HRSAs 340B Drug Pricing Program An Update

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HRSAs 340B Drug Pricing Program An Update

• 11th Annual PPN Conference
• Las Vegas, NV
• August 15, 2007
• Christopher A. Hatwig, M.S., R.Ph.

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Objectives

• Review requirements for DSH participation in 340B
• Discuss updates with the 340B Drug Pricing
  Program to include
• The Office of Pharmacy Affairs (OPA)
• The Pharmacy Services Support Center (PSSC)
• The Prime Vendor Program (PVP)
• Review pending FRNs and 340B legislation

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Background 340B Drug Pricing Program

• 1990 -Congress created Medicaid rebate law
• Drug manufacturers responded by increasing prices
• 1992 - Congress passed Veteran Health Care Act
  (VHCA) intended to extend relief to govt payers
  of drugs
• Act stated that manufacturers participating in
  Medicaid must sign a Pricing Agreement to
  participate in the 340B program
• Provides discounts on outpatient covered drugs
• Required drug manufacturers to give best price to
  disproportionate share hospitals and certain
  covered entities grants
• Also referred to as Section 602, PHS or
  340B pricing

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340B Covered Entities Eligible to Participate

• Disproportionate Share Hospitals (DSH)
• FQHC LAs
• HRSA Grantees
• Federally Qualified Health Centers (FQHC)
• Hemophilia Treatment Centers
• Ryan White Programs (HIV programs)
• Sexually Transmitted Disease programs
• Tuberculosis Programs
• Title X Family Planning Clinics
• Urban 638 Tribal Programs

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What Drugs Are Covered?

• Non-covered drugs
• Vaccines
• Drugs given to the patient in inpatient care
  settings

• Covered drugs
• Outpatient Prescription drugs
• Over-the-counter drugs (if accompanied by a
  written prescription)
• Clinic administered drugs within eligible
  facilities
• ER drugs
• Drugs in other amb care settings (e.g. day
  surgery)

Aggressive discounts have been negotiated for
vaccines and other non-covered by the Prime
Vendor Program
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Current Patient Definition Requirements for 340B
Hospitals

• Three criteria to meet
• 1. The covered entity must maintain records of
  health care services for the individual
• 2. The individual must receive care from a health
  care professional who is employed by or under
  contract or other arrangements with the covered
  entity and
• 3. Responsibility for the care provided must
  remain with the covered entity.

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Inventory Management

• To ensure compliance and to optimize 340B
  savings, Most DSH will need to utilize 340B
  pricing within mixed (inpt/outpt) patient care
  settings
• Two options in meeting program guidelines
• Separate physical inventories
• Virtual inventory management using split billing
  software
• Requirements to avoid diversion of 340B product
• Retrospective replenishment program
• NDC to NDC match (11 digit match)
• Reports/subject to audit

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340B Service Options

• In-House Pharmacy
• Traditional
• Telepharmacy
• Management company operated
• Contracted Pharmacy
• Community retail
• Mail order
• Prescriber Dispensing

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Current Contract Pharmacy Guidelines

• Each covered entity may use only one pharmacy to
  provide all pharmacy services
• The entity has the choice of using either an
  in-house pharmacy or a contract pharmacy for site
• There are no limits on how many in-house
  pharmacies a covered entity can operate
• Larger DSH facilities typically manage their own
  in-house outpatient pharmacy. Contract model
  more prevalent in smaller DSH and community
  health centers
• Ship to, bill to arrangement

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Typical 340B Chain of Distribution
MANUFACTURER
No Medicaid Rebate
WAC
Chargeback
340B Non-340B Accts
WHOLESALER
MEDICAID FEE-FOR- SERVICE
Payment
340B
Non-340B
Bill AAC
COVERED ENTITY
CONTRACT PHARMACY
Bill UC
Dispensing Fee
Co-pay (if applicable)
Dispensed or Administered
OTHER PAYERS
Dispensed
Co-pay
ELIGIBLE PATIENT
Powers Pyles Sutter Verville, PC
Bill von Oehsen [phone]
William.vonOehsen_at_ppsv
.com
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The Value of 340B Savings

• Discounts range from 25 to 50
• DSH see savings in the range of 22 to 40 below
  GPO prices
• A Mathematica study commissioned by HRSA
  documented an average of 27 savings
• Other HRSA grantees see even great savings
• The 340B Prime Vendor Program also negotiates
  sub-ceiling discounts
• Although covered entities are entitled to a
  ceiling price that averages 51 percent of AWP,
  they may negotiate sub-ceiling discounts
• Additionally value may be available on inpatient
  drugs (more later on this)

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Program Administration

• Three Legs of the 340B Program
• Office of Pharmacy Affairs (OPA)
• Pharmacy Services
• Support Center
• (PSSC)
• 340B Prime Vendor
• Program (PVP)

340B Program
OPA
PVP
PSSC
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Office of Pharmacy Affairs (OPA) Mission and
FunctionFederal Register 9/21/2004

• Responsible for management and oversight of the
  340B Programs
• Manage pharmaceutical pricing agreements (PPAs)
  with industry
• Manage covered entity eligibility and enrollment
• Promote access to clinically and cost-effective
  pharmacy services through
• Maximizing the value of participation in 340B
• Developing innovative pharmacy services
• Being a Federal resource for pharmacy practice

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340B Program Integrity Concerns

• Office of the Inspector General (OIG Reports)
• Industry
• Covered entity compliance
• Diversion
• Patient definition
• Duplicate discounts
• Covered Entities
• Industry compliance
• Overcharges
• Restrictive pricing practices (specialty
  distributors, IVIG, etc.)
• Pricing transparency

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340B Program Integrity Pilot Project

• Recommended by the OIG and certain drug
  manufacturers
• Test collaboration of OPA/Manufacturers to
  jointly publish verified price file to
  marketplace via the Prime Vendor Program to
  wholesale distributors
• Possible benefits Increased pricing integrity
  and transparency
• Six manufacturers and one wholesaler currently
  participating others encouraged to participate
• Project period April 1, 2007 through March 30,
  3008

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340B Basics Regulation and Policy

• Policy issued via Federal Register Notice
  publication.
• www.hrsa.gov/opa/federalregister.htm
• Process
• - OPA drafts guidance
• - notice published in federal register
• - public comment requested/received
• - comments reviewed/considered
• - notice finalized
• HRSAs OPA currently has three FRNs pending
  comment and final publication

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Proposed Guidance Definition of Patient 72
FR 1543

• Clarifies previous FRN of October 1996
• A clear and enforceable definition to help ensure
  against diversion and support 340B program
  integrity
• Clarifies requirement to keep records of the
  patients health care
• Clarifies relationship between covered entity and
  medical provider who generates prescription of
  340B drugs
• Provides guidance for DSHs as to which its
  clinics may participate in 340B
• Status
• Comment Period 1/12/07 03/13/07
• Comments being reviewed and final publication
  being developed

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Proposed Guidance Contract Pharmacy 72 FR
1540

• Updates previous FR Notice of August,1996
• Builds upon experience with Demonstration
  Projects
• Incorporates multiple pharmacies as standard
  option
• Network model arrangements would still require
  Alternative Methods Demonstration Projects
  (AMDPs) approval
• Status
• Comment Period 1/12/07 03/13/07
• Comments being reviewed and final publication
  being developed

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Proposed Guidance Childrens Hospitals (new FRN)

• References section 6004 of the DRA
• Clarifies that childrens hospitals are subject
  to the same 340B responsibilities as other
  covered entities
• Describes application procedures for childrens
  hospitals
• Reaffirms drug manufacturers responsibility to
  furnish discounts under Pharmaceutical Pricing
  Agreement (PPA).
• Feasibility of an independent auditor to verify
  eligibility
• Status
• Published in Federal Register July 9, 2007
• Sixty day comment period closes September 7, 2007

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Patient Safety/Clinical Pharmacy Initiative

• Patient Safety Problem
• IOM reports medication errors injure 1.5 Million
  people and cost billions annually.
• Pharmacy services in HRSA programs safety-net
  partners growing rapidly.
• HRSA desires these programs to be the best and
  safest in the United States.

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FY 2008 2.94 Million Budget Request for OPA

• House Senate Appropriations Committees
• Funds will enable OPA to begin to
• Improve Program Integrity
• Increase compliance with 340B pricing
  requirements
• Publish Federal Register Notices to clarify 340B
  guidance
• Improve OPA-IS and begin annual verification of
  covered entity data
• Increase stakeholder training and technical
  assistance
• Improve Program Transparency
• Evaluate collaborative 340B Pricing Pilot and
  possibly expand it
• Encourage voluntary manufacturer posting of
  pricing files to the 340B Prime Vendor secure Web
  site

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HRSA Pharmacy Services Support Center at APhA
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About PSSC

• Established through a contract between APhA and
  HRSA, signed September 27, 2002.
• Enhances Office of Pharmacy Affairs (OPA)
  resources to optimize the value of the 340B
  program in order to provide affordable,
  comprehensive pharmacy services that improve
  medication use and advance patient care and
  patient access to affordable drugs.

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Pharmacy Services Support Center

• Information management
• Organizing pharmacy expertise and resources
• Responding to 340B inquiries
• Providing technical assistance
• Policy analysis
• Monitoring pertinent policy developments
• Communication and education on policy issues
  impacting 340B and pharmacy services.
• Networking
• Communication and education
• Project development

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Learning Management System
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PSSC PharmTA

• Free technical assistance for 340B-eligible
  entities interested in setting up or enhancing
  clinically and cost-effective pharmacy services
• To request TA
• Call 1-800-628-6297
• E-mail pssc_at_aphanet.org

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Optimization Resources

• Program Assessment
• financial
• operational
• compliance/integrity
• Implementation Plans
• Financial Analysis
• Formulary Management

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340B Action Plans
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Interactive Financial Analysis
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Formulary Management
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HRSAs 340B Prime Vendor Program
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The Prime Vendor Program

• In addition to the cost savings available through
  the 340B Program, its Prime Vendor Program (PVP)
  provides additional savings to DSHs and HRSA
  grantees
• The mission of the PVP is to improve access to
  affordable medications for all 340B covered
  entities by
• Lowering participants supply costs by expanding
  the current PVP portfolio of sub-340B priced
  products
• Providing covered entities with access to
  efficient drug distribution solutions to meet
  their patients needs
• Providing access to other value added products
  and services meeting covered entities unique
  needs
• Participation is free and voluntary for all 340B
  eligible participants

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Estimated Prices For Selected Public Purchasers,
as Percent AWPvon Oehsen Pharmaceutical
Discounts Under Federal Law State Program
Opportunities
0
20
40
60
80
100
100.0
AWP
80.0
AMP
67.9
Medicaid (Min.)
60.5
Medicaid Net
51.7
FSS
Private Sector Pricing
49.0
340B
47.9
FCP
34.6
VA Contract
Stephen Schondelmeyer, PRIME Institute,
University of Minnesota (2001)
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HPPIs History as the PVP

• Late 2003 - AmerisourceBergen (ABC) subcontracted
  the responsibilities of Prime Vendor Program to
  HPPI
• Sept. 2004 HPPI awarded PVP contract by HRSA
• Jan/Feb. 2007 HPPI met or exceeded all 26
  performance criteria within the contract. HRSA
  granted contract extension through 2008
• July to Sept., 2007 Program transitions to new
  non-profit company named Apexus

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Apexus

• Non-profit subsidiary corporation - June 18, 2007
• HRSA fully supported
• Dedicated to managing the PVP with HRSA
• BODs will include representation from the PVPs
  participants
• Transition will be seamless for HRSA and PVP
  participants
• Minimal change to PVP logo

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340B PVP Updates

• Contracted from a single national distributor to
  13 national, regional, and specialty distributors
• Expanded to over 5,200 participants
• Contracted with 50 suppliers representing over
  2,800 products and services
• Major MIS Related Projects
• New contract management system software being
  implemented
• Major modifications to PVP participant databases
• Building interface to HRSAs database for
  eligibility
• Expanding demographic data to include multiple
  contract pharmacy relationship and unique
  identifiers for participants

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340B PVP Updates (cont.)

• Two additional FTEs (Analyst, Pharmacy
  Director), plus Pharmacy Intern
• Three participant councils provide program
  guidance (DSH, CHC, and Title X Family Planning)
• Average sub-340B savings on PVP contract sales
  across all participants for 2006 was 17
• Lilly, Wyeth, X-Gen added to list of companies
  posting ceiling prices
• Partnered with national organizations
  representing covered entities to conduct
  340B-related education and compliance programs

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PVP Participants by Entity Type (as of 7/19/07
5231 participants)
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Supplier AgreementsSource 340B PVP website

• Allendale Pharmaceutical
• Alliant Pharmaceuticals
• Astra-Zeneca Pharmaceuticals
• Abraxis Pharmaceutical
• Akorn Inc.
• ASD (flu vaccine)
• Bayer Diagnostics
• Bedford Labs
• Can-am Care LLC
• Caraco Pharmaceutical Labs
• Cytogen (pending)
• FFF (flu vaccine)
• GW Laboratories
• Geritrex Corporation
• GlaxoSmithKline
• Hawthorne Pharmaceuticals, Inc
• Home Diagnostics Inc.
• Early Detect
• Lilly Company

• 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
• Sciele Pharma
• Teva Health Systems
• Total Pharmacy Supply
• Tri State Distribution
• Stratus Pharmaceuticals
• Trinity Biotech
• X-Gen Pharmaceuticals
• Watson Pharma Inc.

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PVP Sub-ceiling avings by Quarter
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DSH Inpatient Program
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DSH Inpatient Pricing

• Section 1002 of MMA Amended Medicaid Rebate Law
  to exclude inpatient prices from best price
  reporting by drug manufacturers
• Program is voluntary for manufacturers
• Exeption to GPO exclusion for inpatient -
  Contracts can be negotiated by GPO or by DSH
  independently
• Complete and accurate lists of eligible members
  must be maintained by GPOs and pricing is
  restricted to DSH members only
• Some hospitals report 10 or greater in added
  savings over typical GPO prices

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SNHPA Survey ResultsDSH Inpatient Discounts

• SNHPA survey indicates hospitals have received
  post-MMA inpatient discounts on only 12 percent
  of their most commonly used brand name drugs
• 70 percent of the discounts were contingent on
  hospitals guaranteeing a certain market share
• Small and rural hospitals are the least likely to
  receive inpatient discounts under Section 1002
  because of requirements placed on contracts
• SNHPA has advocated for legislation to address
  the inpatient pricing. Members of Congress have
  introduced legislation that would mandate 340B
  pricing on DSH inpatient drugs see S.1376 and
  H.R.2606

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Safety Net Inpatient Drug Affordability Act S
1376/ HR 2606

• Expands 340B program to new entities
• Permits GPO within inpatient
• Extends discounts to inpatient
• Credit paid to Medicaid for inpatient discounts
  based on formula
• Modifies AMP
• Increases OPA authority and resources for
  enforcement and improves pricing integrity
• Permits multiple contract pharmacies
• January 1, 2008

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Contact Information

• Office of Pharmacy Affairs
• Phone [phone] or 1-800-628-6297
• Email opastaff_at_hrsa.gov
• Web www.hrsa.gov/opa
• Pharmacy Services Support Center
• Phone [phone]
• Email pssc_at_aphanet.org
• Web http//pssc.aphanet.org
• Prime Vendor Program
• Phone [phone]
• Email 340b_primevendor_at_340bpvp.com
• Web http//www.340bpvp.com