Transcript C Hatwig - HRSA 340B drug pricing program

HRSA’s 340B Drug Pricing
Program – An Update
11th Annual PPN Conference
Las Vegas, NV
August 15, 2007
Christopher A. Hatwig, M.S., R.Ph.
Objectives
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Review requirements for DSH participation
in 340B
Discuss updates with the 340B Drug
Pricing Program to include:
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The Office of Pharmacy Affairs (OPA)
The Pharmacy Services Support Center (PSSC)
The Prime Vendor Program (PVP)
Review pending FRNs and 340B
legislation
Background:
340B Drug Pricing Program
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1990 -Congress created Medicaid rebate law
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Drug manufacturers responded by increasing prices
1992 - Congress passed Veteran Health Care Act (VHCA)
intended to extend relief to gov’t payers of drugs
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Act stated that manufacturers participating in Medicaid must sign
a Pricing Agreement to participate in the 340B program
Provides discounts on outpatient covered drugs
Required drug manufacturers to give best price to
disproportionate share hospitals and certain covered entities
grants
Also referred to as “Section 602”, “PHS” or “340B” pricing
340B Covered Entities Eligible to
Participate
1)
2)
3)
Disproportionate Share Hospitals (DSH)
FQHC LA’s
HRSA Grantees:
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Federally Qualified Health Centers (FQHC)
Hemophilia Treatment Centers
Ryan White Programs (HIV programs)
Sexually Transmitted Disease programs
Tuberculosis Programs
Title X Family Planning Clinics
Urban 638 Tribal Programs
What Drugs Are Covered?
Covered drugs:
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Outpatient Prescription drugs
Over-the-counter drugs (if
accompanied by a written
prescription)
Clinic administered drugs
within eligible facilities
ER drugs
Drugs in other amb care settings
(e.g. day surgery)
Non-covered drugs:
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*Vaccines
Drugs given to the patient in
inpatient care settings
*Aggressive discounts have been negotiated for vaccines and other non-covered
by the Prime Vendor Program
Current Patient Definition Requirements
for 340B Hospitals
Three criteria to meet:
1. The covered entity must maintain records of health
care services for the individual;
2. The individual must receive care from a health care
professional who is employed by or under contract or
other arrangements with the covered entity; and
3. Responsibility for the care provided must remain with
the covered entity.
Inventory Management
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To ensure compliance and to optimize 340B savings,
Most DSH will need to utilize 340B pricing within
mixed (inpt/outpt) patient care settings
Two options in meeting program guidelines:
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Separate physical inventories
Virtual inventory management using split billing software
Requirements to avoid diversion of 340B product:
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Retrospective replenishment program
NDC to NDC match (11 digit match)
Reports/subject to audit
340B Service Options
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In-House Pharmacy
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Contracted Pharmacy
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Traditional
Telepharmacy
Management company operated
Community retail
Mail order
Prescriber Dispensing
Current Contract Pharmacy Guidelines
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Each covered entity may use only one pharmacy to provide
all pharmacy services
The entity has the choice of using either an in-house
pharmacy or a contract pharmacy for site
There are no limits on how many in-house pharmacies a
covered entity can operate
Larger DSH facilities typically manage their own in-house
outpatient pharmacy. Contract model more prevalent in
smaller DSH and community health centers
“Ship to, bill to” arrangement
Typical 340B Chain of Distribution
AWP
$100
WAC
$84
Non-340B
$70
340B
$51
MANUFACTURER
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
ELIGIBLE PATIENT
Powers Pyles Sutter & Verville, PC
(202) 466-6550
Bill von Oehsen
[email protected]
The Value of 340B Savings
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Discounts range from 25 to 50%
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DSH see savings in the range of 22 to 40% below GPO prices
A Mathematica study commissioned by HRSA documented an
average of 27% savings
Other HRSA grantees see even great savings
The 340B Prime Vendor Program also negotiates sub-ceiling
discounts
Although covered entities are entitled to a ceiling price that
averages 51 percent of AWP, they may negotiate “subceiling” discounts
Additionally value may be available on inpatient drugs (more
later on this)
Program Administration
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Three Legs of the 340B Program
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Office of Pharmacy Affairs (OPA)
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Pharmacy Services
Support Center
(PSSC)
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340B Prime Vendor
Program (PVP)
340B Program
OPA
Office of Pharmacy Affairs (OPA)
Mission and Function
Federal Register 9/21/2004
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Responsible for management and oversight of the
340B Programs
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Manage pharmaceutical pricing agreements (PPA’s)
with industry
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Manage covered entity eligibility and enrollment
Promote access to clinically and cost-effective
pharmacy services through:
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Maximizing the value of participation in 340B
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Developing innovative pharmacy services
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Being a Federal resource for pharmacy practice
10
12
340B Program Integrity Concerns
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Office of the Inspector General (OIG Reports)
Industry
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Covered entity compliance
Diversion
Patient definition
Duplicate discounts
Covered Entities
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Industry compliance
Overcharges
Restrictive pricing practices (specialty distributors, IVIG, etc.)
Pricing transparency
340B “Program Integrity Pilot Project”
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Recommended by the OIG and certain drug manufacturers
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Test collaboration of OPA/Manufacturers to jointly publish
verified price file to marketplace via the Prime Vendor
Program to wholesale distributors
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Possible benefits: Increased pricing integrity and transparency
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Six manufacturers and one wholesaler currently participating;
others encouraged to participate
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Project period: April 1, 2007 through March 30, 3008
340B Basics: Regulation and Policy
Policy issued via Federal Register Notice publication.
www.hrsa.gov/opa/federalregister.htm
Process
- OPA drafts guidance
- notice published in federal register
- public comment requested/received
- comments reviewed/considered
- notice finalized
HRSA’s OPA currently has three FRN’s pending
comment and final publication
Proposed Guidance:
Definition of Patient –72 FR 1543
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Clarifies previous FRN of October 1996
A clear and enforceable definition to help ensure against
diversion and support 340B program integrity
Clarifies requirement to keep records of the patient’s health
care
Clarifies relationship between covered entity and medical
provider who generates prescription of 340B drugs
Provides guidance for DSHs as to which its clinics may
participate in 340B
Status
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Comment Period 1/12/07 – 03/13/07
Comments being reviewed and final publication being developed
Proposed Guidance:
Contract Pharmacy –72 FR 1540
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Updates previous FR Notice of August,1996
Builds upon experience with Demonstration Projects
Incorporates multiple pharmacies as standard option
Network model arrangements would still require
Alternative Methods Demonstration Projects
(AMDPs) approval
Status
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Comment Period 1/12/07 – 03/13/07
Comments being reviewed and final publication being
developed
Proposed Guidance:
Children’s Hospitals (new FRN)
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References section 6004 of the DRA
Clarifies that children’s hospitals are subject to the same
340B responsibilities as other covered entities
Describes application procedures for children’s hospitals
Reaffirms drug manufacturers’ responsibility to furnish
discounts under Pharmaceutical Pricing Agreement (PPA).
Feasibility of an independent auditor to verify eligibility
Status
 Published in Federal Register July 9, 2007
 Sixty day comment period closes September 7, 2007
Patient Safety/Clinical Pharmacy
Initiative
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Patient Safety Problem:
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IOM reports medication errors injure 1.5 Million
people and cost billions annually.
Pharmacy services in HRSA programs & safety-net
partners growing rapidly.
HRSA desires these programs to be the best and
safest in the United States.
FY 2008 $2.94 Million Budget
Request for OPA
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House & Senate Appropriations Committees
Funds will enable OPA to begin to
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Improve Program Integrity
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Increase compliance with 340B pricing requirements
Publish Federal Register Notices to clarify 340B guidance
Improve OPA-IS and begin annual verification of covered entity
data
Increase stakeholder training and technical assistance
Improve Program Transparency
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Evaluate collaborative 340B Pricing “Pilot” and possibly expand it
Encourage voluntary manufacturer posting of pricing files to the
340B Prime Vendor secure Web site
HRSA Pharmacy
Services Support Center
at APhA
About PSSC
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Established through a contract between APhA and
HRSA, signed September 27, 2002.
Enhances Office of Pharmacy Affairs (OPA)
resources to optimize the value of the 340B program
in order to provide affordable, comprehensive
pharmacy services that improve medication use and
advance patient care and patient access to affordable
drugs.
Pharmacy Services Support Center
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Information management
 Organizing pharmacy expertise and resources
 Responding to 340B inquiries
 Providing technical assistance
Policy analysis
 Monitoring pertinent policy developments
 Communication and education on policy issues impacting
340B and pharmacy services.
Networking
 Communication and education
 Project development
Learning Management System
PSSC PharmTA
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Free technical assistance for 340B-eligible
entities interested in setting up or enhancing
clinically and cost-effective pharmacy
services
To request TA:
Call 1-800-628-6297
E-mail: [email protected]
Optimization Resources
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Program Assessment
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financial
operational
compliance/integrity
Implementation Plans
Financial Analysis
Formulary Management
340B Action Plans
Interactive Financial Analysis
Formulary Management
HRSA’s 340B Prime
Vendor Program
The Prime Vendor Program
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In addition to the cost savings available through the 340B Program,
its Prime Vendor Program (PVP) provides additional savings to
DSH’s and HRSA grantees
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The mission of the PVP is to improve access to affordable
medications for all 340B covered entities by:
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Lowering participants’ supply costs by expanding the current PVP
portfolio of sub-340B priced products
Providing covered entities with access to efficient drug distribution
solutions to meet their patients’ needs
Providing access to other value added products and services meeting
covered entities’ unique needs
Participation is free and voluntary for all 340B eligible participants
Estimated Prices For Selected Public
Purchasers, as Percent AWP
von Oehsen; Pharmaceutical Discounts Under Federal Law: State Program Opportunities
0%
20%
40%
60%
80%
100.0%
AWP
80.0%
AMP
67.9%
Medicaid (Min.)
60.5%
Medicaid Net
51.7%
FSS
340B
49.0%
FCP
47.9%
VA Contract
100%
34.6%
Stephen Schondelmeyer, PRIME Institute, University of Minnesota (2001)
Private Sector Pricing
HPPI’s History as the PVP
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Late 2003 - AmerisourceBergen (ABC)
subcontracted the responsibilities of Prime Vendor
Program to HPPI
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Sept. 2004 – HPPI awarded PVP contract by
HRSA
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Jan/Feb. 2007 – HPPI met or exceeded all 26
performance criteria within the contract. HRSA
granted contract extension through 2008
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July to Sept., 2007 – Program transitions to new
non-profit company named Apexus
Apexus
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Non-profit subsidiary corporation - June 18, 2007
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HRSA fully supported
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Dedicated to managing the PVP with HRSA
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BODs will include representation from the PVP’s
participants
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Transition will be seamless for HRSA and PVP
participants
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Minimal change to PVP logo
340B PVP Updates
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Contracted from a single national distributor to 13 national, regional,
and specialty distributors
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Expanded to over 5,200 participants
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Contracted with 50 suppliers representing over 2,800 products and
services
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Major MIS Related Projects:
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New contract management system software being implemented
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Major modifications to PVP participant databases
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Building interface to HRSA’s database for eligibility
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Expanding demographic data to include multiple contract pharmacy
relationship and unique identifiers for participants
340B PVP Updates (cont.)
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Two additional FTE’s (Analyst, Pharmacy Director), plus
Pharmacy Intern
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Three participant councils provide program guidance (DSH,
CHC, and Title X Family Planning)
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Average sub-340B savings on PVP contract sales across all
participants for 2006 was 17%
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Lilly, Wyeth, X-Gen added to list of companies posting ceiling
prices
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Partnered with national organizations representing covered
entities to conduct 340B-related education and compliance
programs
PVP Participants by Entity Type
(as of 7/19/07 – 5231 participants)
Tuberculosis , 409
Sexually Transmitted
Disease Treatment,
554
Other, 16
Community Health
Center, 1301
HIV Programs, 126
Title X Family
Planning, 1620
Disproportionate
Share Hospitals,
1205
Supplier Agreements
Source: 340B PVP website
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Allendale Pharmaceutical
Alliant Pharmaceuticals
Astra-Zeneca Pharmaceuticals
Abraxis Pharmaceutical
Akorn Inc.
ASD (flu vaccine)
Bayer Diagnostics
Bedford Labs
Can-am Care LLC
Caraco Pharmaceutical Labs
Cytogen (pending)
FFF (flu vaccine)
G&W Laboratories
Geritrex Corporation
GlaxoSmithKline
Hawthorne Pharmaceuticals, Inc
Home Diagnostics Inc.
Early Detect
Lilly & Company
Major Pharmaceuticals
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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
Sciele Pharma
Teva Health Systems
Total Pharmacy Supply
Tri State Distribution
Stratus Pharmaceuticals
Trinity Biotech
X-Gen Pharmaceuticals
Watson Pharma Inc.
Wyeth Pharmaceuticals
PVP Sub-ceiling $avings by Quarter
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$Q1
2005
Q2
2005
Q3
2005
Q4
2005
Q1
2006
Q2
2006
Q3
2006
Q4
2006
Q1
2007
DSH Inpatient Program
DSH Inpatient Pricing
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Section 1002 of MMA: Amended Medicaid Rebate Law to
exclude inpatient prices from best price reporting by drug
manufacturers
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Program is voluntary for manufacturers
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Exeption to “GPO exclusion” for inpatient - Contracts can
be negotiated by GPO or by DSH independently
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Complete and accurate lists of eligible members must be
maintained by GPOs and pricing is restricted to DSH
members only
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Some hospitals report 10% or greater in added savings over
typical GPO prices
SNHPA Survey Results:
DSH Inpatient Discounts
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SNHPA survey indicates hospitals have received post-MMA
inpatient discounts on only 12 percent of their most
commonly used brand name drugs
70 percent of the discounts were contingent on hospitals
guaranteeing a certain market share
Small and rural hospitals are the least likely to receive
inpatient discounts under Section 1002 because of
requirements placed on contracts
SNHPA has advocated for legislation to address the inpatient
pricing. Members of Congress have introduced legislation
that would mandate 340B pricing on DSH inpatient drugs –
see S.1376 and H.R.2606
Safety Net Inpatient Drug Affordability Act
S 1376/ HR 2606
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Expands 340B program to new entities
Permits GPO within inpatient
Extends discounts to inpatient
Credit paid to Medicaid for inpatient discounts
based on formula
Modifies AMP
Increases OPA authority and resources for
enforcement and improves pricing integrity
Permits multiple contract pharmacies
January 1, 2008
Contact Information
Office of Pharmacy Affairs
Phone: 301-594-4353 or 1-800-628-6297
Email: [email protected]
Web: www.hrsa.gov/opa
Pharmacy Services Support Center
Phone: 1-800-628-6297
Email: [email protected]
Web: http://pssc.aphanet.org
Prime Vendor Program
Phone: 1-888-340-2787
Email: [email protected]
Web: http://www.340bpvp.com