ThinkstockPhotos-647517096.jpgTwo 340B rules changes result in less clarity and more risk for Pharma

When HHS issued the Final Rule for 340B Drug Pricing Program Ceiling and Manufacturer Civil Monetary Penalties Regulation on January 5 this year, Pharma had the last piece of information necessary to understand the impact. It could now finalize plans to meet the new requirements and avoid the higher penalties. That is until January 30. It was announced the Mega-Rule guidance, or Omnibus guidelines, under the ACA was withdrawn.

The HHS 340B Final Rule refers directly to the Mega-Rule; the expected refinement and clarity for the AMP calculation as well as the covered entity definition will now wait until new legislation and possibly the redefinition of the entire ACA is completed. Even with the March 24 pull of the proposed legislation to repeal and replace the ACA, timing is unclear.

April 1st ready or not…

The new HHS 340B Final Rule clearly defines the additional administrative and processing requirements as well as the significant penalties for failure to meet this law. Pharma has been preparing for the expected additional workload and compliance risk, but not necessarily for the lack of clarity of financial impact and the assessment modifications needed to scope that impact.

Most of the details pharma needs to define the “what” and “how” (e.g., internal policies, processes, systems and reporting impacts), which are expansive, are included in the published Final Rule. While not easy to accomplish operationally, the needs are specific. For example the 120-day refund payment processing requirement despite the lack of a mechanism.

Yet, to assess the financial impact without the anticipated covered entity and patient details under the now-withdrawn Mega-Rule requires a data-driven forecasting approach. For example, studies show that ~40% more hospitals are included as covered entities under the ACA for 340B.The definitions within the Mega-Rule included narrowed covered entity requirements and patient eligibility details. This would limit the impact for pharma while increasing the level of detail required for tracking and reporting.

While a few reports indicate the 340B Final Rule may not go into effect April 1 due to larger government policy changes under the Trump administration, pharma must act quickly. It needs to assess the immediate financial impact as well as the capabilities required to meet the 340B Final Rule without Mega-Rule Guidance. The assessment and forecasting must consider the range of possible definitions including:

  • the broadest inclusion criteria under the current ACA
  • the specificity of the Mega-Rule definitions and;
  • the increasing limitations over time of future proposals, if pursued for the replacement of ACA

For more information

For more information about Paragon’s approach to 340B rule change assessment and optimization, please visit Paragon's Government Pricing Consulting Services or call, 1 (800) 462-5582.