The 340B Program:An Overview

NGA/NCSL Web-assisted Audioconference August 5, 2005

Diane P. Goyette, RPh, JDU.S. Department of Health and Human ServicesHRSA Pharmacy Services Support CenterAmerican Pharmacists Association

Objectives Review of 340B Program basics and steps for

determining eligibility Introduction to 340B price determinations, Medicaid

billing and other considerations Pharmacy options under the 340B Program Description of the HRSA Pharmacy Services

Support Center (PSSC) as a pharmacy resource for states and 340B entities

Provide resources for additional information and assistance.

Office of Pharmacy Affairs In the HRSA Healthcare Systems Bureau Mission: 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

Resources to carry out its mission Expert staff, support from HRSA Leadership

Pharmacy Services Support Center

340B Prime Vendor Program

Pharmacy Services Support Center

Established by a September, 2002, contract between HRSA and the American Pharmacists Association

Established to help 340B entities develop comprehensive pharmacy services for their patients

Government-funded resource for 340B pharmacy services start up and enhancement.

PSSC Mission

To provide information, education, and policy analysis to help entities optimize use of the 340B program to provide clinically and cost effective pharmacy services that improve medication use and advance patient care. 340B Information and Analysis Outreach and Education 340B Pharmacy Technical Assistance

The 340B Program

Section 602 of the “Veteran’s Health Care Act of 1992” added section 340B to the Public Health Service Act.

Response to increase in prices resulting from 1990 OBRA law establishing “Medicaid best price”. 340B (also DOD, FSS and VA) price excluded

from “Medicaid best price” Administered by the HRSA Office of

Pharmacy Affairs

Section 340B, PHS Act

Requires manufacturers to sell ‘covered outpatient drugs’ to certain “covered entities” at a price determined using a statutory formula.

What Are Covered Entities?

Nation’s core medical safety net providers Only categories listed in the 340B statute Federal grantees and disproportionate

share hospitals More than 12,000 entities registered on

HRSA Web site, as of July 1, 2005.

Who are the Covered Entities

Consolidated Health Centers

AIDS clinics and drug programs

Black Lung Clinics

Federally Qualified Health Center Look-a-likes

Disproportionate Share Hospitals

Hemophilia treatment centers

Native Hawaiian health centers

Urban Indian clinics/638 tribal centers

Title X family planning clinics

STD clinics TB clinics

Total Entities by StateSTATE COUNT STATE COUNT STATE COUNT STATE COUNTAK 58 IA 130 MT 72 RI 46AL 374 ID 88 NC 270 SC 294AR 120 IL 472 ND 39 SD 32AS 1 IN 125 NE 64 TN 381AZ 162 KS 106 NH 37 TX 643CA 1050 KY 323 NJ 156 UT 79CO 171 LA 209 NM 179 VA 250CT 104 MA 225 NV 67 VI 12DC 33 MD 229 NY 776 VT 28DE 44 ME 125 OH 280 WA 322FL 725 MH 4 OK 121 WI 124FM 2 MI 417 OR 228 WV 234GA 824 MN 94 PA 523 WY 42GU 7 MO 287 PR 94HI 81 MS 178 PW 1

Enrolling in the Program

Go to http://www.hrsa.gov/opa/introduction.htm for forms and information.

Most entities fill out a 1-page form, provide required information, which can include your Medicaid provider number.

Disproportionate Share Hospitals Different enrollment process for public versus private non-

profit hospitals

STD/TB and some Ryan White entities have another process and also have to be “certified” annually.

340B Entity Database

Information from approved application entered into Eligible Entity list, available on HRSA website: http://www.hrsa.gov/opa/databases.htm

List updated quarterly by HRSA; must be on it to be eligible for 340B pricing.

Information must be submitted by the first day of the 3rd month of a quarter to appear for eligibility the following quarter.

Not in the database? Manufacturers and wholesalers do not have to sell to you at 340B prices.

340B definitions Covered outpatient drugs (42 USC 340B(b))

Prescription drugs, over-the-counter drugs that are prescribed;

Excludes vaccines and inpatient drugs. A “patient” of a covered entity (61 FR 55156)

Receives a range of health care services from a practitioner employed by the entity such that the entity remains responsible for the care of the patient;

Grantee entities: care must be within the scope of the grant Health records maintained by the entity; Getting prescription services not enough to make you a

patient.

Diversion to non-patients

Section 340B makes it illegal to sell or provide 340B-priced drugs to persons who are not patients of a covered entity.

Entities are responsible for having procedures to prevent this and records to prove it.

Does not require separate inventories. Subject to audit by the manufacturer or the

Secretary.

Other 340B Issues

Duplicate Discount Section 340B protects manufacturers from paying

a Medicaid rebate AND giving a 340B discount on the same drug.

Secretary was directed to develop a mechanism that States and 340B providers could use to ensure this.

Final guidelines issued August 23,1996 (61 FR 43549).

340B Price Determination

Brand name drugs: 340B price for each unit of the drug cannot exceed AMP (as reported to CMS under Medicaid rebate program) minus “rebate percentage”

Minimum discount on branded drugs + AMP minus 15% Generic and prescribed OTC drugs = AMP minus 11% Ceiling price – deeper discounts can be negotiated

340B Prime Vendor Program Studies show average savings of 51% below AWP No list of “the” 340B price exists

340B Prime Vendor Required by statute and OPA mission to maximize the value of

the program for safety net providers; Current agreement finalized in October 2004 with Health

Purchasing Partners, Inc.; set up separate, non-profit “340B Prime Vendor Program”;

Negotiate sub-ceiling prices and access to value added services for participating entities;

Voluntary, no cost to entities, no need to change current wholesaler;

Information about the 340B Prime Vendor can be found at http://www.340bpvp.com/home.asp

340B Pharmacy Options

Subject to state law

Order the drugs; physician dispensing Sample closets, etc.

Establish in-house pharmacy to provide pharmacy services

Contract with a community pharmacy to provide services

CHC 340B In-House Pharmacy How it works…

Entity establishes pharmacy according to state law. Entity buys covered drugs at “the 340B price” (or

lower if Prime Vendor or entity-negotiated with the manufacturer) through their wholesaler; Outpatients with 3rd party prescription coverage: Co-pay and

pharmacy reimbursement according to the insurer’s policy 340B does not prescribe how the savings must be used or

spent Medicaid patients: entity must choose a procedure that

prevents duplicate discounts Uninsured patients: what patient pays determined by the

entity, often on a sliding scale, subsidized by 340B savings from other patient transactions.

340B Contract Pharmacy (Final guidelines: 61 FR 4359, August 23, 1996)

Allows an entity to contract with a pharmacy to dispense 340B drugs and provide pharmacy services to the entity’s patients.

One contracted pharmacy per eligible entity site Pharmacy must provide entity with reports

“consistent with customary business practices” Entity and pharmacy subject to audits Entity and pharmacy must comply with all Federal

and State laws Does NOT require dual physical inventory

Alternative Method Demonstration Projects

HHS Secretary approved concept in 2001 Three general types;

Networks of covered entities, Multiple contract pharmacy service sites, or Using contract pharmacy to supplement in-house

pharmacy services Submit to HRSA Pharmacy Affairs

Detailed description of the need for the project Description of the method Successful methods address diversion issues and

communicate increased access.

Federal 340B Developments S. 4, the “Healthy American Act of 2005”

Introduced by Sen. Frist on July 27, 2005 Would allow DSHs to buy 340B outpatient drugs through a group

purchasing organization. Would allow entities to contract with more than one pharmacy to provide

services. Would appropriate money to the Office of Pharmacy Affairs (OPA) to:

Improve the covered entity data base, Establish a third-party auditing system to ensure compliance with the

program requirements, Fund OPA’s currently authorized enforcement activity, Issue guidelines to clarify the definition of 340B patient Issue OPA advisory opinions, Create a password protected system to access 340B prices, Educational activities.

Federal 340B Developments

H.R. 3547, “The Safety Net Inpatient Drug Affordability Act”

Introduced by Rep. Emerson on July 29, 2005. Allows DSH to purchase under the 340B program for their

inpatients; Requires DSH who do so to pass on a certain percentage

of the 340B savings received on Medicaid patients to their state Medicaid agency in the form of rebates;

Adds Critical Access Hospitals to the list of eligible entities.

340B Pharmacy Technical Assistance(PSSC PharmTA)

Free expert assistance on providing clinically and cost effective 340B pharmacy services

Phone consultations, written materials or site visits, as appropriate

Available through HRSA Pharmacy Services Support Center 1-800-628-6297 or 1-866-pharmta www.pharmta.net

Resources

HRSA Pharmacy Services Support Center 1-800-628-6297; E-mail: pssc@aphanet.org; Web page: http://pssc.aphanet.org/

PSSC Technical Assistance www.pharmta.net; 1-866-PHARMTA

The 340B Prime Vendor Program www.340bpvp.com Toll free (888) 340-2787