The 340B Program: An Overview

1. The 340B Program:An Overview NGA/NCSL Web-assisted Audioconference August 5, 2005 Diane P. Goyette, RPh, JD U.S. Department of Health and Human Services HRSA Pharmacy Services Support Center American Pharmacists Association

2. 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.

3. 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

4. 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.

5. 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

6. 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

7. Section 340B, PHS Act • Requires manufacturers to sell ‘covered outpatient drugs’ to certain “covered entities” at a price determined using a statutory formula.

8. 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.

9. 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 Who are the Covered Entities

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

11. 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.

12. 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.

13. 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.

14. 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.

15. 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).

16. 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

17. 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

18. 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

19. 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.

20. 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

21. 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.

22. 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.

23. 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.

24. 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

25. 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