Update on 340B Rules

Guest Author: Katie Lapins

The long-awaited “Mega” Rule related to the 340B Program may soon be released. In the past, the 340B Program has been primarily administered without formal regulations, establishing the rules that govern the 340B program primarily through policy releases, informal guidance, and FAQs. However, when the Patient Protection and Affordable Care Act (ACA) / Health Care and Education Reconciliation Act (HCERA) was passed, Health Resources and Services Administration (HRSA) was mandated to specifically address certain topics that require clarity or further guidance.

Before any rule can be published, it is submitted to the Office of Management and Budget (OMB) who must first clear it which normally takes about 90 days. The “Mega” Rule was submitted in June, making its release in September likely. Although rules can be held up at OMB for months, or longer, most experts do not expect that to happen with this one. So what are a few of the “hot topics” in the 340B Program?

Orphan Drug Rule
You may remember that HRSA had previously submitted a Proposed Rule regarding Orphan Drugs to the OMB but withdrew it in November 2014 after a court ruled that HRSA had overstepped its authority 1. This rule was later reissued as “interpretive,” PhRMA has challenged it (again), and we still are waiting for a ruling from the courts. This case has been important as the court’s decision implies that an agency must have the specific authority from Congress to issue rules that change those items established through statute. However, this interpretive guidance could ultimately be the foundation for enforcement against manufacturers, creating a conundrum for them since that would mean HRSA’s interpretation would have the same impact as a rule. The next court decision in this matter could clarify this situation, making the procedures of HRSA as important as the content in this case.

The “Mega” Rule
Earlier this year, HRSA issued a Proposed Rule regarding the calculation of 340B ceiling prices and CMPs and public comments are due within 60 days (August 17, 2015). So what’s left for the 340B Program and why is there still a pending “Mega” Rule? Many people believe it will contain components related to the 340B Program that remain vague and require clarity for all stakeholders, including:

1. Definition of a 340B patient
2. Hospital eligibility requirements, including off-site facilities
3. Contract pharmacy arrangements
4. Price reporting/transparency
5. Duplicate discounts and procedures for manufacturer refunds

Many of these topics are related to the overall intent, and potentially unintended outcomes, of the program. In recent years, the growth of the program has been rapid for a few reasons; many hospitals have acquired other facilities that are 340B eligible and also, as of March 2010, covered entities can use multiple contract pharmacies. As this growth has occurred, questions have arisen regarding the intent of the program and the profits of various stakeholders. Congress has issued letters to some of the stakeholders and held special hearings, and the General Accounting Office and Office of the Inspector General have also raised concerns about the program’s integrity. Even without diversion or duplicate discounts, the ability to purchase drugs at deeply discounted prices and administer them to patients who may have health insurance provides a large “spread” or profit to the covered entity. The retail outlets serving as contract pharmacies also have the potential to see significant revenue from this role, beyond what was originally imagined. HRSA’s mission is to, “improve[e] access to health care by strengthening the health care workforce, building healthy communities and achieving health equity.”2. At issue to many is if the way the 340B Program is currently functioning follows the intent of the program.

The “Mega” Rule will be issued as a Proposed Rule, allowing 60 days for comments from stakeholders. It’s important that manufacturers read the entire document and involve the appropriate personnel and departments to determine the potential impact on their own company’s operations and ultimately, their bottom line. This will include not only the legal and policy areas but also the procedural and administrative ones, as well.

Clearly, the 340B Program continues to be one of great change and important considerations must be weighed by all of its stakeholders. The 20th MDRP Summit by IIR is filled with 340B-related topics and includes a full day workshop on this important topic. Hear from colleagues, attorneys, and government officials who have expertise in the 340B Program to find out about the implications for your organization of these impending changes. Download the agenda to see a complete topic list.

Katie Lapins

Katie Lapins has worked in the pharmaceutical and medical device industries in the areas of commercial and government contracting, compliance, finance and sales operations for 15 years. As a consultant, Katie’s areas of primary focus are government programs, corporate compliance and commercial operations. Within these areas, she has developed policies and procedures, assisted manufacturers with voluntary disclosures/restatements, led audits and assessments, calculated and submitted statutory pricing requirements (AMP, BP, ASP, Non-FAMP, PHS and TRICARE), processed Medicaid/ SPAP/ Supplemental invoices, validated PHS eligibility, handled Class of Trade projects with over 100K entities, and created training for onsite and web-based instruction for 2 – 200 employees. Katie’s experience within the industry includes government contract administration, pricing analysis, commercial operations, specialty pharmaceutical distribution agreements and commercial contract management.


1 - In brief, HRSA’s Orphan Drug Proposed Rule said that the free-standing cancer hospitals, critical access hospitals, rural referral centers and sole community hospitals purchasing orphan-designated drugs are entitled to purchase those drugs at the 340B ceiling price when they are used for an indication other than the orphan indication.

2 - http://www.hrsa.gov/about/index.html

340B Changes Are Coming - Are You Prepared?

With the completed review of HRSA's latest Proposed Rule: "340B Civil Monetary Penalties for Manufacturers and Ceiling Price Regulations" by the White House Office of Management and Budget (OMB) and the long-awaited proposed "Mega" Guidance under review and slated to come out later this year, are you prepared for the compliance requirements brought on by these policy and procedure changes?

At the 20th Annual Medicaid Drug Rebate Program Summit, we've got an entire day dedicated to just 340B. Join us during the pre-conference day on Wednesday, September 30th to get key 340B compliance information, with sessions on:

• • Key Highlights and Updates on HRSA, OPA 2015 Rulemaking
• • Getting it Right: 340B Policy & Procedure Compliance Checklist
• • Panel: Navigating the 340B Drug Pricing Program Database
• • Ensuring Compliance & Conducting Monitoring and Internal Auditing
• • Panel: 340B Hot Topics
• • And More!

Download the MDRP brochure for Summit details and the complete agenda.

PLUS! Get 340B Updates directly from HRSA on Thursday, October 1st during the main conference from Michelle Herzog, Deputy Director, Office of Pharmacy Affairs, HRSA.

This full-day summit is part of the Platinum Pass, which gives you access to the full three days of the MDRP Summit - the best value! Register now and save up to $300 off standard registration. Be sure to use priority code: XP2058BLOG

See you in Chicago this September!

Is Medicaid Extension Really Feasible?

The following excerpt is from a Podcast recorded by the MDRP Summit with Grace-Marie Turner, President of the Galen Institute last June. Access the complete MP3 and Transcript here.

Is Medicaid extension really feasible?

Grace-Marie: I just think that it’s going to be very difficult to convince those other states that have resisted so far because more and more evidence is coming down to show that expanding Medicaid as a traditional program as it is currently structured is real harmful to people. And it’s really harmful to the most vulnerable citizens who are on Medicaid today. If people have many chronic conditions, many of them have no place else to go. They are basically not insurable in the private marketplace. If they are under 100 or 138% of poverty, Medicaid really is their only option. As a result, you wind up with more people competing for the same limited number of doctors who will see Medicaid patients and making it even more difficult for people on Medicaid today to find a doctor to see them.

I had a father write to me recently who has a daughter who is on Medicaid – many chronic conditions and in a wheelchair. He said: “It takes me sometimes six weeks to get an appointment with her urologist”. He said: “Do they even think about how much more difficult it’s going to be to get an appointment with the urologist if there are a million more people competing for those same appointments?” So, we must fix it so that it allows the safety net to be intact for the most vulnerable people and give those who have the option to get private coverage to do so, so that they are not competing.

And then finally, I think that the states who want to expand the program need to guarantee that providers will be paid enough that they will be able to see a Medicaid patient. In some states like New Mexico that have a very high match rate, Medicaid pays at very close to Medicare rates. In other states, a doctor may be paid $5 or $7 for an office visit – not even enough to begin to cover expenses. Doctors want to take care of these patients, but they can only keep so many and keep the lights on and pay their own bills. So, we’ve got to be able to pay providers more and that’s the kind of leverage that I think that the states would be able to have if they were not so constrained by an avalanche of federal rules and all the “Mother May I?” waiver requests that they have to get to make any changes to their plan.

If they had more flexibility, then they could make sure that patients on the program today could actually find a doctor to see them and also make sure that those who may be in an expansion population have the option of coverage that looks more like the private insurance and the private marketplace so that it’s a track and a platform to private coverage rather than the cliff that Medicaid is today – either in or out. If you make $1 too much money then you’re out of Medicaid or $1 less and you’re in. It needs to be a smoother ramp to private coverage and there are a lot of ideas to do that, including giving people the option of basically taking their Medicaid allotment as a voucher to buy into private coverage. There are a lot of ideas out there to improve this program, but we need to remember that we’re doing it for the most vulnerable citizens who are on the program today, who have no place else to go, competing for a limited number of appointments with a shrinking number of doctors to actually get appointments.

We can do so much better and I think you’re going to see many more governors actually demanding those kinds of changes and that kind of flexibility in exchange for any expansion.


Join us at the 2015 MDRP Summit for complete coverage on all things pricing, rebates, contracting and collaboration. Register now and save $300 when you use the code: XP2058BLOG. 

A Message from Edward McAdam, Chairman, IIR’s MDRP Summit

Government rules and regulations affect every department at a pharmaceutical company. However, few areas are as directly—and as frequently—affected as the government pricing and reimbursement space. Those working in this segment need to be knowledgeable about several different government agencies whose updates impact the way manufacturers conduct their government-related operations.

We’re still thinking about Medicaid expansion and how many states will ultimately expand, thereby adding more weight to the Medicaid Drug Rebate Program. Along with HRSA’s 340B Proposed Mega Rule and CMS’ Final AMP Rule—both set to come out this year—this will fundamentally change how we do our calculations.

There’s only one event that I know that really addresses these questions providing a forum to debate and create a roadmap for manufacturers to follow—IIR’s Medicaid Drug Rebate Program Summit. I’m pleased to once again be chairing this industry-leading event—the largest in the country—taking place September 30-October 2 in Chicago.

I invite you to join us. 

The MDRP Chicago Summit has anticipated what manufacturers are dealing with on a day-to-day basis and provides essential content you won’t find anywhere else. It is THE largest MDRP event where industry, state and federal government professionals come to share information, get updated on regulatory issues, and have a good time doing it.

When you download the agenda, you’ll see why the MDRP Summit stands out: 

• Six pre-conference symposium including the all-new Town Hall between Manufacturers and States 
• The annual update on 340B Program Regulations and Processes from Michelle Herzog, Deputy Director, Office of Pharmacy Affairs, HRSA 
• The only event facilitating Dispute Resolution Meetings with at least 20 participating States 
• The all-new Pharmaceutical VA Contracting and Compliance Summit where you will get updates on FSS, NFAMP, FCP and more

There’s a reason 550+ MDRP executives (including myself!) come back year after year. Take a look at the agenda by downloading it here and register today!

I look forward to meeting you in Chicago. (I’ll be the guy up front introducing our opening keynote, Ezra Klein, Editor-in-Chief, Vox.com; Columnist, Bloomberg News, Policy Analyst/Contributor, MSNBC!)

Sincerely,

Edward J. McAdam, Sr. 
Daiichi Sankyo, Inc. 
Chairman, IIR’s Medicaid Drug Rebate Program Summit

The Future of Medicaid Reform

The following excerpt is from a Podcast recorded by the MDRP Summit with Grace-Marie Turner, President, Galen Institute in June of 2014. Access the complete MP3 and Transcript here.

June 12, 2014: I am distressed that more states did not demand more flexibility with this program in exchange for expanding Medicaid. Half of the states have decided to expand it; half have not after the Supreme Court re-wrote the ACA and made expansion of Medicaid up to 138% of poverty an option for the states. As of last June, about 24 states were resisting expansion for a number of reasons.

Medicaid is a program desperately in need of reform. Back in 2005/2006, I served on the Medicaid Commission – we did hearings around the country to look at the Medicaid program – to learn about it – because each state runs its own, it’s really 50 different programs. In our findings, people desperately dependent upon Medicaid and yet it was not serving them. If states were given more flexibility, they could make a significant amount of Medicaid dollars go much further to cover more people.

With this said, states are going to increasingly resist expansion of Medicaid unless they get more flexibility to control the program themselves and be able to save money and be able to provide better benefits to their citizens often in giving them the option of private coverage.

So what is the future of Medicaid? More governors demanding more flexibility; and then more patients on Medicaid getting more options for private coverage.



Join us at MDRP Summit 2015 for complete coverage on all things pricing, rebates, contracting and collaboration. Register now and save $500 when you use the code: XP2058BLOG.

Where is CMS Heading?

Over the year, a lot has changed in healthcare. As the final rule continues to hang on the horizon, what is needed for all of the players in the healthcare industry to implement change quickly? Learn more from CMS at MDRP 2014 to make sure you have adequate information to launch your program changes efficiently.

At MDRP 2014 get essential regulatory updates from key federal government officials. From the Center for Medicaid Services (CMS) you will receive updates on:

• MDRP Compliance & Current Reporting – Kim Howell, Department Director, Division of Pharmacy, Department of Health and Human Services, CMS 
• Medicare Part D Proposed Rule – Tracey McCutcheon, Deputy Director, Medicare Drug Benefit Group, CMS

Download the complete agenda.

And make sure you join us September 15-17 in Chicago to prepare for the AMP Final Rule and deconstruct Part D and 340B Mega Rule.

Remember as a blog reader you can save an EXTRA $100 off the current rate when you register with the code: XP1958BLOG

Register now.