340B and Specialty Pharmacy

340B and Specialty Pharmacy

Learning Objectives:

• Describe the history, intent and statutory principals of the 340B program.

• Outline the process for addressing 340B policy and the maintenance of integrity of the 340B Program participation.

• What are the current trends in 340B and specialty pharmacies.

• Identify the roles and responsibilities of 340B implementation.

340B Drug Pricing Program

• Established by Section 602 of the Veterans Health Care Act of

1992

• Enables “Covered Entities” to receive discounts on drug

purchases

• Requires drug manufacturers to provide outpatient drug

discounts to certain Covered Entities and to participate in other

government programs such as Medicare/Medicaid

• Not subsidized by the federal government

340B Program Status and Growth

• 28,000 Covered Entities and Child Sites*

• 50,000 Contract Pharmacy Arrangements*

• 900 Manufacturers Participating

• Many 340B Software Vendors/Administrators

* Office of Pharmacy Affairs Database, http://www.hrsa.gov/opa

Which patients are considered eligible under 340B?

• HRSA current requirements for patients:

– Has an established relationship with the covered entity

– Patient’s medical records maintained by the covered entity

– Receives health care services from professionals who are either

employed by or under contract or arrangement with the covered entity

• HRSA is currently redefining the definition of eligible patient.

• The uninsured and underinsured patients have the most potential

benefit under the 340B program, however, there is no financial

means testing, or exclusion for insured patients.

Contract Pharmacy Services

• The Covered Entity retains legal title to all drugs purchased

under 340B.

• The Covered Entity must pay for all 340B drugs, but a “ship to-

bill to” arrangement may be used.

• The contract pharmacy is subject to audits to identify and

prevent diversion and/or duplicate discount.

• As of 2010, Covered Entities can contract with multiple

pharmacies.

340B Administrators

• Solutions available to Covered Entities for administrating the

340B program:

– Traditional pharmacy-based solution

• Separate 340B inventory managed at pharmacy but owned by the

Covered Entity

– Third party administrator solution

• Eligible patients are seen at the Covered Entity under a PBM model

– Post review solution

• Audits all claims processed at contracted pharmacy against the CPT

• Diagnostic codes billed by the Covered Entity

Current 340B Challenges

• Increase scrutiny by Congress

• Focus on program oversight and integrity provisions

• Disagreements surrounding intent of program (patient subsidy vs. covered entity subsidy)

• Focus on use of program savings or “revenue” – Profiteering?

• Impact on drug shortages

• Pointed letters to hospitals and Walgreens

• PhRMA, PBMs, and Oncologists have raised concerns about program scale and patient benefit

• AIR 340B

• Negative editorials in national publications

• White Paper, “Unfulfilled Expectations…”

340B Policy Focus

• 340B “Mega-Reg”

• Eligible Patient Definition

• Contract Pharmacy

• Hospital Eligibility

• Off-site Facility Eligibility

• Date of rule publication and impact in question due to…

• PhRMA vs US DHHS

• May 2014 ruling by US District Court in favor of PhRMA

• Ruling states that HRSA does not have authority to create the orphan drug regulation published in Fall 2013

• Impact on Mega-Reg?

• Impact on previous program guidance?

340B Specialty Pharmacy

• Tend to be high volume, low margin

• Flexibility is key point to win/lose in this game

• Future legislative / regulatory / technology developments will determine viability of existing players

Definition of Specialty

• Focus on:

• Specific Diseases

• Specific Dollars

• Specific Patient Needs

• Specific System Needs

• 340B Specialty is simply an subset of these with heightened pharmacy business requirements, keeping patient & office care experiences intact

340B Scenarios

• Vary Widely

• Many different Covered Entity formats

• Many different population requirements

• Must contract & design according to each unique scenario

• Traditional payor contracts may not support patient care scenarios & vice versa

340B Implementation

• Prevent Diversion

• Inventory Management

• Virtual vs physical

• Reporting

• Ensure valid participation

• Contracting

• With Covered Entities

• With Payors/Networks

340B Implementation

• Cost containment/design for pharmacy

• Considerations:

• Payor Audits

• Reverse Logistics

• Limited Distribution

• Restricted Networks

• Dynamic patient coverage

• Carve Out Services

340B Implementation

• Does my technology support the business design? patient care design?

• Does my facility & workflow support the business design? patient care design?

• How do we keep the intent of the program intact?

• Does my physical inventory management system support 340B in forward & reverse logistics

Trends for 2015

• Drug Launches

• Limited Distribution growth or transfer in Specialty

• More HRSA and manufacturer audits

• Covered entities’ continued investment in compliance

• Continued aggregation of contract pharmacies

Trends for 2015

• Additional guidance from HRSA on patient definition and the prevention of duplicate discounts

• Continued Congressional interest

• Proposed regulations

• Calculation of 340B ceiling prices and manufacturer civil monetary penalties

• Dispute resolution

Discussion & Questions

Thank You!

Robert Tinsley

VP, Pharmacy Services

Independent Pharmacy Cooperative

800-755-1531 ext. 4856

Rob.Tinsley@ipcrx.com

Timothy Davis, PharmD

President & COO

PANTHERx Specialty Pharmacy

1-855-726-8479

tdavis@pantherspecialty.com

Contact Information: