lifesciences.omnibus.guidanceOn August 28, 2015, the Health Resources and Services Administration (HRSA) released the long awaited 340B Drug Pricing Program “Omnibus” proposed guidelines or “Mega Rule” (Proposed 340B Guidance). HRSA has requested comments from stakeholders prior to finalizing the guidance.

Input from stakeholders is due to HRSA by October 27, 2015.

The Proposed 340B Guidance provides a comprehensive view of HRSA’s rational for administering the 340 Program and demonstrates the agency’s continued focus to provide the clarification needed to support greater compliance and efficiencies between covered entities and drug manufacturers.

There are many aspects of the Proposed 340B Guidance that Manufacturers should consider and evaluate to understand the impact to the business and anticipate these changes.

Here are three main areas of the 340B program that have historically challenged manufacturers to implement that will most likely bring greater impact after the Proposed 340 Guidance is finalized.

Termination of a Covered Entity

The fluctuating enrollment and termination of covered entities within the 340B program is one of the biggest operational pain points for manufacturers in managing membership and eligibility for covered entities participating in the 340 program. The covered entities are listed on the HRSA website and maintained in the 340B database.

The Proposed 340B Guidance makes clear that a covered entity that loses its program eligibility (either in a parent site, a child site or through termination of a contract pharmacy) must take action immediately to notify HRSA, stop purchasing and using 340B drugs, and refund manufacturers for discounted purchases made following the termination date. Additionally, if a parent entity loses eligibility so do all of its child sites.

HRSA commits to alerting manufacturers by providing communications and issuing website notices for covered entity terminations and deletions that occur mid-quarter, but makes the condition clear that it is the responsibility of the covered entity to regularly review and update its information on the database.

The Proposed 340B Guidance attempts to clarify when a covered entity can re-enroll in the program. In the event a covered entity is terminated from the program, the entity may re-enroll during the next enrollment period once it has demonstrated to HHS that it will comply with program requirements.

Additionally, some good news for manufacturers, the entity must have completed or be in the process of offering repayment to affected manufacturers. Once these requirements are satisfied, re-enrollment for a covered entity is pretty much guaranteed regardless of the violation, as it seems there are no measures HRSA can take to indefinitely terminate the covered entity.

It appears that the fluctuating enrollment and termination of covered entities within the 340B program will continue to be a pain point and the repayment process will only add to an already complicated process. Manufacturers should consider putting a process in place to proactively manage the termination notices on the HRSA website to help minimize revenue leakage and customer clean-up on the back end. 

Duplicate Discounting or “Double Dipping” 

Double Dipping is a widespread concern and exposes Manufacturers to financial risk. The Proposed 340B Guidance intends to provide some hope to Manufacturers by expanding the Medicaid exclusion file that is currently in use to address Medicaid Managed Care Organization patients.

While HRSA believes that the use of a 340B Medicaid Exclusion File would identify the covered entity billing practices used for MCO patients, the Proposed 340B Guidance does not offer concrete solutions to effectively mitigate the risk of Double Discounting.  

The responsibility falls on the covered entities, the states and the Medicaid Managed Care Organizations to identify 340B claims and eliminate duplicate discounting when 340B drugs are dispensed to patients covered by one of these same programs.  Manufacturers should not rely solely on the onus of these parties to ensure they are not double dipped. 

To ensure the rampant concern of duplicate discounting within the Medicaid Managed Care Organizations is truly minimized, greater oversight measures need to be implemented as a part of the final Proposed 340B Guidance and capabilities to ensure enforcement and accountability.

To help further mitigate the financial exposure of Double Discounting, Manufacturers should consider implementing, as a best practice, an approach that includes monitoring and cross referencing of respective data sets including: chargeback claims, NCPDP data, Medicaid data, and claims level data supplied by payers and states.

Refunds to Covered Entities 

Per the 340B section of the PHSA, HHS is required to establish procedures for manufacturers to issue refunds to covered entities. However, the Proposed 340B Guidance does not specifically outline these procedures.

The Proposed 340B Guidance simply states the expectation of manufacturers and what must submitted by when, but lacks the specific details needed to operationally support the process. This is all too familiar to the Coverage Gap Discount Program (CGDP) negative balance process. The new requirements imposed on Manufacturers for issuing refunds to covered entities are partial, impractical.

Specifically, manufacturers are required to refund overcharges within ninety days of determination, and netting for undercharges and overcharges is not permitted nor is aggregating across NDCs.

Furthermore, manufacturers must submit to HRSA the 340B price recalculation results, along with an explanation of overcharges and details on how the refund was calculated. Manufacturers should consider submitting comments to request more of the specifics on implementing the process for these guidelines or they will find themselves in an all too familiar place similar to the CGDP negative invoice debacle.

The full reference to the 340B Drug Pricing Program “Omnibus” guidance or “Mega Rule” (“Proposed 340B Guidance”) can be found here

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