Transcript Safety net hospitals for pharma access

340B Introduction Session
by
Bill von Oehsen
President and General Counsel
Safety Net Hospitals for Pharmaceutical Access
340B Workshop & Networking Luncheon
Sponsored by Apexus/340B PVP
and co-hosted by SNHPA
Orlando, FL
December 7, 2008
Overview
 How much 340B saves
 DSH hospital inpatient drug discounts
 Medicaid billing requirements to avoid duplicate
discounts
 Children’s hospitals
 Application of patient definition to 340B hospitals
 Contract pharmacies
 Supply chain dynamics
 Additional 340B resources
Safety Net Hospitals for Pharmaceutical Access
202-552-5850
Bill von Oehsen
[email protected]
How Much Does 340B Save?
100%
84%
79%
Private Sector Pricing
68%
“Best Price” 63%
64%
58%
53%
51%
49%
Fr
ee
ag
e
av
er
VA
Fo
ur
B
ig
34
0B
FS
S
C
an
ad
ia
n
e
R
eb
at
A
SP
M
ed
ic
ai
d
A
M
P
W
A
C
42%
A
W
P
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Source: Data derived from Prices for Brand-Name Drugs Under Selected Federal Programs, Congressional Budget Office (June 2005); Pharmaceutical Discounts
under Federal Law: State Program Opportunities, William H. von Oehsen (May 2001).
Safety Net Hospitals for Pharmaceutical Access
202-552-5850
Bill von Oehsen
[email protected]
DSH Inpatient Drug Prices
 As a result of Section 1002 of the Medicare Modernization
Act (MMA), manufacturers may offer 340B hospitals deep
discounts on inpatient drugs without adversely affecting the
companies’ “best price” used to calculate their Medicaid
rebates and 340B prices
 Letter from HRSA to industry encourages manufacturers to
take advantage of best price exemption by lowering inpatient
drug prices paid by 340B hospitals
 SNHPA survey indicates that 340B hospitals have received
post-MMA inpatient discounts on 12 percent of their most
commonly used brand name drugs
 To address disappointment among 340B hospitals, members
of Congress are supporting legislation that would mandate
340B pricing on DSH inpatient drugs – see S.1376 and
H.R.2606
Safety Net Hospitals for Pharmaceutical Access
202-552-5850
Bill von Oehsen
[email protected]
Medicaid Billing Requirements
 Covered entities must change how they bill 340B drugs
to Medicaid but not to other payers
 The rationale for covered entities adjusting their
Medicaid billing practices is the need to protect
manufacturers from a “duplicate discount” problem
 The duplicate discount problem and its impact on
covered entities, manufacturers and state Medicaid
agencies is one of the most challenging aspects of the
340B program
 Medicaid billing procedures do not have to be altered if
the 340B drugs are billed to a Medicaid managed care
organization or are billed and paid by Medicaid as part of
a bundled rate
Safety Net Hospitals for Pharmaceutical Access
202-552-5850
Bill von Oehsen
[email protected]
Duplicate Discount IssueStep 5: Manufacturer
Step 1:
Manufacturer
sells drug at
340B
discount
Covered
Entity
Manufacturer
pays rebate on 340B
drug
Step 4: State
submits rebate
request
Step 3: Covered entity bills
Medicaid for 340B drug
State
Medicaid
Agency
Medicaid patient
Step 2: 340B drug
is dispensed to
Medicaid patient
Safety Net Hospitals for Pharmaceutical Access
202-552-5850
STEPS 1 AND 5 = DUPLICATE
DISCOUNT
Bill von Oehsen
[email protected]
How to Avoid Duplicate Discounts
Options
Covered Entity
Procedures
State Medicaid
Procedures
340B PassThrough
Bills state at actual acquisition
cost (AAC) and submits
pharmacy’s Medicaid billing
number to HRSA for posting
on website
Excludes from rebate request
files any claims paid under
billing number posted on
HRSA website
Medicaid
Carve-Out
Purchases its Medicaid
outpatient drugs outside 340B
program, bills Medicaid at
regular non-340B rates and
submits “N/A” for posting on
HRSA website
Includes covered entity’s
claims in rebate request files
Shared Savings
Same as 340B pass-through
option except covered entity
and state enter into
alternative billing and
payment arrangement
Pays enhanced dispensing
fee or above AAC rates
Safety Net Hospitals for Pharmaceutical Access
202-552-5850
Bill von Oehsen
[email protected]
Children’s Hospitals
 Under the Deficit Reduction Act of 2005 (DRA),
freestanding children’s hospitals are eligible for 340B
pricing if (1) they are public institutions or have a contract
with state or local government to provide significant levels
of indigent care; (2) they abide by the GPO exclusion; and
(3) their revenue from state, local and Medicaid payors is
more than 30 percent of total revenue or they have a
sufficient number of Medicaid inpatient days to have a DSH
adjustment percentage greater than 11.75 percent if they
were a DSH hospital
 On July 6, 2007, HRSA published a Federal Register notice
proposing how children’s hospitals can qualify and apply for
participation in the 340B program
 Children’s hospitals may not enroll in the program until the
proposed guidelines are finalized
Safety Net Hospitals for Pharmaceutical Access
202-552-5850
Bill von Oehsen
[email protected]
HRSA’s Three-Part Patient
Definition Test
1.
2.
3.
The covered entity has established a relationship with
the individual, such that the covered entity maintains
records of the individual’s health care; and
The individual receives health care services from a
health care professional who is either employed by the
covered entity or provides health care under
contractual or other arrangements (e.g. referral for
consultation) such that responsibility for the care
provided remains with the covered entity; and
The individual receives a health care service or range
of services from the covered entity which is consistent
with the service or range of services for which grant
funding or federally-qualified health center look-alike
status has been provided to the entity.
Safety Net Hospitals for Pharmaceutical Access
202-552-5850
Bill von Oehsen
[email protected]
Application to 340B Hospitals
 Third prong of patient definition does not apply
 Receipt of care outside the hospital does not disqualify the
patient if the individual’s care is initiated at the hospital and
there is a proximate relationship between the off-site care
and the care provided by the hospital. See letter to SNHPA
from former HRSA Deputy Administrator Thomas Morford
(1/26/01)
 SNHPA has posted on its website a set of “Principles” to
help guide both SNHPA and non-SNHPA members in
complying with patient definition standards
 Transfer of discounted drugs to non-patients may violate
both the 340B definition of patient and the Prescription
Drug Marketing Act
Safety Net Hospitals for Pharmaceutical Access
202-552-5850
Bill von Oehsen
[email protected]
Contract Pharmacies
 HRSA recognized the difficulties facing 340B
covered entities that lack in-house pharmacies
 In 1996, HRSA issued guidelines approving the use
of contract pharmacies to dispense 340B drugs and
requiring manufacturers to offer 340B pricing on
drugs dispensed by contract pharmacies
 Patients may choose to obtain drugs from any
pharmacy, not just the contract pharmacy
 The covered entity must use a “ship to/bill to”
arrangement so that drugs are purchased by the
covered entity but sent to the contract pharmacy
 The covered entity is responsible for the contract
pharmacy’s compliance with 340B requirements
Safety Net Hospitals for Pharmaceutical Access
202-552-5850
Bill von Oehsen
[email protected]
Contract Pharmacies (cont’d)
 A contract pharmacy “will provide all pharmacy
services...”
 A covered entity may contract with a pharmacy chain,
but only one site within the chain can dispense the
covered entity’s 340B drugs
 A covered entity with multiple sites may have an inhouse or contract pharmacy for each site, but not both
 On January 12, 2007, HRSA issued a Federal Register
notice that proposes to expand the use of contract
pharmacies by allowing covered entities to enter into
multiple contract pharmacy arrangements, including
covered entities with in-house pharmacies, without having
to establish alternative method demonstration projects
(AMDPs)
Safety Net Hospitals for Pharmaceutical Access
202-552-5850
Bill von Oehsen
[email protected]
Supply Chain Dynamics
AWP
$100
WAC
$78
MANUFACTURER
Non-340B $70
340B
$51
WAC
No Medicaid
Rebate
Chargeback
340B + Non-340B Acc’ts
WHOLESALER
Non-340B 340B
MEDICAID
FEE-FORSERVICE
Payment
Bill AAC
COVERED ENTITY
CONTRACT
PHARMACY Dispensing
Fee
Dispensed
Co-pay
Dispensed or
Administered
Co-pay
(if applicable)
Bill U+C
OTHER
PAYERS
PATIENT
Safety Net Hospitals for Pharmaceutical Access
202-552-5850
Bill von Oehsen
[email protected]
Upcoming Conferences/Events
Pharmacy Managers Networking Session
ASHP Midyear
December 8, 2008
12:30 – 2:00 PM
Convention Center, Room W304, Level 3
Visit SNHPA’s Booth at ASHP Exhibition Area
Booth 1600
One-on-one TA visits
5th Annual 340B Coalition Winter Conference
co-hosted by Apexus/340B PVP
February 2-4, 2009
San Diego, CA
www.340Bwinterconference.org
13th Annual 340B Coalition Conference
July 13-15, 2009
Washington, DC
www.340Bconferences.org
Safety Net Hospitals for Pharmaceutical Access
202-552-5850
Bill von Oehsen
[email protected]
Additional 340B Resources
SNHPA Web Site
www.safetynetrx.org
Contact Laurinda Dennis at 202-552-5854 or
[email protected] about membership
Newsletter
Federal Drug Discount and Compliance Monitor
www.drugdiscountmonitor.com
SNHPA Career Service Site
www.rxjobsolutions.com
Safety Net Hospitals for Pharmaceutical Access
202-552-5850
Bill von Oehsen
[email protected]
Additional 340B Resources (cont’d)
OPA Website
ww.hrsa.gov/opa
340B Prime Vendor Program
(888) 340-BPVP or (888) 340-2787
www.340bpvp.com
Pharmacy Services Support Center
1-800-628-6297 or www.pssc.aphanet.org
Safety Net Hospitals for Pharmaceutical Access
202-552-5850
Bill von Oehsen
[email protected]
Contact Information
Bill von Oehsen
President and General Counsel
Safety Net Hospitals for Pharmaceutical Access (SNHPA)
1501 M Street, NW
7th Floor
Washington, DC 20005
Tel: (202) 872-6765
Fax: (202) 785-1756
E-mail: [email protected]
Safety Net Hospitals for Pharmaceutical Access
202-552-5850
Bill von Oehsen
[email protected]