340B Archives

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.

For decades, the 340B Drug Pricing Program has served an important purpose by helping hospitals and other covered entities receive discounted prices on drugs to offset care provided to vulnerable, underserved populations.

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

One such condition has been for covered entities to submit their 340B contract pharmacy claims data to drug companies through a third-party contractor called 340B ESP. The goal was to provide a secure and easy-to-use platform for 340B covered entities and pharmaceutical manufacturers to work together to resolve duplicate discounts. Ideally, the CEs submit their claims data, 340B ESP takes the data and submits it to the manufacturer, and pricing is restored to the covered entity. This has also given CEs the hope that manufacturer inquiries and audits would decrease (or go away altogether) for manufacturers that participate in 340B ESP, given they are receiving all necessary detail 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 340B ESP in an effort to regain some of the past two years’ lost revenue. The process was intended to be simple, straightforward, and efficient – but the reality has been quite the opposite.

340B ESP Submission Challenges

The 340B ESP portal is supposed to provide general information regarding the “restoration of 340B pricing within 10 business days,” but this has been a gross understatement compared to the actual amount of time it has taken for CEs to see pricing restored. This is not the fault of only 340B ESP, but all the parties necessary to restore pricing in a timely manner.

The entire process of pricing restoration is dependent on communication between the wholesaler, manufacturer, and TPA, and it is often taking 12 weeks or more for CEs to see pricing restored. There is also tremendous effort involved for the covered entity 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 if covered entities don’t have the resources to manage and track. Manufacturer lookback dates also vary by manufacturer, making data retrieval and submission even more challenging.

Factors of 340B ESP Submission Challenges

So what is ultimately causing these challenges? There are a number of factors at play.

First is the volume of submissions, as so much data is being submitted that 340B ESP simply cannot keep up with its proposed timeline. But this is partly due to the fact that there is little effort being made to escalate or fast-track communication, largely on the part of wholesalers and manufacturers. CEs are continually reaching out to wholesalers who do not show a congruent level of urgency.

The manufacturers and wholesalers are simply not as incentivized financially to speed up the process, which is undoubtedly a root cause of the issue.

What Covered Entities Can Do

While the team at Visante has witnessed dozens of success stories from CEs seeing pricing restored several months post-submission, it has not come without its challenges. It is important for CEs to appoint appropriate resources and time to allow the ongoing communication and research necessary for pricing to be restored in a timely manner.

While many contract pharmacy chains early on had not allowed their covered entity partners to share data with 340B ESP, this has largely been reversed. However, there are still several contract pharmacy chains that are not allowing CEs to share data with 340B ESP, with the warning that doing so would be a violation of their existing contract and relationship. This leaves these covered entities in a vulnerable position and continues to fragment their data submission process and the ability to regain lost revenue.

For CEs that have been without contract pharmacy revenue from all the impacted manufacturers for some time that have recently made a decision to move ahead with 340B ESP, these wrinkles create an additional challenge after the years of uncertainty and revenue loss they have faced.

How Visante Can Help

In the face of these challenges, many covered entities are left wondering how and whom to communicate with. Many lack the resources to perform the follow-up necessary to see their pricing restored.

Visante can provide resource support and can help open the lines of communication, extending the bandwidth of CEs’ internal teams while leveraging industry connections to help make follow-up more effective.

We work with all types of covered entities to support them in making the most of their 340B program while avoiding duplicate discounts and seeing pricing restored in the manner they deserve.

The 340B Drug Pricing Program has served an important purpose for decades, helping hospitals and other covered entities receive discounted prices on drugs for vulnerable, underserved populations. 340B not only provides these groups with a discounted price for important drugs, but it also helps covered entities manage rising prescription drug costs.

The list of covered entities capable of registration for the 340B program includes six categories of hospitals and 10 categories of non-hospitals as listed below.

Hospitals
- Disproportionate share hospitals
- Children’s hospitals and cancer hospitals exempt from the Medicare prospective payment system
- Sole community hospitals
- Rural referral centers
- Critical access hospitals
Non-hospitals
- Federally qualified health centers (FQHCs)
- FQHC “lookalikes”
- State-operated AIDS drug assistance programs
- Ryan White Comprehensive AIDS Resources Emergency (CARE) Act clinics and programs
- Tuberculosis clinics
- Black lung clinics
- Title X family planning clinics
- Sexually transmitted disease clinics
- Hemophilia treatment centers
- Urban Indian clinics
- Native Hawaiian health centers

As important as 340B is and continues to be for these organizations, it has come under fire in recent years, primarily by drug manufacturers. This has forced covered entities to make tough decisions as it pertains to submitting 340B contract pharmacy claims data. Here is a closer look at the issue and what it ultimately means for covered entities today.

340B pushback from drug manufacturers

Over the past few years, drug companies have started pushing back on 340B by putting restrictions and conditions in place that threaten to dismantle the program and that are causing significant financial losses to covered entities with contract pharmacy relationships.

One of these conditions is for covered entities to submit their 340B contract pharmacy claims data to drug companies through a third-party contractor called ESP. The primary goal of this data submission is to eliminate duplicate discounts for 340B drugs.

Given that a covered entity may buy drugs at a discounted rate and dispense those products to a patient that does not qualify, it is critical to manage the duplicate discount prohibition. ESP provides one avenue that several manufacturers appear to feel confident with.

How does ESP work?

Independently, State Medicaid programs and pharmaceutical manufacturers lack the information necessary to resolve duplicate discounts. 340B ESP provides a secure and easy-to-use platform for 340B covered entities and pharmaceutical manufacturers to work together to resolve duplicate discounts without the hassle of ongoing dispute resolution.

Once submitted, ESP will take all your data and submit it to the pharmaceutical manufacturer on your behalf. 340B ESP enables covered entities to upload de-identified 340B claims data linked to Medicaid and commercial rebate data provided by pharmaceutical manufacturers to identify duplicate discounts.

A large number of covered entities resisted ESP for some time but are now beginning to see it as a temporary resolution – while still remaining hopeful that these manufacturer restrictions are eventually considered unlawful/illegal and are ultimately reversed.

What this means for you

HRSA wants to ensure hospitals and covered entities are providing discounts only to patients that meet the definition of 340B eligibility. This leaves these organizations with essentially two choices:

Submit data to ESP to open up restricted contract pharmacy networks.
Do not submit data to ESP.

If you decide to submit data to ESP, Visante can work closely with you to make the process simpler and more efficient. If you decide not to submit to ESP, Visante can still work with you to find other ways to optimize your 340B program.

Visante is here to help

Visante works with all types of covered entities to support them in making the most of their 340B program while avoiding duplicate discounts. We routinely perform external audits to identify compliance gaps and also provide internal oversight for organizations that need dedicated resource support.

Written by: Kristin Fox-Smith (Senior Vice President) and William Wood (RPh, Senior Director)

Those of us actively engaged in the 340B Program are well aware of the scores of issues faced by participating hospitals and it’s not surprising they account for an exceptionally large percentage of all HRSA audits. But, what about other types of Covered Entities (CEs), such as the Specialty Clinics and Grantees? These important CEs are also subject to HRSA audits and face the same severe penalties for non-compliance, including the possibility of repayments to manufacturers.

Over the last decade, Visante‘s industry leading 340B Program Assessment and Integrity Audit Readiness has been successfully implemented in virtually all types of grantees. As a result of our experience in this specialized area, we are pleased to provide our NEW “Need to Know” series of key takeaways for grantees.

We plan to offer this “Need to Know” series over a period of a few months. This schedule will give us the opportunity to add new information as changes in the 340B Program dictate.

HINT: You may want to start by reading our Visante Insider blog titled Manufacturers Create Chaos For the 340B Program from August 21.

Ready? Here is our first “Need to Know” blog for new grantees.

Need to Know #1: You’re new!

Okay, you know that. What else do you know and what do you need to know?

What do you know about the 340B Program? More specifically, what do you know about grantees such as yours?

What do you know about your role? Are you:

An Authorizing Official (AO)? If so, do you know your role and responsibilities?
A Primary Contact (PC)? Do you fully understand your role and responsibilities and how they differ from the AO?
A healthcare provider? How do the 340B rules and regulations impact your role?
A board member of your newly eligible organization? Did you even know that your organization is newly enrolled in the 340B Program?
One of the many other 340B stakeholders?
Compliance
Accounting
Billing
Medical records
Legal

As you can see, there is a lot that a 340B newcomer needs to know. Undoubtedly, you had to learn a lot to enable your covered entity to enroll. Is there more? You bet there is, keep reading!

Takeaway: Newcomers to the 340B Program have a lot to learn. Visante can help!

Need to Know #2: The grant

Non-hospital types of organizations include a variety of health centers, Ryan White HIV/AIDS Program Grantees, and several types of specialized clinics. Some of them receive direct funding while others receive grants. These organizations will be referred to collectively as grantees as they all have similar 340B requirements.

ALL grantees may utilize 340B drugs only within the scope of their grant.

This leads us into Need to Know #2: The grant

Have you read your grant? What is the scope of your grant? For some types of grantees this may be quite limited and easy to define. For others it may not be so straight forward.

A Comprehensive Hemophilia Treatment Center, for example, is expected to provide optimal care using a multi-disciplinary team approach that provides accessible, family-centered, continuous, comprehensive, coordinated and culturally effective care for individuals with hemophilia and other bleeding disorders. As such, the only 340B drugs that would be included in the scope of their grant would be antihemophilic factor VIII or factor IX or other drugs to treat bleeding disorders.

On the other hand, grantees such as Federally Qualified Health Centers (FQHC)

provide primary care services in underserved areas. Primary care services encompass many different drugs which makes utilization within the scope of the grant large. Referrals to outside specialists could even qualify, assuming that the FQHC maintains the appropriate auditable records.

What is the term of your grant? The HRSA Notice of Award will specify a “project period” and will include several terms and conditions, including reporting requirements. What is the grant number? This can be found on Line 4B of the HRSA notice of award. Does it match the grant number shown for your organization of the Office of Pharmacy Affairs Information System (OPAIS)?

What is OPAIS? Keep reading, we will discuss that a bit later.

If your entity is selected for a HRSA 340B integrity audit the grant will be among the documents requested. Do you know where it is and how to obtain it?

Takeaway: Grantees may utilize 340B drugs only within the scope of their grant. Do you fully know the scope of your grant?

Need to Know #3: Navigating OPAIS

What is this OPAIS we mentioned above? OPAIS stands for Office of Pharmacy Affairs Information System.

The 340B registration and pricing databases are collectively known as the 340B Office of Pharmacy Affairs Information System (340B OPAIS). Authorized users of 340B OPAIS must have a user account with appropriate roles and permissions granted by HRSA. The functions a user can perform are determined by the user’s role. Until the user logs in, the user may only access the Public User Guides, Public Search, Reports/Files, and Login functions.

Authorized users may use OPAIS to initiate Covered Entity/Manufacturer registrations, change requests, or to respond to annual recertification requests.

Public users only have access to a limited selection of the system’s capabilities which include a variety of search criteria to search for Covered Entities (CEs), Contract Pharmacies (CPs), and Manufacturers (MFRs). Public users can also review and download a variety of available reports and files.

Now that you know what the OPAIS is, why do you need to understand it?

Among the findings that HRSA may issue following an audit is one for failure to maintain the accuracy of the covered entity’s information as it appears on the OPAIS. This can occur for things as seemingly minimal as incorrect entries for address, site ID, and name for offsite outpatient facilities. HRSA has been known to issue this finding even when the address for a contract pharmacy shown on the OPAIS differed from that on the contract by a little as a suite number!

A review of all of your OPAIS information should be part of your internal audit process and should include verification of:

the name of your entity including address and shipping addresses, type of entity, and 340B ID number
your grant number
your AO and PC including their contact information
your Medicaid billing status including whether you are carved in or carved out and all NPI and Medicaid billing numbers if you are carved in.
If you are carved in you MUST also check the Medicaid Exclusion File (MEF) to verify the NPI and Medicaid billing numbers for all participating sites
ALL contract pharmacies including proper addresses

Takeaway: Review of the OPAIS is a task that is fairly simple to accomplish. Don’t risk a HRSA audit finding for something this easy!

Written by: Kristin Fox-Smith (Senior Vice President), Douglas E. Miller (PharmD, Senior Director), William Wood (RPh, Senior Director)

In recent weeks, several drug manufacturers announced plans to discontinue offering 340B drugs to contract pharmacies. These actions, in addition to plans by some manufacturers to require Covered Entities to upload contract pharmacy claims to a new and unproven vendor’s software platform, have created new challenges to 340B Covered Entities already burdened by the COVID-19 pandemic.

It comes as no surprise to those of us who have worked with the 340B program for many years that these actions began almost immediately after the Health Resources and Services Administration (HRSA) stated that HRSA’s power to enforce 340B guidance is limited.

At the recent 340B Coalition Virtual Conference; Admiral Krista Pedley, Director of HRSA’s Office of Pharmacy Affairs (OPA) stated: “HRSA’s enforcement ability is limited, as guidance does not provide HRSA appropriate enforcement capability.” This statement came shortly after the U.S. House Appropriations Committee turned down HRSA’s request to give it broad regulatory authority over the 340B program.

Was HRSA’s announcement that its authority is limited what the drug manufacturers have been waiting for? The following statement from the highly regarded “340B Report” seems to think so: “The wave of drug manufacturer activity all appears to trace back to HRSA’s position that it cannot enforce its 340B program guidance absent a clear violation of the 340B statute.”

The first “salvo” was fired by Merck in late June. Merck issued strongly worded “requests” that 340B Covered Entities start submitting a wide array of 340B contract pharmacy claims data as part of what the company calls a new “integrity initiative.” Part of Merck’s letter involves requests for commercial, Medicare Part D, and Medicaid managed care claims data that are beyond the scope of the 340B statute. In the letter, Merck asked Covered Entities to begin uploading contract pharmacy claims data every two weeks into a new and unproven vendor’s software platform, 340B ESP platform of Second Sight Solutions. Second Sight Solutions is a prescription drug information technology company that collects 340B contract pharmacy claims data on manufacturers’ behalf.

Although the company letter was described as a request, Merck said it might take “less collaborative, and substantially more burdensome” action against uncooperative entities. It asked entities to begin supplying the requested data by August 14.

Those of us that follow 340B closely might have heard of 340B ESP’s founder, Aaron Vandervelde. As Managing Director of Berkeley Research Group (BRG), he has written or co-written articles about the 340B program on behalf of Pharmaceutical Research and Manufacturers of America (PhRMA). He has also done work for the drug-company-led advocacy group AIR 340B and the trade association for private practice oncologists Community Oncology Alliance (COA). PhRMA, AIR 340B, and COA cite Vandervelde’s research in arguments that hospitals benefit from the 340B program, but low-income and uninsured patients do not, and that the program raises the cost of cancer care.

The next drug manufacturer to announce a similar plan was Sanofi. The letter sent from Sanofi to covered entities stated: “Sanofi will require 340B covered entities to submit claims data for 340B prescriptions of Sanofi products filled through its contract pharmacies.” The letter goes on to say “340B covered entities that elect not to provide 340B claims data will no longer be eligible to place Bill To / Ship To replenishment orders for Sanofi products dispensed through a contract pharmacy.”

The letter adds, beginning October 1, entities must submit the requested data to 340B ESP, the same contractor Merck is using, every two weeks. HRSA’s only comment to date states it “is aware of Sanofi’s requests to covered entities and is working to better understand their plan.” We hope to receive updates from HRSA in the near future as it relates to these types of manufacturer changes.

Yet another drug manufacturer, Novartis, has now announced that it intends to begin collecting and analyzing 340B Covered Entities’ contract pharmacy claims data to mitigate duplicate 340B drug discounts and “ineligible rebates.” As recently as August 18, Novartis declined to address reports that it is joining Merck and Sanofi as clients of Second Sight.

In a similar policy release on August 17, AstraZeneca sent letters to 340B Covered Entities and their wholesalers informing them that, effective October 1, it “only will process 340B pricing through a single contract pharmacy site for those covered entities that do not maintain their own on-site dispensing pharmacy.” In the event a Covered Entity does not have an owned outpatient pharmacy, they will need to make a selection of only one contract pharmacy to limit their bill to/ship to arrangements.

So far HRSA’s only comment has been “We are in the process of reviewing the information.”

In addition to the above-named manufacturer actions; AstraZeneca and Eli Lilly announced restrictions to sales of their products to contract pharmacies.

Lilly took the first step when it said it would only allow contract pharmacies to get discounted units of Cialis if a 340B provider did not have an in-house pharmacy.

Following the Lilly announcement, AstraZeneca informed Covered Entities that, starting Oct. 1, it no longer will offer 340B pricing to Covered Entities with on-site outpatient pharmacies for any of its drugs dispensed through contract pharmacies.

In response to Lilly’s action, 340B advocacy organization 340B Health sent Lilly a letter stating that “we believed its policy change was contrary to the 340B statute” and requested a meeting with company officials to discuss further. Lilly declined a follow-up meeting and insisted that it is on firm legal ground in cutting off access to program discounts through contract pharmacies.

AstraZeneca said it believes the change is consistent with HRSA guidelines and operative 340B statutory provisions in a written statement.

An article published in Modern Healthcare on August 19 made the following statement: “Pharmaceutical companies appear to be testing how far they can challenge sub regulatory guidance issued by the Health Resources and Services Administration that allows 340B providers to receive discounts for working with multiple contract pharmacies.”

As we stated above, it does appear obvious that the drug manufacturers are indeed testing how far they can go in challenging HRSA’s lack of statutory enforcement authority.