Just when you thought you understood all the threats facing the 340B Drug Pricing Program (“340B Program”), along comes the Bipartisan Budget Act of 2015 (“BBA 2015). BBA 2015 changes the way in which new off-campus hospital outpatient departments (“HOPDs”) will be paid come January 1, 2017. This change could have a substantial impact on 340B Program child site eligibility.
U.S. Federal District Court Judge for the District of Columbia, Rudolph Contreras, ruled Wednesday, October 14, 2015 that manufacturers need not offer 340B discounts for orphan drugs sold to a specified group of covered entities (CEs), regardless of how the orphan drug is used.
To make a very long story short, in 2010, the Patient Protection and Affordable Care Act (PPACA) made several changes to the 340B Program. In part, it added several new CEs (e.g., children’s hospitals and critical access hospitals) and narrowed the categories of drugs to which a specified group of CEs would have access at 340B discount prices by creating the orphan drug exclusion. This specified group of CEs subject to the orphan drug exclusion include free-standing cancer hospitals, rural referral centers, sole community hospitals, and critical access hospitals.
It is coming down to the wire – comments are due on the 340B Drug Pricing Program Omnibus Guidance (“Guidance”) in about two weeks! On October 28, 2015 the comment period will be closed and there will be nothing left to do but sit back and wait.
This post will focus on an aspect of the 340B Program that could undergo significant changes under the proposed Guidance – child sites. What are we talking about here? Currently and under the proposed Guidance, all offsite outpatient facilities, clinics, eligible offsite location, or associated health care delivery sites (collectively referred to as “offsite facilities”) not located at the same physical address as the “parent” covered entity (“CE”) must be registered in the 340B Program, if the offsite facilities intend to purchase and use 340B drugs for their eligible patients. Easy enough. But, as tends to be the case in the 340B Program, the devil lies in the details.
As promised, the blog will be taking an in-depth look at discrete topics included in the proposed 340B Drug Pricing Program Omnibus Guidance (“Guidance”), which was published August 28, 2015. The proposed Guidance touches on almost every aspect of the 340B Program, including covered entity (“CE”) eligibility; the patient definition; Group Purchasing Organization prohibitions; contract pharmacies; duplicate discounts; and CE audits. It also includes enhanced program integrity requirements for CEs, contract pharmacies, and pharmaceutical manufacturers participating in the 340B Program. Today’s blog will take a look at CE eligibility, registration, and termination.
Let’s start with the basics. Only CEs are eligible to participate in the 340B Program. These CEs are both non-hospital (e.g., STD clinic) and hospital (e.g., children’s hospital) entities. The proposed Guidance delineates the eligibility elements that have been established by the law, existing regulations, and past guidance. Once an eligible CE registers in the 340B Program, it is listed on the public 340B database. The registration conditions, deadlines, and procedures remain the same as outlined in previous guidance. As is the current practice, CEs must immediately notify the Health Resources and Services Administration (“HRSA”) regarding any changes in eligibility and CEs will still be required to annually recertify with HRSA.
It is official: The Health Resources and Services Administration (“HRSA”) has published the long-awaited “Mega Guidance.” The Proposed 340B Drug Pricing Program Omnibus Guidelines (“Guidelines”) were published in the Federal Register on August 28, 2015. Any comments must be submitted on or before October 27, 2015.
The proposed Guidelines aim to “add clarity in the marketplace for all 340B Program stakeholders and strengthen the [U.S. Department of Health and Human Services’] HHS’s ability to administer the 340B Program.” This clarity will likely prove useful to manufacturers in the wake of the June proposed rulemaking, which proposed to authorize the HHS Office of the Inspector General to pursue civil monetary penalties from manufacturers for violation of the 340B Program requirements.
From a covered entity’s perspective, one of the most significant changes the proposed Guidelines make to existing law, guidance, and resources from HRSA and its contracted 340B Prime Vendor, Apexus, is the definition of a patient. Briefly, 340B Program covered entities may only provide covered outpatient drugs to “patients.” As it stands now, an individual is a patient of a 340B covered entity (with the exception of State-operated or funded AIDS drug purchasing assistance programs) only if:
- 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. Disproportionate share hospitals are exempt from this requirement.
On June 17, 2015 the Health Resources and Services Administration (“HRSA”) finally published its much anticipated proposed rule, the 340B Drug Pricing Program Ceiling Price and Manufacturer Civil Monetary Penalties Regulation. Comments must be submitted via the online portal, email, or US Mail by August 17, 2015. Keep in mind, all submitted comments will be available to the public in their entirety.
The proposed rule begins with a discussion of HRSA’s authority to promulgate rules regarding ceiling prices and civil monetary penalties, and notes that HRSA’s orphan drug restriction was recently vacated by the United States District Court for the District of Columbia. It also touches on the proposed rules before it.
The proposed rule modifies the summary, definitions, and eligible entities sections of 42 C.F.R. Part 10 (the 340B Drug Pricing Program) and deletes the definition of covered outpatient drug and the orphan drug restriction sections. Finally, it creates a section regarding manufacturer civil monetary penalties.
In just a matter of days, changes to the 340B Program were proposed and then withdrawn from H.R. 6, The 21st Century Cures Act. Had hospitals, health systems, and related lobbying groups not been closely watching the Act, the changes might have quietly gone through when the 21st Century Cures Act was unanimously passed out of Committee on May 21, 2015.
The 21st Century Cures initiative, advanced by the House Energy & Commerce Committee and spearheaded by committee chairman, Michigan Representative, John Upton, had been underway since last year. The Act covers matters affecting the regulation of pharmaceuticals, medical devices, biotechnology, and reimbursement and funding for medical research. Issues relative to 340B were never part of this legislative package.
Nevertheless, in the final weekend before voting, Committee staff distributed a new Discussion Draft containing provisions that would affect the 340B Program. Hospitals, health systems, and related lobbying groups caught wind of these changes and swiftly drafted letters to Chairman Upton and leaders in the U.S. House and Senate.
Under the authority granted it by the Patient Protection and Affordable Care Act, the Health Resources and Services Administration (HRSA) is moving forward to laying the groundwork for imposing civil monetary penalties on manufacturers that overcharge covered entities under the 340B Program.
HRSA has submitted its second Information Collection Request (ICR) regarding calculation and verification of 340B ceiling prices. http://www.gpo.gov/fdsys/pkg/FR-2015-04-21/pdf/2015-09078.pdf. Interested persons only have until May 21, 2015 to weigh in. Comments must be submitted to the desk officer for HRSA, either by email to OIRA_submission@omb.eop.gov or by fax to 202-395-5806.
340B Program manufacturers have a statutory obligation to provide covered outpatient drugs to covered entities at no greater than the 340B ceiling price. The 340B ceiling price refers to the maximum amount a manufacturer may charge a covered entity. Currently, this 340B ceiling is calculated by HRSA, using pricing information which manufacturers are required to submit to the Centers for Medicare and Medicaid Services (CMS).
Mark your calendars! Calling all Title X Family Planning clinics that participate in the 340B Program—recertification opens May 13, 2015 and that means 340B Participant Change Forms must be submitted before that date.
Online 340B Participant Change Forms take between five and ten days to process. These forms will not be processed during recertification. However, change requests for Authorizing Officials (AOs) will be processed during recertification—a change to last year’s recertification procedures.
Recertification for Title X Family Planning clinics that participate in the 340B Program opens on May 13, 2015 and closes four weeks later on June 10, 2015. AOs and Primary Contacts can expect to receive a reminder email from the Office of Pharmacy Affairs (OPA) on May 11, 2015. On May 13, 2015, the AO will receive an email with the covered entity’s unique username and password from the OPA, which will instruct the AO to recertify the entity.
As readers of this blog already know, manufacturers and some legislators believe the 340B program has grown too large, suffers from mission creep and needs reform. They argue that the program’s purpose is simply to reduce drug costs for the uninsured and the indigent, nothing more. All three of the federal agencies with program oversight (HRSA, GAO, and the HHS OIG) see its purpose as helping safety-net providers stretch scarce resources.
These three agency viewpoints were presented on March 24, 2015 at a hearing held by the House Energy & Commerce Health Subcommittee. The subcommittee’s original news release announcing the hearing stated that its members would review the functionality of the program “to ensure it is meeting its goal of improving access to prescription drugs for needy patients at facilities serving these populations.” A later announcement took a blander tone: “Subcommittee members will review the functionality of the program to ensure it is meeting its intended goals.” This may be indicative of some disagreements behind the scene, as views on the intent of the program continue to evolve. It is not inconceivable that there could be an effort over the next couple of years to clarify the intent in new legislation. One subcommittee member even invited HRSA to be more forthcoming in requesting more legislative authority if needed.
The questioning at the hearing revealed the political fault lines on this topic. Republicans seemed more concerned about the lack of any legal requirement for covered entities to account for their uses of 340B savings, while Democrats seemed more supportive of allowing the program to generally improve access to care for the underserved. However, both parties seem to agree that improved program oversight is needed.