ACI Monthly (May 2024)
- ACI 340B Management
- Jun 24, 2024
- 8 min read
May 2024
Volume 1, Issue 5
Inside this issue
Senate Proposal
Current Status of State Bills to Protect Contract Pharmacy
OPAIS Enhancements
Optimizing 340B Efficiency: TPAS & Manufacturer Blocks
Novo Nordisk Update
On May 1, 2024, Novo Nordisk sent an update to 340B Covered Entities that will allow some access to medications replenished through 340B Contracted Pharmacies. Beginning July 1, 2024, Novo Nordisk’s criteria for contract pharmacy bill-to-ship-to arrangements will change.
The following are the changes:
Hospital CEs and Grantee CEs: Allow a maximum of two contract pharmacy designations for both hospital and grantee CEs.
Hospital CEs: Will continue to allow bill-to-ship-to orders to an unlimited number of contract pharmacies that are wholly owned and operated by a hospital CE, as long as the hospital CE provides claims level data associated with 340B dispenses.
Grantee CEs: Will facilitate bill-to-ship-to orders to an unlimited number of contract pharmacies, as long as the grantee CE provides claims level data associated with 340B dispenses.
Designations will need to be made through the ESP™ platform, in which all applications will be reviewed by Novo Nordisk prior to approval. If a hospital CE would like to change their current designations, these changes will need to be made prior to June 1.
For grantee contract pharmacy designations to be effective on July 1, a grantee CE designation will need to be submitted to the ESP™ platform by June 23, 2024. Designations will not be needed for grantees if the grantee CE is willing to submit claims level detail on 340B qualified dispenses.
Senate Proposal: Incentivizing Hospital Stockpiling of Generic Drugs in Exchange for 340B Forfeiture
In a move to bolster the nation's resilience against drug shortages, a draft Senate bill has emerged proposing a novel solution: paying hospitals to maintain stockpiles of specific generic drugs. However, the catch lies in hospitals forgoing discounts under the 340B Drug Pricing Program and adhering to new contracting standards.
The bill, which is still in its preliminary stages, aims to address the recurring issue of drug scarcity, which has become increasingly prevalent in recent years. Often, shortages of crucial medications can jeopardize patient care and strain healthcare facilities nationwide.
Under the proposed legislation, hospitals would be offered financial incentives to maintain supplies of certain generic drugs deemed critical for patient care. These stockpiles would act as a buffer against potential shortages, ensuring that hospitals have access to essential medications when needed most.
However, the bill presents a trade-off for participating hospitals. In exchange for the financial incentives to stockpile drugs, hospitals would be required to forfeit discounts available through the 340B program. The 340B program, established in 1992, allows eligible hospitals and other healthcare providers to purchase outpatient drugs at discounted prices, providing significant cost savings.
The decision to forgo these discounts could have substantial financial implications for hospitals, particularly those serving vulnerable populations. Therefore, the bill includes provisions to mitigate the impact on hospitals, such as offering alternative forms of financial support to offset the loss of 340B discounts.
Furthermore, the proposed legislation introduces new contracting requirements for hospitals participating in the program. These requirements are designed to enhance transparency and accountability in drug procurement practices, ensuring that hospitals adhere to fair and competitive contracting standards.
Supporters of the bill argue that it represents a proactive approach to addressing drug shortages and improving patient care. By incentivizing hospitals to maintain adequate supplies of essential medications, the legislation aims to mitigate the adverse effects of drug scarcities on patient health outcomes.
Critics, however, raise concerns about the potential financial strain on hospitals, particularly those already facing economic challenges. They contend that forfeiting 340B discounts could exacerbate financial hardships for safety-net hospitals, which rely heavily on these savings to support underserved communities.
As the draft bill undergoes further refinement and debate, stakeholders from across the healthcare sector will undoubtedly weigh in on its merits and shortcomings. Ultimately, the proposed legislation reflects ongoing efforts to develop innovative solutions to pressing healthcare challenges, balancing the need for drug supply stability with the financial realities healthcare providers face.
Current Status on State Bills and Laws that Prohibit Drugmaker 340B Contract Pharmacy Restrictions
*States in Bold are the newest updates since last month
OPAIS Enhancements with Pricing Review
In response to growing concerns about drug pricing transparency and accessibility, the Office of Pharmaceutical Affairs and Information Services (OPAIS) has announced a series of enhancements to its operations, including a comprehensive review of pricing mechanisms. These changes are poised to reshape the landscape of pharmaceutical pricing and procurement, promising greater efficiency and accountability in the distribution of medications.
OPAIS, a regulatory body tasked with overseeing pharmaceutical affairs and information dissemination, plays a pivotal role in safeguarding public health by ensuring that medications are priced fairly and equitably. However, in recent years, the agency has faced mounting scrutiny over perceived inefficiencies and inconsistencies in its pricing review process.
The newly unveiled enhancements seek to address these challenges head-on, with a particular focus on streamlining the drug pricing review process. One of the key initiatives involves the implementation of a more robust and standardized framework for evaluating medication prices, aimed at promoting greater consistency and transparency across the board.
Under the revamped framework, pharmaceutical manufacturers will be required to undergo a comprehensive pricing review for all new drug introductions and significant price adjustments. This review process will encompass a thorough analysis of various factors, including production costs, market dynamics, and comparative pricing strategies.
Furthermore, OPAIS will introduce enhanced mechanisms for monitoring and enforcing compliance with pricing regulations. This will involve closer collaboration with other regulatory agencies and stakeholders to ensure that pharmaceutical companies adhere to established pricing guidelines and regulations.
In addition to these procedural enhancements, OPAIS has also announced plans to bolster its information dissemination efforts, providing stakeholders with greater access to pricing data and analysis. By promoting transparency and accessibility, the agency aims to empower healthcare providers, policymakers, and consumers to make more informed decisions regarding medication procurement and utilization.
The announcement of these OPAIS enhancements has elicited a mixed response from industry stakeholders. Advocates herald the reforms as a significant step forward in promoting fairness and accountability in drug pricing, potentially leading to improved affordability and access for patients.
However, some critics remain skeptical about the efficacy of the proposed changes, expressing concerns about potential implementation challenges and unintended consequences. They argue that while greater transparency in pricing review processes is commendable, it must be accompanied by measures to address underlying systemic issues contributing to high drug costs.
As OPAIS moves forward with the implementation of these enhancements, the pharmaceutical industry and healthcare community will be closely monitoring their impact on drug pricing dynamics. Ultimately, the success of these initiatives will hinge on their ability to strike a delicate balance between promoting innovation and ensuring affordability in the pharmaceutical marketplace.
Examining Pharmacy Overreach in the 340B Program: Balancing Access and Accountability
The 340B Drug Pricing Program, established in 1992, was intended to provide qualifying healthcare organizations, known as covered entities, with discounted prices on outpatient drugs. However, in recent years, concerns have emerged regarding potential overreach by pharmacies participating in the program, raising questions about its integrity and effectiveness.
Pharmacies, including contract pharmacies and retail chains, play a crucial role in the 340B program by dispensing discounted medications to eligible patients. However, critics argue that some pharmacies may be exploiting loopholes in the program to maximize profits at the expense of its intended beneficiaries.
One of the primary areas of concern is the expansion of contract pharmacy arrangements within the 340B program. Under these arrangements, covered entities contract with pharmacies to dispense 340B drugs to eligible patients. While contract pharmacies can enhance access to discounted medications, there are growing concerns about the lack of oversight and transparency in these arrangements.
Critics argue that some contract pharmacies may be diverting 340B drugs to ineligible patients or populations, effectively undermining the program's mission to serve underserved communities. Additionally, there are allegations of pharmacies charging full price for 340B drugs and pocketing the difference, rather than passing on the savings to covered entities and patients.
Another area of contention is the proliferation of duplicate discounts, wherein pharmaceutical manufacturers provide both 340B discounts and rebates under the Medicaid Drug Rebate Program for the same drugs. This practice has led to disputes between manufacturers and covered entities over the appropriate use of discounts, further complicating the landscape of drug pricing and procurement.
In response to these concerns, policymakers and regulatory agencies have begun to scrutinize pharmacy overreach within the 340B program. Efforts are underway to enhance transparency and accountability, including proposals to strengthen reporting requirements for contract pharmacies and to clarify the rules governing duplicate discounts.
However, finding a balance between preserving access to discounted medications and preventing abuse of the program remains a complex challenge. Advocates for pharmacy participation argue that contract pharmacies play a vital role in expanding access to 340B drugs, particularly in underserved communities with limited healthcare infrastructure.
Ultimately, addressing pharmacy overreach within the 340B program will require a multifaceted approach that involves collaboration between stakeholders, including covered entities, pharmacies, manufacturers, and regulatory agencies. By promoting transparency, accountability, and integrity, policymakers can ensure that the 340B program fulfills its intended purpose of improving access to affordable medications for vulnerable populations while safeguarding against exploitation and abuse.
Optimizing 340B Program Efficiency: Best Practices with TPAs and Manufacturer Blocks
The 340B Drug Pricing Program is crucial in expanding access to affordable medications for eligible healthcare organizations serving vulnerable populations. Covered entities, including federally qualified health centers, disproportionate share hospitals, and others, can purchase outpatient drugs at discounted prices. Third-party administrators (TPAs) and manufacturer blocks are pivotal components within this program, facilitating seamless operations and compliance. This article explores the best practices associated with TPAs and manufacturer blocks, enhancing efficiency and integrity within the 340B Program.
Understanding TPAs in the 340B Program: TPAs serve as intermediaries between covered entities and pharmacies, managing various aspects of 340B Program administration. They are crucial in facilitating drug purchases, contract pharmacy arrangements, and compliance oversight. Key best practices with TPAs include:
1. Transparency and Communication: Establish clear lines of communication between covered entities and TPAs to ensure mutual understanding of program requirements, changes, and updates.
2. Data Integrity and Accuracy: Implement robust data management systems to ensure accurate reporting and tracking of 340B transactions, including inventory management and prescription validation.
3. Compliance Monitoring: Regularly audit TPA activities to verify compliance with program guidelines, contract terms, and regulatory requirements. This includes reviewing contract pharmacy arrangements and ensuring the appropriate use of 340B drugs.
Leveraging Manufacturer Blocks: Manufacturer blocks are mechanisms employed by pharmaceutical manufacturers to restrict the distribution of 340B-priced drugs to eligible covered entities. While these blocks can present challenges, they also offer opportunities for optimization. Effective strategies for managing manufacturer blocks include:
1. Proactive Engagement: Establish proactive communication channels with manufacturers to address block-related issues, clarify eligibility criteria, and advocate for covered entity interests.
2. Documentation and Appeals: Maintain meticulous documentation of 340B Program eligibility and compliance to support appeals and resolution efforts in cases of manufacturer block disputes.
3. Collaboration and Advocacy: Collaborate with industry associations, advocacy groups, and regulatory agencies to advocate for fair and transparent manufacturer block policies that uphold the intent of the 340B Program.
4. Technology Integration: Invest in technology solutions that streamline data exchange and facilitate real-time eligibility verification to minimize disruptions caused by manufacturer blocks.
Optimizing efficiency and compliance within the 340B Program requires effective management of TPAs and manufacturer blocks. By implementing best practices in transparency, communication, compliance monitoring, and proactive engagement, covered entities can navigate the complexities of third-party administration and manufacturer restrictions while maximizing the program's benefits for underserved patient populations.
Through strategic collaboration, advocacy efforts, and technological innovation, stakeholders can uphold the integrity of the 340B Program and ensure continued access to affordable medications for those who need them most.