340B and the Pharmacy Wholesaler s Role

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1 340B and the Pharmacy Wholesaler s Role Daniel Neal Sr. Product/Market Mgr., 340B Innovative Delivery Solutions 10 th Annual 340B Coalition Winter Conference Wednesday, February 5, 2014 Disclaimer The views expressed herein are my own and do not necessarily represent those of Cardinal Health and/or another other person or entity. Conflict of Interest Daniel Neal is an employee of Cardinal Health. 1

2 Today s Goals Understand wholesaler s role in the 340B program Describe chargeback process CE Question Through which mechanism are wholesalers made financially whole when they sell products to a customer on a 340B contract? The Active Participants in 340B GPO s & Buying Groups HRSA OPA Customers Covered Entity Suppliers Wholesaler Contract Pharmacy Third-Party 340B Software Vendors 2

3 Wholesaler s Role The Basics Manage Contracts & Pricing Customer Set-up Order Entry & Order Management Invoicing & A/R Supplier Chargebacks 340B Integration Services Manage Contracts & Pricing Manufacturer / Supplier contracts Membership GPO & Buying Group Contracts Membership & Product portfolios Apexus pricing options (340B, Non-GPO, Generics, etc.) Pricing tiers Pricing determination Supplier Contracts GPO Agreements Wholesaler COGS (Cost of Goods Sold) agreements Customer Set-up Licensing validation DEA & State Boards of Pharmacy HIN information Tax Certificates / Tax Exemptions 340B eligibility Bill-to / Ship-to relationships Demand planning & forecasting Program set-ups Auto-sub Backorders Contract ranking 3

4 Order Entry & Order Management Online ordering tools & systems EDI set-ups for ordering & invoicing 3 rd Party 340B Software vendors Order confirmations Pick / Pack / Ship activities Separate totes Ship-to delivery locations Invoicing & A/R Printed invoices to Covered Entity Mailed or ed Delivered with other orders Packing slips to Contract Pharmacy Price masking A/R Statements Payment terms Supplier Chargebacks Since wholesalers purchase items at wholesale acquisition cost (WAC) to maintain stock for customers, the end customer of each product is not known. As almost all prices are below WAC, wholesalers submit claims to suppliers to make themselves whole. These claims are called chargebacks. Wholesaler buys from supplier at WAC ($100) Customer contract w/ supplier ($60) Wholesaler sells to customer with COGS adjustment ($59) Wholesaler issues chargeback for WAC contract cost ($40) Supplier remits chargeback to wholesaler once verifies customer eligibility ($40) If denied, wholesaler does credit / re-bill with customer at WAC or other price 4

5 340B Services Software offerings to help manage inventory & ordering Integration with Third-party 340B software vendors that manage inventory, patient eligibility, replenishment, etc. Facilitate ordering with third-party vendors Typically EDI based Execute sales re-classifications when appropriate Special set-ups regarding Orphan drugs GPO exclusion considerations Specialty & drop-ship drugs Consultative services & guidance CE Question Through which mechanism are wholesalers made financially whole when they sell products to a customer on a 340B contract? CE Answer Supplier CHARGEBACKS 5

6 Thank You! Daniel Neal Sr. Product/Market Mgr., 340B Innovative Delivery Solutions 6