The 340B Program: Today and Beyond

Transcription

1 FL Regional Education Session - Tampa The 340B Program: Today and Beyond May 19, :15-3:15 PM ET 2015 Safety Net Hospitals for Pharmaceutical Access 1

2 Disclaimer This presentation is not to be construed or relied upon as legal advice. Today s speakers declares no conflict of interest, real or apparent, and no conflict of interest in any company, product or services mentioned in this program including grants, employment, gifts, stockholdings, and honoraria. 2

3 Navigating the 340B Drug Discount Program 3

4 340B Program Overview

5 What is 340B? The 340B Drug Pricing Program is a federally mandated drug pricing program that allows certain healthcare organizations, Covered Entities, to purchase outpatient drugs at or below defined discounted prices However, 340B drugs must only be given to Patients of a 340B hospital The 340B Program enables hospitals to stretch scarce resources as far as possible, reach more eligible patients, and provide more comprehensive healthcare services The 340B Program is heavily regulated Oversight by HRSA and its Office of Pharmacy Affairs (OPA)

6 What are the Benefits of the 340B Program? On average, 340B drugs are 30 60% cheaper than Average Wholesale Price (AWP) Often represents millions of dollars in savings for hospitals 100% 80% 60% 100% 79% 66% 64% 58% 53% 51% 49% 40% 20% 0%

7 Two Components of Savings Non Retail: Physician administered or incident to drugs administered to the Patient while onsite at the 340B hospital Chemotherapy Retail: Outpatient scripts filled within a hospital s pharmacy network In house retail pharmacies 340B contract pharmacies

8 The Most Important 340B Question: Who is an Eligible Patient? 340B drugs can only be provided to eligible hospital outpatients The 340B patient definition is a multi part test: Patient must be a hospital outpatient Hospital must have a relationship with patient such that hospital maintains a record of care received Individual receives care from a health care professional who is either 1) employed by Hospital or 2) under contractual or other arrangements (such as referral consultation) such that responsibility of care remains with hospital Service provided must be more than just dispensing drug Hospital cannot dispense 340B drugs to individuals who do not meet patient definition, this would violate policy against diversion

9 340B Mega-Guidance Mega-rule Mega-guidance Expected to be released this year with 60-day comment period HRSA does not expect to finalize prior to FY 2016 Topics: Patient definition Hospital eligibility Contract pharmacy Covered outpatient drug definition Annual covered entity recertification Audit Medicaid duplicate discount Manufacturer limited distribution plans Procedures for manufacturers to repay entities

10 340B Mega-Guidance (cont d) 340B Health will submit comments, but will need data from hospitals Comments from individual hospitals will be critical!!! Hospitals should be preparing to evaluate impact Identify point person to collect data Review your entity s use of 340B in key areas Can you comply with the possible changes? How would the changes affect your use of the340b program?

11 Setting the Record Straight Allegation Insufficient program oversight/gaming the system 340B has grown too fast 340B should be for the uninsured only Unclear what hospitals are using 340B savings for Truth HRSA has conducted over 200 provider audits since 2012 and hundreds more anticipated. None of the audit findings have found intentional problems. So far, there has only been 1 audit of a drug manufacturer. Number of DSH hospitals in program has actually declined in past four years. Congress was clear that covered entities may use 340B drugs for any patient. Insurance status irrelevant. Published reports, including two government studies, demonstrate that covered entities are using 340B savings to benefit their vulnerable patients.

12 Setting the Record Straight (cont d) Allegation 340B negatively impacts the oncology market 340B hospitals are not providing enough charity care 340B causes drug shortages Truth No evidence that 340B negatively impacts private oncologists. Practices struggling to stay afloat because of market forces. Oncologists refer low-income patients to 340B hospitals. 340B hospitals provide 62% of uncompensated care in U.S. Not only do they provide the majority of charity care, but they also treat more than twice as many poor patients as non-340b hospitals. No nexus between 340B and drug shortages. Experts have not identified 340B pricing as a contributor to shortages.

13 House E&C Health Subcommittee Hearing March 24, 2015 First dedicated 340B hearing in a decade Witnesses: HRSA: - Diana Espinosa, Deputy Administrator - Krista Pedley, Director Office of Pharmacy Affairs OIG: - Ann Maxwell, Assistant Inspector General for Evaluation and Inspections GAO: - Debbie Draper, Director, Health Care No stakeholder panel 340B

14 House E&C Health Subcommittee 340B Hearing (cont d) Supporters on both sides of the aisle But concern about whether 340B hospitals are using 340B to help low-income patients Strong interest by some to have hospitals report how they use their 340B savings Indications that some House members interested in amending the 340B statute to give HRSA explicit authority to issue regulations SNHPA concerned that any opportunity to amend 340B could result in harmful provisions PhRMA actively looking to narrow program to uninsured only

15 Key Lawmakers Weigh-In Chairman, Health Subcommittee Joe Pitts (R-PA) Do you think there might be another metric for 340B eligibility that could work better than the DSH metric to help ensure the program reaches the hospitals that are truly serving a disproportionate share? Frank Pallone (D-NJ) Ranking Member, Full Committee Congressional history states that the 340B drug pricing program was created to help designated healthcare providers stretch scarce resources to provide more comprehensive care to more patients.

16 Key Lawmakers Weigh-In Rep. Gene Green (D-TX) Ranking Member, Health Subcommittee I cannot underscore enough how important the 340B program continues to be for hospitals and other entities that provide care to underserved patients in every district across the country. It's a key part of the multipronged approach to provide all individuals with access to quality care.

17 Key Lawmakers Weigh-In Rep. Kathy Castor (D-FL) I want to start by saying that 340b is a life saver for so many hardworking Americans. When congress created the 340B initiative in 1992 it intended that eligible providers use the 340B for any patient of the entity regardless of insurance status. Rep. Gus Bilirakis (R-FL) In the interest of having a level playing field and increasing accountability, do you think it would be prudent to subject manufactures to similar compliance and auditing standards as covered in the entities One thing many of us like about the 340B program is that it doesn't cost tax payers dollars.

18 Key Lawmakers Weigh-In Chairman Fred Upton (R-MI) Through the years, the 340B program has allowed covered entities to stretch scarce resources to better serve millions of patients in Michigan and across the country who are uninsured, underinsured, or dependent on programs like Medicaid and Medicare. Rep. Billy Long (R-MO) I think everybody realizes how important this is to a lot of entities and our congressional district and this is a very important hearing...

19 Key Lawmakers Weigh-In Rep. John Shimkus (R-IL) Have you been able to do work to track revenue generated by 340B prescriptions and what 340B entities do with those dollars? Wasn't there basically an intent that the revenue be provided to be helpful to low income population? Rep. Renee Ellmers (R-NC) isn't it true that under current guidelines some insured patients may receive lower cost drugs from a covered entity participating in the program while other uninsured patients may not receive that same discount from other covered entities in the program? it's too muddy as to how an uninsured patient might end up being charged the full cost of a drug.

20 Looking Ahead Critics will continue calling for changes Will Congress take legislative action? HRSA guidance, OIG, GAO reports expected this year We urge Congress to wait for HRSA to guidance before legislating on 340B issue

21 Audit Background 340B statute permits HRSA and manufacturers to audit covered entities September 2011 GAO report recommended selective audits of entities HRSA began entity audits in January 2012 HRSA chooses entities they believed most likely to be at risk Risk determination is based on volume of purchases, complexity of program administration, and use of contract pharmacies HRSA also conducts targeted audits based on manufacturer complaints 51 audits in FY 2012, 94 in FY 2013, and 99 audits in FY 2014 Expected to double to around 200 audits for FY 2015

22 Audit Findings Overview Findings 5 types: Inaccurate database record, diversion, duplicate discount, eligibility, or orphan drug Repayment obligation for: Diversion findings Duplicate discount finding (only if state collected rebates) GPO exclusion finding Orphan drug finding Eligibility finding reportedly can lead to removal of hospital and/or its contract pharmacies from 340B program (none removed so far) Appeals Most findings are not appealed Of those that are appealed, more than half succeed on one or more findings Successful appeals are often based on mistaken findings or lack of information collected by the auditor Areas for Improvement

23 Audit Findings Update 11-Digit NDC Replenishment in Mixed-Use Setting Audit finding: Entity replenished drugs using an internal identification system that permitted replenishment from different manufacturers than those actually dispensed to patients Audit finding: Entity accumulates identical drugs under a Charge Drug Master (CDM) that groups drugs irrespective of NDC and therefore is not an exact match for replenishment

24 Audit Findings Update (cont d) Morford letter (2001): Patient who is treated at a hospital and has subsequent care at a facility that is not on the hospital s cost report may qualify for 340B if the care bears a proximate relationship to the initial hospital care with respect to both type and time of care. Audit appeal: The 2001 letter applied to a specific situation involving follow-up care at outpatient clinics affiliated with the covered entity. It would not apply to follow-up care at private physicians offices.

25 Audit Findings Update (cont d) 340B statute: DSHs, children hospitals, and cancer hospitals are eligible for 340B if they do not obtain covered outpatient drugs through a GPO or other group purchasing arrangement Audit finding: GPO violation means hospitals were ineligible for the program from August 7, 2013 At least 8 hospitals since November have findings in this area Penalty Removal from the 340B program; and Repayment to manufacturers Several violations relate only to controlled substances

26 Audit Findings Update (cont d) Contract Pharmacies Strong emphasis on oversight of contract pharmacies Looking for annual independent audits Failure to have robust review process resulting in potential penalty of having all the hospital s contract pharmacies being removed from the program

27 Patient Definition Clear: 340B drugs can be used for prescriptions written during a visit at the hospital or an offsite location that is registered with the 340B program 340B drugs can be used for prescriptions written in connection with documented referrals Unclear: Use of 340B drugs in connection with follow-up care (i.e., Morford letter) What if follow-up care relates to clinics that are part of the hospital system? What if follow-up care relates to care in private physician offices? 2014 OIG Report on contract pharmacy found that covered entities have varying interpretations for these situations

28 Hospital Eligibility 340B statute requires that private nonprofit hospitals have a contract with their state or local governments to provide services to low-income individuals who are not covered by Medicare or Medicaid There is no requirement about the level of services that must be provided; that decision is handled between the hospital and the government entity Possible Change: HRSA may propose a specific amount of care that must be provided under these contracts 2011 GAO report noted that the lack of standards in this area may allow hospitals that provide a small amount of care to these low-income individuals to qualify for 340B Review the terms of your contract and evaluate how you are meeting those terms

29 Statistics for 340B Disproportionate Share (DSH) Hospitals 340B DSH hospitals provide: Twice as much care to Medicaid and low-income Medicare patients (41.9% vs. 18.1%) Almost twice as much uncompensated care ($24.6 billion vs. $12.9 billion) Similar level of uncompensated care across-the-board More services that are generally viewed as unprofitable, but have tremendous value for the community, such as: Children s wellness programs Psychiatric child/adolescent services Social work services Crisis prevention

30 Final Thoughts and Takeaways

31 Final Thoughts and Takeaways 1. Educate departments about 340B (what it is, how it s used, what you are doing with program savings, etc.) 2. Create a 340B Steering Committee 3. Be knowledgeable of the HRSA auditing areas of focus (drug diversion, duplicate discount, GPO prohibition, and database accuracy) 4. Perform internal audits on a continual basis 5. Employee at least 1 FTE to monitor the 340B program as their ONLY job

32 Final Thoughts and Takeaways 6. If you have contract pharmacies, have a third party perform an audit at least annually 7. Get your government relations department involved 8. Write an op/ed or letter to the editor of your local newspaper 9. Schedule a visit with your local Congressperson and discuss the importance of 340B 10. Attend a national meeting regarding 340B or attend 340B University

33 Questions? Harry Norsworthy, RPh Vice President, 340B Services MedAssets, Inc North Dallas Parkway Suite 625 Plano, TX work: mobile: Frank Thomas, RPh, MBA Corporate Pharmacy Contracting Coordinator Pharmacy Administration Orlando Health, Inc Kuhl Ave., MP 10 Orlando, FL tel: fax: