Finsights Blog

340B Program Management in the Wake of HRSA’s “Mega Rule” Withdrawal

The “mega rule” has been officially withdrawn, effective November, 2014.

BFG has been on record since May 23, 2014, when the US District Court for DC overturned the 340B Orphan Drug rule, questioning whether HHS really had the authority to issue the 340B “mega rule” with guidance around the following:
-Definition of an eligible patient
-Compliance requirements for 340B Contract Pharmacy arrangements
-Hospital eligibility criteria
-Eligibility of off-site facilities
-Guidance around inventory handling and replenishment

While there are no material operational changes required in the way pharmaceutical manufacturers handle 340B pricing and eligibility as a result of this rule being withdrawn, one thing does stick out. As unclear as some of the details around the program may seem, it’s not going anywhere, and it’s going to continue to grow. In reviewing the HRSA 340B Database, this quarter alone we saw approximately 2000 new covered entity identifiers added to eligibility for 340B pricing, along with 2400 new contract pharmacy arrangements.

As a result of the program growing, compliance with the program is more critical than ever. Maybe it’s time to go back to the fundamentals. Really, it comes down to having effective policies and operational procedures in place for ALL aspects around 340B management. Here are some questions to which you should have answers nailed down.
How do you manage the provision of 340B price to covered entities?
Are your customer records and 340B eligibility aligned with the OPA database?

Is your organization taking ownership of 340B eligibility maintenance, or are you relying on intermediaries and turning a blind eye?
How often is 340B eligibility updated?
Is 340B chargebacks processing managed in a manner that allows you to confirm that 340B price is extended to all eligible entities, and only eligible entities?
How do you handle transactions involving contract pharmacies?
Would instituting an audit program for specific covered entities and contract pharmacies be warranted given initial analysis of your data?

Is your team capable of periodically checking for duplicate discounts and/or diversion? If so, do the findings warrant your organization instituting a regular process to do so?
Do your Medicaid restatements take into account what refunds may be due to covered entities?

The answers to these questions should be clear, even if an outsourcing partner or 3PL is providing services to carry out your 340B eligibility. Manufacturers with such arrangements are not off the hook in the case of an error. The onus for compliance is always on the manufacturer. As a result, it’s a good idea to routinely monitor and audit whoever is handling your 340B eligibility and processing. All it takes is one transaction to an ineligible customer to set a new Best Price, potentially leading to a whole host of issues, including a significant jump in Medicaid liability.

It’s also a good idea to obtain legal review and guidance in how you are operationalizing the program. Avoiding assumptions that conflict with policy position or lack legal review will always help to maintain a compliant solution and avoid trouble down the road.

It does look like there will be some form of guidance issued in 2015 around general policy and integrity of the program. “In 2015, HRSA plans to issue a proposed guidance for notice and comment that will address key policy issues raised by various stakeholders committed to the integrity of the 340B program. HRSA is also planning to issue proposed rules pertaining to civil monetary penalties for manufacturers, calculation of the 340B ceiling price, and administrative dispute resolution.”[1]

However, in the meantime, take a step back and analyze how effectively you’re handling the 340B program within your own organization. A thorough analysis of your own policies and procedures could reveal exposure or opportunity lurking under the surface.

 

[1] HRSA – 340B Drug Pricing Program. (n.d.). Retrieved December 19, 2014, from http://www.hrsa.gov/opa/index.html

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