Inventory Management in 340B Entities Douglas Wong, Pharm.D. Sr. Executive Consultant

1. Inventory Management in 340B Entities Douglas Wong, Pharm.D.Sr. Executive Consultant February 1, 2008

2. Disclosure Douglas Wong, Pharm.D. Employee of Pharmacy Healthcare Solutions; Senior Executive Consultant Pharmacy Healthcare Solutions is a wholly owned subsidiary of AmerisourceBergen Corporation

4. Inventory Management in the 340B Drug Discount Program?

5. Goals for Implementation Assure full compliance with the regulations and guidelines of the 340B program Establish the operational procedures for an efficient process Maximize the value of participating in the 340B program for the healthsystem and their patients Most DSH will need to utilize 340B pricing within mixed (inpt/outpt) patient care settings

6. Requirements and Guidelines Requirements of the Entity may not resell or transfer a 340B drug to a person who is not a �patient� of the entity observe unique Medicaid billing procedures in order to protect manufacturers from having to offer both a 340B discount and a Medicaid rebate on the same drug (prevent duplicate discount). limited in their use of group purchasing organizations (GPOs) or GPO-like

7. Requirements and Guidelines Guidelines for the Entity must implement separate purchasing accounts (establishing 2 wholesaler accounts) separate dispensing records to prevent diversion to ineligible patients maintain adequate tracking systems for drugs dispensed to its patients. entities offering excluded services must maintain a separate method for purchasing and dispensing drugs for those services Subject to audit

8. Methods for Implementation Options in meeting program guidelines: Separate physical inventories Stock replacement system or �virtual inventory management� using: In-house developed software Commercial split billing software Manual method for tracking and ordering formulating 340B purchase orders based on historical outpatient utilization in mixed settings Allows single inventory that is replenished with 340B drugs to replace products that are dispensed to 340B eligible patients

9. Methods for Implementation Requirements to avoid diversion of 340B product: Retrospective replenishment program NDC to NDC match (11 digit match) Reports/subject to audit provide evidence that the quantity and identity of drugs bought through 340B matches the quantity and identity of drugs dispensed or administered to 340B-eligible patients or the product is in the inventory of the hospital awaiting use by 340B-eligible patients

10. Methods for Implementation Concerns with replacement systems: Reverse replenishment of 340b drug with non-340b drug is not allowed Practical issues What if NDC is discontinued or unavailable? Drug is not a �covered outpatient drug� Manufacturer fails to comply Drug is in short supply What if a generic equivalent is cheaper? Ability to capture utilization when the patient is considered an outpatient

11. Vendors of Software Wholesaler Neutral Dimension21� (ChoiceSystems) 340BMGR (Integrated Informatics) AutoSplit� (Talyst) 340B Replenishment Software (eAudit Solutions)

12. Vendors of Software Wholesaler Neutral Speed Script (Digital Simplistics) SUNRx Solution (SUNRx) eRx Network (eRx Network) e340B� System (Global Pharmaceutical Solutions)

13. Vendors of Software Wholesaler Exclusive Sentinel RCM and Sentrex (Sentry Data Systems - Cardinal) McKesson 340B ManagerSM (McKesson) MD 340B Split Bill (New Tech Computer Systems - Morris Dickson)

14. Steps for Implementation � Data Management For each qualified area, determine the optimal method to capture utilization. Create unique identifier (CDM or PIS) to NDC crosswalk Match procurement information (NDC) to utilization data Identify charge unit multipliers for billing units to vendor package sizes Create reports to capture utilization Validate functionality of selected system

15. Steps for Implementation � Compliance Generate Policies and Procedures Define the processes and responsibility Maintenance of identifier-NDC crosswalk Education Develop a Quality Assurance Program Quarterly or semi-annual self audits Re-assessment of the entity

16. Operationalizing 340B in the Health System Setting

17. Contact Information Douglas Wong, Pharm.D. Sr. Executive Consultant Office: 215-591-5096 Cellular: 215-353-6490 E-mail: dwong@pharmhs.com www.pharmhs.com