FUNGISAI NOTA, PHD. *ANDREW WELSH

ANDREW LOFURNO

AIDS CARE GROUP

RYAN WHITE ALL TITLES MEETING, WASHINGTON DC

NOVEMBER 27 T H -29 T H , 2012

* C O N TA C T I N F O R M AT I O N : F N O TA @ A I D S C A R E G R O U P. O R G

340B AND YOUR ORGANIZATION

340B Background

340B Program Evolution

1992340B Statute

19931st Guidelines

1996 Contract Pharmacy,PatientDefinition

2004Vendors

2010 Affordable Care Act

1st Proposed Regulations

Creation of the 340B Program

Certain safety net covered entities

Outpatient drugs

Price discountsRequired for all

manufacturers in Medicaid

340B Progra

m

Intent of the 340B Program

Stretch scarce federal resources1

Reach more eligible patients1

Provide more

comprehensive services1

Reduce price of

pharmaceuticals for

patients

Expand services

offered to patients

Provide services to more patients

1. HR Rep No. 102–384, pt 2, at 12 (1992).

Patient Definition

340B Eligible Entities

* 340B eligible through Section 7101 of the Affordable Care Act

Hospital Eligibility Criteria

*340B eligible through Section 7101 of the Affordable Care Act

Hospital Outpatient Facilities

In order for outpatient facilities to become eligible for the 340B Program:

The outpatient facility must be an integral part of the hospital

The outpatient facility must be included as reimbursable on the covered entity’s most recently filed Medicare Cost Report

To register additional outpatient facilities, complete the online Register an Outpatient Facility registration at: http://opanet.hrsa.gov/OPA/CERegister.aspx

340B Enrollment Procedure

http://opanet.hrsa.gov/OPA/CERegister.aspx

340B Implementation

1. History of 340B

2. The Intent of 340B Program

3. Who is eligible

4. Key dates

Part 1 - Summary

340B Prohibitions and Requirements

340B Covered Drugs

340B Prohibitions and Requirements

Duplicate Discount

s

Diversion

Duplicate Discount on 340B Drugs

Examples of Duplicate Discounts

Examples of Duplicate DiscountsCont’d

1. CMS. Letter re: medication prescription drug rebates. April 22, 2010. Available at: www.ncsl.org/documents/health/42210PPACADrug_Rebate_ SMD.pdf. Accessed November 22, 2011.

Billing Medicaid

Medicaid Exclusion File and 340B Contract Pharmacies

The Medicaid Exclusion File

CE Decision to Use 340B DrugsCarve-In

CE Responsibilities for Avoiding Duplicate Discounts

It is ultimately the responsibility of the 340B participating entity to ensure accurate reporting of Medicaid billing of any 340B drugs to OPA and the state

Medicaid agency.

Avoiding Duplicate Discounts

Diversion Prohibition

GPO Exclusion

The Orphan Drug Exclusion

The Orphan Drug Product Designation Database can be found at: http://www.accessdata.fda.gov/scripts/opdlisting/oopd/index.cfm

Part 2 - Summary

1. Determining which drugs are covered under 340B

2. Diversion / Exclusion / Duplicate discounts 3. Carving – in or Carving - out Medicaid4. GPOs and Orphan drugs

OPTIMIZING YOUR 340B PROGRAM

340B Prime Vendor Program

PVP Mission and GoalsImprove access to affordable medications for

covered entities and their patientsPrimary goals:

Lower participants’ supply costs by expanding the current PVP portfolio of sub-340B priced products

Provide covered entities with access to efficient drug distribution solutions to meet their patients’ needs

Provide access to other value added products and services meeting covered entities’ unique needs

Estimated Prices For Selected Public Purchasers as a Percent of AWP

Stephen Schondelmeyer, PRIME Institute, University of Minnesota (2001)

100.0%

80.0%

67.9%

60.5%

51.7%

49.0%

47.9%

34.6%

0% 20% 40% 60% 80% 100%

AWP

AMP

Medicaid (Min.)

Medicaid Net

FSS

340B

FCP

VA Contract

Private Sector Pricing

The 340B Price

25%–50% of the average wholesale price

Drug Manufacturers

Drug Pricing Program

340B

The 340B price is actually considered a “ceiling” price

Can offer sub-ceiling prices

Benefits of PVP to Participants

Ease of enrollment and activation of pricing by wholesaler

Access to 340B sub-ceiling prices for covered drugs

Access to discounts on other value added outpatient products such as vaccines and diabetic supplies

Participant communications Support of DSHs and HRSA grantees by funding

340B education and networking opportunities

Value of PVP to Participants

Savings - average sub-ceiling savings on PVP contract purchases for all participants = 16% in 2007

Diminishes the need for Independent Sub-Ceiling contracts and the resources that they require to manage

Provides a “One Stop Shopping” model for outpatient pharmacy services such as 340B split-billing software

Access to lowest priced vaccines in the marketplace

Access to market reports to help cut formulary costs

Cost Savings Analysis Summary

Current Annualized Purchases = $538,576Projected Annualized Purchases if the participant

takes advantage of all categories of savings (1:1, generic exchange, and therapeutic exchange = $331,131

Annualized Savings of $205,455Percent Savings of 38% This analysis was for a FQHC switching from a

GPO Model to a 340B plus Prime Vendor Model

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

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

Other Products and Services

Vaccines PAP software Split billing software Auditing/overcharge recovery services Repackaging services Prescription vials/labels/printer cartridges Diabetic/TB syringes PBM services OTC diagnostic test kits HIV rapid test kits Pharmacy automation/technology

Manufacturers & 340B Pricing

Must provide 340B pricing if their drug(s) is covered by Medicaid

Cannot sell covered drug above 340B ceiling price to covered entity

Are not prohibited from selling outpatient drugs at below 340B ceiling price

Prices offered covered entities are exempt from “best price” but not Non-FAMP calculation

Are not required to offer sub-ceiling price to other covered entities or Medicaid

Can obtain Non-FAMP pricing exemption for sub-ceiling pricing through HRSA’s 340B Prime Vendor Program

Manufacturers – 340B Pricing and Medicaid Rebate Programs

Medicaid and 340B entities receive prices based on either “Best Price” OR Average Manufacturer Price (AMP) – 15.1% for branded drugs

Additional discounts are applied if price increases exceed the Consumer Prime Index (CPI)

Generics – AMP minus 11% “Best Price” is not part of generic calculationPricing - recalculated quarterlyDiscounts are upfront. No backend rebates

PRIME VENDOR CONTRACTING

• Contract methodology- build upon existing supplier

relationships- new supplier contracting- savings vs. revenue- target high dollar/ proprietary drugs- negotiations vs. bidding on select drug

classes- value added products and services

Positive (+) Negative (- )

Entity pays flat fee per claim Stop-loss function (prevents

3rd party transmission is loss to entity)

Entity does not pay fees on claim reversals

Entity pays lowest of U&U, MAC, and 340B

Entity pays fees based on % of revenue or drug cost

Entity does not keep Medicaid/3rd party reimbursement

Vendor recruits patients to its mail order pharmacy

Early cancellation fees Entity not allowed to select

wholesaler Entity might end may end up

purchasing partial bottles at high rates due to non-replenishment

CHOOSING A CONTRACT PHARMACY

Part 3 - Summary

1. Understanding PVP

2. Expected gains from joining the PVP

3. Choosing contract pharmacies

340B POLICIES

Guidelines Regulations (proposed)

• Patient Definition*• Contract Pharmacy*• Audits*• Dispute Resolution*• Outpatient Facilities• Duplicate Discounts

Manufacturer Civil Monetary Penalties

Administrative Dispute Resolution

Orphan Drugs

340B Policies

340B Guidance and Policy

http://www.hrsa.gov/opa/federalregister.htm

340B Proposed Regulations

Drug Delivery Contract Pharmacies

340B Usage Considerations

340B Program Support

Office of Pharmacy Affairs (OPA)

340B Program Integrity Resource

340B Program Integrity Resource

Functions of OPA

Clinically and Cost-EffectivePharmacy Services

MAKING 340B PROGRAM WORK

1. Maintain updated records on OPA website.2. Choose your contact pharmacy wisely3. Conduct regular internal audits4. Devote adequate quality personnel for 340b5. Develop and update your organization’s

340B standard operating procedures (SOPs)6. If you deliver the medication – combine it

with case management to increase adherence

GETTING READY FOR AN AUDIT

Have Policies and Procedures- do not create them for the purpose of the audit- detail entire process

Be proactive- get information to the auditor when requested in an easily

digestible format Audit Now

- trace clinically significant encounters monthly- involve social workers, patient financial services, and medical

records. Understand state Medicaid managed care

- get to know your Medicaid office that processes claims for your entity Stand your ground with C-suite, do not be pressured into risky

practices.

QUESTIONS

MAIN SOURCES USED

OPAHRSAAPEXUS – 340B PVP