Insights

By Kristin Fox-Smith and Angela De Ianni

For decades, the 340B drug pricing program has served an important purpose by helping hospitals and other Covered Entities (CEs) receive discounted prices on drugs to offset care provided to vulnerable, underserved populations.

But over the past several years, drug companies have started pushing back on the 340B program, putting restrictions and conditions in place that have threatened to dismantle it altogether. These restrictions are causing significant financial losses for CEs with contract pharmacy relationships.

One such condition has been for CEs to submit their 340B contract pharmacy claims data to drug companies through a third-party contractor called ESP. The goal of ESP was to provide a secure and easy-to-use platform for 340B CEs and pharmaceutical manufacturers to work together to resolve duplicate discounts. Ideally, the CEs submit their claims data, ESP takes the data and submits it to the manufacturer, and pricing is restored to the CE. This has also given CEs the hope that manufacturer inquiries and audits would decrease (or go away altogether) for manufacturers that participate in ESP, given they are receiving all the necessary details related to the 340B dispense on the front end.

Since this structure was put in place, large numbers of CEs have begun submitting data to ESP in an effort to regain some of the past two years’ lost revenue. The process was said to be simple, straightforward, and efficient – but the reality has been quite the opposite.

The entire process of pricing restoration is dependent on communication between the wholesaler, manufacturer, and Third-Party Administrator (TPA), and often takes 12 weeks or more for CEs to see pricing restored. There is also tremendous effort involved in managing communication to keep the process moving forward. 

Combine this with the fact that pricing is not restored all at once, but rather manufacturer-by-manufacturer, and the process slows down even further. Meanwhile, CEs need to allocate supplementary resources to manage additional requests and track the delays. Manufacturer lookback dates also vary by manufacturer, making data retrieval and submission even more challenging.

Strategies to help manage 340B challenges

Visante continues to encourage TPAs to develop standard reporting for their CEs to use to allow for easier data extraction, analysis, and submission. While several vendors have made progress in this regard over the last several months, there are still several TPA vendors that are lagging, creating work around processes for CEs that are both time consuming and inefficient.

Furthermore, Visante recommends that CEs consider ways to reduce losses. As losses continue to challenge many CEs, 340B optimization should be considered as an opportunity to decrease revenue loss. Some potential areas to target are referral prescription capture, managing WAC spend, and auditing non-eligible claims to determine ways to make them eligible.  Through auditing non-eligible claims, a CE may discover multiple issues that prohibit claims from qualifying, such as:

• Settings within the 340B validating process that prohibit claims from qualifying
• Outdated prescriber files or non-eligible prescribers writing prescriptions from a 340B eligible area
• Clinics not currently captured in the 340B universe
• Contract pharmacy opportunities
• Referral capture opportunities

Visante’s team of 340B experts, most with 340B ACE credentials, is an industry-leading consulting firm that helps CEs of all kinds to reach their compliance goals, prepare for and successfully complete audits. Our experience and know-how with ESP has helped hundreds of CEs recover funds in a timely manner. We help hospitals and health systems to make the most of their programs and optimize savings. Contact us at solutions@visanteinc.com to talk to one of our team members.