340B AND YOUR ORGANIZATION
F U N G I S A I N O TA , P H D. *
ANDREW WELSH
ANDREW LOFURNO
AIDS CARE GROUP
RY A N W H I T E A L L T I T L E S M E E T I N G ,
WASHINGTON DC
N OV E M B E R 2 7 T H - 2 9 T H , 2 0 1 2
* C O N TA C T I N F O R M A T I O N : F N O TA @ A I D S C A R E G R O U P. O R G
340B Background
340B Program Evolution
1993
1st
Guidelines
1992
340B Statute
1996
Contract
Pharmacy,
Patient
Definition
2004
Vendors
2010
Affordable
Care Act
1st
Proposed
Regulations
Creation of the 340B Program
Certain safety net covered
entities
Outpatient drugs
340B
Program
Price discounts
Required for all
manufacturers in Medicaid
Intent of the 340B Program
Stretch scarce federal
resources1
Reach more eligible
patients1
Provide more
comprehensive
services1
Reduce price of
pharmaceuticals
for patients
Expand services
offered to
patients
Provide services to
more patients
1. HR Rep No. 102–384, pt 2, at 12 (1992).
Patient Definition
340B Eligible Entities
* 340B
eligible through Section 7101 of the Affordable Care Act
Hospital Eligibility Criteria
*340B
eligible through Section 7101 of the Affordable Care Act
Hospital Outpatient Facilities
 In order for outpatient facilities to become eligible for
the 340B Program:

The outpatient facility must be an integral part of the hospital

The outpatient facility must be included as reimbursable on the
covered entity’s most recently filed Medicare Cost Report

To register additional outpatient facilities, complete the online
Register an Outpatient Facility registration at:
http://opanet.hrsa.gov/OPA/CERegister.aspx
340B Enrollment Procedure
http://opanet.hrsa.gov/OPA/CERegister.aspx
340B Implementation
Part 1 - Summary
1. History of 340B
2. The Intent of 340B Program
3. Who is eligible
4. Key dates
340B Prohibitions and Requirements
340B Covered Drugs
340B Prohibitions and Requirements
Exclusions
Diversion
Duplicate
Discounts
Duplicate Discount on 340B Drugs
Examples of Duplicate Discounts
Examples of Duplicate Discounts
Cont’d
1. CMS. Letter re: medication prescription drug rebates. April 22, 2010. Available at: www.ncsl.org/documents/health/42210PPACADrug_Rebate_SMD.pdf.
Accessed November 22, 2011.
Billing Medicaid
Medicaid Exclusion File and 340B Contract
Pharmacies
The Medicaid Exclusion File
CE Decision to Use 340B Drugs
Carve-In
CE Responsibilities for Avoiding Duplicate
Discounts
It is ultimately the responsibility of the 340B participating entity to ensure accurate
reporting of Medicaid billing of any 340B drugs to OPA and the state Medicaid agency.
Avoiding Duplicate Discounts
Diversion Prohibition
GPO Exclusion
The Orphan Drug Exclusion
 The Orphan Drug Product Designation Database can be found at:

http://www.accessdata.fda.gov/scripts/opdlisting/oopd/index.cfm
Part 2 - Summary
Determining which drugs are covered under 340B
2. Diversion / Exclusion / Duplicate discounts
3. Carving – in or Carving - out Medicaid
4. GPOs and Orphan drugs
1.
OPTIMIZING YOUR 340B PROGRAM
340B Prime Vendor Program
PVP Mission and Goals
 Improve access to affordable medications for
covered entities and their patients
 Primary goals:
 Lower participants’ supply costs by expanding the
current PVP portfolio of sub-340B priced products
 Provide covered entities with access to efficient drug
distribution solutions to meet their patients’ needs
 Provide access to other value added products and
services meeting covered entities’ unique needs
Estimated Prices For Selected Public
Purchasers as a Percent of AWP
0%
20%
40%
60%
80%
100.0%
AWP
80.0%
AMP
67.9%
Medicaid (Min.)
60.5%
Medicaid Net
51.7%
FSS
340B
49.0%
FCP
47.9%
VA Contract
100%
34.6%
Stephen Schondelmeyer, PRIME Institute, University of Minnesota (2001)
Private Sector Pricing
The 340B Price
340B
Drug Pricing Program
25%–50%
of the average wholesale price
The 340B price is actually considered a “ceiling” price
Can offer subceiling prices
Drug
Manufacturers
Benefits of PVP to Participants
 Ease of enrollment and activation of pricing by wholesaler
 Access to 340B sub-ceiling prices for covered drugs
 Access to discounts on other value added outpatient
products such as vaccines and diabetic supplies
 Participant communications
 Support of DSHs and HRSA grantees by funding 340B
education and networking opportunities
Value of PVP to Participants
 Savings - average sub-ceiling savings on PVP contract
purchases for all participants = 16% in 2007
 Diminishes the need for Independent Sub-Ceiling
contracts and the resources that they require to manage
 Provides a “One Stop Shopping” model for outpatient
pharmacy services such as 340B split-billing software
 Access to lowest priced vaccines in the marketplace
 Access to market reports to help cut formulary costs
Cost Savings Analysis Summary
 Current Annualized Purchases = $538,576
 Projected Annualized Purchases if the participant takes
advantage of all categories of savings (1:1, generic
exchange, and therapeutic exchange = $331,131
 Annualized Savings of $205,455
 Percent Savings of 38%
 This analysis was for a FQHC switching from a GPO
Model to a 340B plus Prime Vendor Model
Supplier Agreements

Allendale Pharmaceutical
Alliant Pharmaceuticals
AMO (pending)
Astra-Zeneca Pharmaceuticals
Abraxis Pharmaceutical
Akorn Inc.
ASD (flu vaccine)
Bayer Diagnostics
Bedford Labs
Can-am Care LLC
Caraco Pharmaceutical Labs
Cytogen
Dabur Pharmaceuticals
FFF (flu vaccine)
G&W Laboratories
Geritrex Corporation
GlaxoSmithKline
Hawthorne Pharmaceuticals, Inc
Home Diagnostics Inc.
Early Detect

Lilly & Company







































Major Pharmaceuticals
Medicure
Morton Grove Pharm Inc.
NitroMed Inc.
Novartis Vaccines
Novo Nordisk
Okomoto USA Inc.
Organon USA, Inc.
Paddock Labs
RD Plastics Co Inc.
Rx Elite Holdings, Inc.
Sandoz Pharmaceutical
Teva Health Systems
Total Pharmacy Supply
Tri State Distribution
Stratus Pharmaceuticals
Trinity Biotech
X-Gen Pharmaceuticals
Watson Pharma Inc.
Wyeth Pharmaceuticals
Other Products and Services
 Vaccines
 PAP software
 Split billing software
 Auditing/overcharge recovery services
 Repackaging services
 Prescription vials/labels/printer cartridges
 Diabetic/TB syringes
 PBM services
 OTC diagnostic test kits
 HIV rapid test kits
 Pharmacy automation/technology
Manufacturers & 340B Pricing
 Must provide 340B pricing if their drug(s) is covered by
Medicaid
 Cannot sell covered drug above 340B ceiling price to covered
entity
 Are not prohibited from selling outpatient drugs at below
340B ceiling price
 Prices offered covered entities are exempt from “best price”
but not Non-FAMP calculation
 Are not required to offer sub-ceiling price to other covered
entities or Medicaid
 Can obtain Non-FAMP pricing exemption for sub-ceiling
pricing through HRSA’s 340B Prime Vendor Program
Manufacturers – 340B Pricing and
Medicaid Rebate Programs
 Medicaid and 340B entities receive prices based on
either “Best Price” OR Average Manufacturer Price
(AMP) – 15.1% for branded drugs
 Additional discounts are applied if price increases
exceed the Consumer Prime Index (CPI)
 Generics – AMP minus 11%
 “Best Price” is not part of generic calculation
 Pricing - recalculated quarterly
 Discounts are upfront. No backend rebates
PRIME VENDOR CONTRACTING
• Contract methodology
- build upon existing supplier relationships
- new supplier contracting
- savings vs. revenue
- target high dollar/ proprietary drugs
- negotiations vs. bidding on select drug classes
- value added products and services
CHOOSING A CONTRACT PHARMACY
Negative (- )
Positive (+)
 Entity pays flat fee per claim
 Entity pays fees based on % of
 Stop-loss function (prevents 3rd
party transmission is loss to entity)
 Entity does not pay fees on claim
reversals
 Entity pays lowest of U&U, MAC,
and 340B





revenue or drug cost
Entity does not keep Medicaid/3rd
party reimbursement
Vendor recruits patients to its mail
order pharmacy
Early cancellation fees
Entity not allowed to select
wholesaler
Entity might end may end up
purchasing partial bottles at high
rates due to non-replenishment
Part 3 - Summary
1.
Understanding PVP
2. Expected gains from joining the PVP
3. Choosing contract pharmacies
340B POLICIES
340B Policies
Guidelines
Regulations (proposed)
• Patient Definition*
 Manufacturer Civil
• Contract Pharmacy*
Monetary Penalties
 Administrative Dispute
Resolution
 Orphan Drugs
• Audits*
• Dispute Resolution*
• Outpatient Facilities
• Duplicate Discounts
340B Guidance and Policy
http://www.hrsa.gov/opa/federalregister.htm
340B Proposed Regulations
Drug Delivery
Contract Pharmacies
340B Usage Considerations
340B Program Support
Office of Pharmacy Affairs (OPA)
340B Program Integrity Resource
340B Program Integrity Resource
Functions of OPA
Clinically and Cost-Effective
Pharmacy Services
MAKING 340B PROGRAM WORK
1.
2.
3.
4.
5.
6.
Maintain updated records on OPA website.
Choose your contact pharmacy wisely
Conduct regular internal audits
Devote adequate quality personnel for 340b
Develop and update your organization’s 340B
standard operating procedures (SOPs)
If you deliver the medication – combine it with
case management to increase adherence
GETTING READY FOR AN AUDIT
 Have Policies and Procedures
- do not create them for the purpose of the audit
- detail entire process
 Be proactive
- get information to the auditor when requested in an easily
digestible format
 Audit Now
- trace clinically significant encounters monthly
- involve social workers, patient financial services,
and
medical records.
 Understand state Medicaid managed care
- get to know your Medicaid office that processes
claims
for your entity
 Stand your ground with C-suite, do not be pressured into risky
practices.
QUESTIONS
MAIN SOURCES USED
 OPA
 HRSA
 APEXUS – 340B PVP