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ACI Monthly (August 2024)

Updated: Sep 20


August 2024

Volume 1, Issue 8

 

Inside this issue

&J’s Proposed Rebate Program

DCSCA Complications

State bill updates

AbbVie Restricts Orphan Drug Pricing for Certain CEs

 

 

2024 340B Recertification Deadline Approaching

 

The 2024 340B Drug Pricing Program recertification process is a critical annual requirement for hospitals that participate in the program. This year, the recertification period is scheduled from August 12 to September 9, 2024. During this time, hospitals must verify their eligibility and compliance to continue receiving discounts on outpatient drugs under the 340B program.

 

Key Steps in the Recertification Process

Verification of Entity Information: Hospitals must log into the Office of Pharmacy Affairs Information System (OPAIS) to verify that all their information is accurate and up-to-date (i.e. contact details, hospital status, and other relevant data).

 

User Account Management: Authorizing Officials (AOs) and Primary Contacts (PCs) are required to have individual user accounts in OPAIS. It's essential that these accounts are active and that all 340B identities linked to the AO's account are   current.

 

Consequences of Non-Compliance: Failure to complete the recertification process by the September 9 deadline will result in the hospital's removal from the 340B program, potentially leading to significant financial losses due to the loss of drug pricing discounts.

 

Preparing for Recertification

To prepare for recertification, hospitals should:

· Review and update their OPAIS accounts well in advance of the   deadline.

· Attend educational webinars and review guidance documents provided by HRSA and other organizations.

· Ensure all necessary documentation is in place and easily accessible.

· Communicate with all relevant departments to coordinate the    recertification process effectively.

 

Recertification is a crucial task that requires careful attention to detail and timely action. Hospitals must ensure they follow all steps outlined by HRSA to maintain their participation in the program and continue benefiting from the significant drug cost savings it provides.

 

 

Johnson & Johnson's Decision to Shift 340B Discounts to Rebate Model

 

Johnson & Johnson (J&J), a global healthcare giant, has announced its intention to transition certain discounts under the 340B Drug Pricing Program from an upfront discount to a rebate model. This decision has ignited a storm of criticism from healthcare providers and regulators alike, who argue that this shift could jeopardize the financial stability of safety-net hospitals and the vulnerable patients they serve.

 

In a controversial move, J&J announced that, starting later this year, it plans to replace the upfront discount provided to some 340B-covered entities with a rebate model. Under this new arrangement, providers would have to pay the full price for medications upfront and later receive rebates from J&J. The company argues that this shift is necessary to ensure transparency and to better align with its broader pricing strategies.

 

Reaction from Healthcare Providers

Healthcare providers have reacted with strong opposition to J&J's announcement, warning that the shift could have devastating consequences. Safety-net hospitals, which rely heavily on the 340B discounts to fund essential services, are particularly concerned. They argue that the rebate model would strain their cash flow, forcing them to cut back on services or even close their doors.

 

Many providers also fear that the administrative burden associated with managing rebates could be overwhelming, especially for smaller organizations with limited  resources. The delay in receiving rebates could exacerbate financial pressures, making it difficult for them to provide consistent care to their patients.

 

Regulatory and Legal Concerns

Regulators, including the Health Resources and Services Administration (HRSA), have also expressed concerns about J&J's move. HRSA, which oversees the 340B program, has emphasized the importance of maintaining the integrity of the program and  ensuring that it continues to serve its intended purpose. There are concerns that J&J's decision could set a precedent for other pharmaceutical companies to follow, potentially undermining the program as a whole.

 

Legal challenges are also being considered by several advocacy groups and provider associations. They argue that the shift to a rebate model may violate the original intent of the 340B program, which was designed to provide immediate financial relief to providers serving low-income communities. Some are calling for HRSA to take legal action against J&J to prevent the implementation of this new pricing   model.

 

J&J's Response

In response to the backlash, J&J has defended its decision, stating that the rebate model is intended to promote greater transparency and accountability in the 340B program. The company argues that the current system is vulnerable to abuse, with some entities allegedly using the discounts in ways that do not directly benefit patients. J&J believes that the rebate model will ensure that discounts are used appropriately while still providing financial support to 340B covered entities.

 

Johnson & Johnson's plan to shift certain 340B discounts to a rebate model has triggered fierce opposition from healthcare providers and regulators, who fear that the change could undermine the financial stability of safety-net hospitals and harm vulnerable patients. As the debate continues, the future of the 340B program and its ability to fulfill its mission of supporting underserved communities remains uncertain.

 

 

 

DCSCA Compliance Raises Concerns for 340B Covered Entities and Pharmacies

 

The Drug Supply Chain Security Act (DCSCA), a critical piece of legislation aimed at securing the pharmaceutical supply chain, has introduced a new layer of compliance challenges for healthcare providers participating in the 340B Drug Pricing Program. As the DCSCA's requirements continue to roll out, covered entities and pharmacies are increasingly concerned about the potential impact on their operations, financial stability, and ability to serve vulnerable populations.

 

Understanding the DCSCA

The DCSCA, enacted in 2013 as part of the Drug Quality and Security Act (DQSA), is designed to enhance the security of the pharmaceutical distribution supply chain in the United States. The law mandates the establishment of an electronic, interoperable system to trace prescription drugs as they move through the supply chain. This system aims to prevent counterfeit, stolen, contaminated, or otherwise harmful drugs from reaching patients.

 

By 2023, the DCSCA requires full implementation of a system that will allow for the tracing of drugs from the manufacturer to the pharmacy or healthcare provider. This includes stringent requirements for documentation, product verification, and  reporting of suspicious activities.

 

340B Program Overview

The 340B Drug Pricing Program allows eligible healthcare providers, known as covered entities, to purchase outpatient drugs at significantly reduced prices. The savings generated from these discounts are intended to support the care of  underserved and low-income patients. The program has become a lifeline for many safety-net hospitals, clinics, and pharmacies.

 

DCSCA Compliance Challenges for 340B Entities

As DCSCA compliance becomes mandatory, 340B covered entities and their contract pharmacies face several significant challenges:

 

Increased Administrative Burden: The DCSCA's stringent tracking and documentation requirements add to the already complex administrative responsibilities that 340B entities must manage. The need to maintain detailed transaction records and ensure compliance with both DCSCA and 340B regulations can strain resources, particularly for smaller organizations.

 

Cost Implications: Implementing the necessary technology and processes to comply with DCSCA can be costly. Many 340B entities operate with thin margins and may struggle to absorb these additional expenses without compromising patient care or other critical services.

 

Supply Chain Disruptions: DCSCA compliance could lead to disruptions in the supply chain, particularly for drugs purchased through the 340B program. Any delays or   issues in verifying the authenticity and tracing of drugs could impact the timely delivery of medications to patients who depend on them.

 

Contract Pharmacy Relationships: The DCSCA's requirements may also complicate the relationships between 340B covered entities and their contract pharmacies. Ensuring that both parties are compliant with DCSCA regulations requires effective coordination and communication, which can be challenging in an already complex environment.

 

Risk of Non-Compliance: Non-compliance with DCSCA can lead to severe       consequences, including fines, penalties, and potential exclusion from the 340B program. This risk adds to the existing pressure on covered entities to maintain compliance with 340B regulations, which are subject to increasing scrutiny. 


Provider and Pharmacy Concerns

Healthcare providers and pharmacies involved in the 340B program have expressed concerns about the impact of DCSCA compliance on their operations. Many fear that the additional administrative and financial burdens could reduce their ability to provide care to underserved populations. The potential for supply chain disruptions also raises alarm, as it could lead to drug shortages or delays in treatment.

 

Additionally, there is concern that DCSCA compliance may disproportionately affect smaller, rural providers who may lack the resources to implement the necessary systems and processes. These providers are often the most reliant on the 340B program to sustain their operations and serve vulnerable communities.

 

Regulatory Guidance and Support

Regulatory agencies, including the Food and Drug Administration (FDA), have provided guidance to help entities comply with DCSCA requirements. However, many covered entities and pharmacies feel that more support is needed, particularly in the form of financial assistance or resources to help with the transition.

 

Industry associations and advocacy groups are also working to raise awareness of the challenges faced by 340B entities and to advocate for solutions that mitigate the impact of DCSCA compliance on these critical healthcare providers.


The DCSCA's requirements present significant challenges for 340B covered entities and pharmacies, adding to the already complex regulatory landscape they must navigate. As they work to comply with these new mandates, there is growing concern about the potential impact on their ability to serve vulnerable populations. Continued dialogue between regulators, industry stakeholders, and advocacy groups will be essential to ensure that the goals of the DCSCA are met without compromising the mission of the 340B program.

 

 

Current Status on State Bills and Laws that Prohibit Drugmaker 340B Contract Pharmacy Restrictions

*States in Bold are the newest updates since last month

 

AbbVie Ceases Offering 340B Pricing for Orphan Drugs for Certain Covered Entities

 

AbbVie, a global biopharmaceutical company, recently made headlines by ceasing to offer 340B ceiling prices effective August 1, 2024, for orphan drugs to certain healthcare providers. This decision is part of a broader trend among pharmaceutical companies reevaluating their participation in the 340B Drug Pricing Program, particularly regarding orphan drugs.

 

Orphan drugs are medications specifically developed to treat rare diseases or conditions that affect fewer than 200,000 people in the United States. Due to the high development cost and the limited patient population, these drugs often come with higher price tags. To incentivize pharmaceutical companies to develop treatments for rare diseases, the Orphan Drug Act of 1983 grants manufacturers various benefits, including tax credits, market exclusivity, and,   sometimes, exemptions from specific pricing requirements under programs like 340B.

 

AbbVie’s Decision and Its Implications

AbbVie's decision to stop offering 340B ceiling prices for orphan drugs affects many 340B  covered entities, particularly those serving patients with rare diseases. The company justifies its stance by referencing the Orphan Drug Act, which allows drug manufacturers to exclude orphan drugs from 340B pricing when sold to certain covered entities. However, this exclusion is contentious, with critics arguing that it undermines the original intent of the 340B program, which is to make medications affordable for underserved populations.

 

The implications of AbbVie's move are significant. Covered entities relying on the 340B discounts to care for patients with rare diseases may now face financial strain, potentially limiting their ability to offer these life-saving medications. This could result in higher out-of-pocket costs for patients or, in some cases, reduced access to the drugs altogether.

 

Broader Industry Trends

AbbVie is not alone in this approach. Several other pharmaceutical companies have also decided to limit 340B discounts on orphan drugs in recent years, citing similar justifications. This trend has sparked debate and legal challenges as healthcare providers and patient advocacy groups push back against what they see as an erosion of the 340B program's benefits.


These moves by drug manufacturers have also drawn attention from policymakers and regulators. The Health Resources and Services Administration (HRSA) oversees the 340B program and has issued guidance on the matter, but the legal landscape remains complex and fluid. There have been calls for legislative action to clarify the rules around orphan drugs and 340B pricing, but the issue remains unresolved.


AbbVie's decision to cease offering 340B ceiling prices for orphan drugs is a significant development in the ongoing debate over the 340B program's scope and effectiveness. While the company's actions are legally permissible under current interpretations of the Orphan Drug Act, they raise important questions about access to affordable medications for patients with rare diseases. As the healthcare community grapples with these challenges, the future of the 340B program and its ability to serve vulnerable populations remains uncertain.

 

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