses can include:
Reduce price of medications for patients (pass-through)
Expand drug formularies
Increase number of indigent patients served
Expand other patient services offered by the entity

9. How to Participate in 340B Must be Not for Profit
Meet criteria based on your type of Covered Entity
DSH facilities with DSH percentage of 11.75%
CAH
SCH with DSH percent of 8%Contract with Government
Enrollment period every quarter
If approved…access 1st day of the following quarter

10. 340B Discounts
Studies have demonstrated an approximate 20% discount from GPO
50% discount from AWP
Pricing is not public
Ceiling Price
Brand products must be discounted the greater of 23.1% from AMP or the difference between AMP and Best Price (BP)
Certain branded clotting factors must be discounted the greater of 17.1% from AMP or the difference between AMP and BP
Generic products must be discounted the greater of 13% from AMP or the difference between AMP and BP

11. 340B Discounts Drugs increasing in price faster that rate of inflation
Additional discount calculation added
Can cause negative calculation
Penny Price
Manufacturers may extend Sub-ceiling pricing or discounts to non-covered patient categories (inpatients)

12. Medicaid Prohibition against duplicate discounts
If Medicaid seeks a rebate, 340B discounted drugs cannot be used
Medicaid is a growing and complex program
Consult Medicaid for billing and reporting requirements

13. Purchasing Rules
DSH, Children’s Hospitals, and Free Standing Cancer Clinics
GPO exclusion on covered outpatient drugs
WAC
SCH, RRR, CAH
Cherry picking GPO or 340B
Orphan drug exclusion
Manufacturer can extend 340B pricing on Orphan drugs (few do)

14. Contract Pharmacy
Retail Pharmacies generally cannot purchase at 340B prices
No dispensing to non-eligible patients
Avoid Medicaid
Retail Pharmacies must have a contract with 340B CE
Retail Pharmacies must be registered on OPA website
Quarterly registration window

15. Patient Definition
340B drugs can only be dispensed to those who meet the definition of a patient, under 340B guidelines:
The covered entity has established a relationship with the individual, such that the covered entity maintains records of the individual's health care; and
The individual receives health care services from a health care professional who is either employed by the covered entity or provides health care under contractual or other arrangements (e.g. referral for consultation) such that responsibility for the care provided remains with the covered entity; and
The individual receives a health care service or range of services from the covered entity which is consistent with the service or range of services for which grant funding or Federally-qualified health center look-alike status has been provided to the entity. Disproportionate share hospitals are exempt from this requirement.

16. Key points for patient eligibility
The definition of a patient does not include payer status or income level
The definition of a patient is critical in determining eligibility for 340B-priced replenishment, especially in a CP setting
The definition of a patient was highly debated in comments on “Mega-Guidance”

17. Managing Contract Pharmacy
Manually can be extremely tedious
Validating Patient Eligibility
Validating Prescriber Relationship
Multiple Inventories
Third Party Software Partners
Requires Administrator at CE
Maintain Prescriber and CE database
Many Companies to choose from

18. Third party Administrator Example
Adjudicate to 3rd Party PBM
Third Party Claims
TPA
Capture Claims
Confirm Eligibility
Confirm 340B Profit
Program Benefit
Covered
Entity
Contract Pharmacy
Patient Savings
Adjudicate to TPA
Cash Claims

19. Patient fills script at pharmacy
TPA
When 100% of bottle is dispensed P.O. is generated based on NDC-11 match
Contract Pharmacy
Eligible Entity
P.O. is approved
Wholesaler
Stock is replenished

20. TPA

21. Congress and 340B House Energy and Commerce Committee
Multiple hearings on 340B Program
Issued report recommending twelve changes to program
Senate Health, Education, Labor, and Pensions (HELP) Committee
Three hearings on 340B Program
No announcements of intentions to submit any changes…yet

22. House of Representatives Activity
340B Supportive Bills
HR 6071
Introduced by Rep. Matsui (D. Cali)
Would codify many aspects of the 340B program as they currently are
Require greater transparency for Manufacturers
Eliminate Orphan Drug Exclusion
Reverse DSH payment cuts for 340B DSH facilities
HR 4392
Reverses the $1.6 billion DSH payment cuts

23. House Activity
HR 4710 – Would freeze ability to add any hospitals to the program
S – Would freeze addition of DSH, Children’s, and Free Standing Cancer clinics
Increase the DSH percentage to reduce number of current participants
Discussion on raising DSH percentage by Joe Barton (R. TX) that would raise participation requirements
Would eliminate 51% of current participants

24. Trump Administration
Implemented cuts in reimbursement to DSH for outpatient
30% reduction
New formula is ASP – 22.5%
Blueprint for Drug Prices
Many references to 340B program reductions
Penalties for Manufacture's Overcharging
HHS delayed implementation again this year

25. Questions