340B Contract Pharmacy Arrangements -...
Transcript of 340B Contract Pharmacy Arrangements -...
340B Contract Pharmacy Arrangements Complying With Legal and Regulatory Requirements When Structuring Arrangements
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WEDNESDAY, FEBRUARY 27, 2013
Presenting a live 90-minute webinar with interactive Q&A
Michael B. Glomb, Partner, Feldesman Tucker Leifer Fidell, Washington, D.C.
Alan J. Arville, Principal, Ober Kaler, Washington, D.C.
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FELDESMANTUCKERLEIFERFIDELLLLP
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340B Contract Pharmacy
Arrangements
Michael B. Glomb, Partner
February 27, 2013
The Role of Contract Pharmacies
in Implementing a 340B Drug
Program
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Overview
• Key features of 340B Discount Program
• History/development of contract pharmacy
model
• Operational considerations
• Pharmacy program management vendors
• Procurement considerations
• HRSA compliance initiatives
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Disclaimer
• Presentation is intended as general
information only, not as specific legal advice
• Opinions expressed are mine
• Consult qualified legal counsel for specific
advice.
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340B Essentials
• Enacted in 1992 – Section 340B of the Public Health Service Act (42
USC 256b)
• Applies only to “covered outpatient drugs” as defined in the Medicaid
statute (Social Security Act, Section 1927(k))
• Requires drug manufacturers to sell covered drugs to at a substantial
discount (25% to 50% off the AWP, according to HRSA)(the “ceiling
price”) in order to have the drug covered under Medicaid
• 340B discount is computed based on Medicaid rebate formula:
• 23.1% (single source/innovator multiple source drugs)
• 17.1% (certain clotting factors and HHS-approved pediatric drugs)
• 13% (non-innovator multiple source drugs)
• Ceiling price = AMP minus Unit Rebate Amount (URA)
• Available only to certain types of organizations - Covered Entities (CE) -
specified in the statute
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340B Essentials - Covered Entities
HRSA Grantees Hospitals
Comprehensive Hemophilia Treatment
Centers
Federally Qualified Health Centers
Native Hawaiian Health Centers
Tribal/Urban Indian Health Centers
Ryan White Programs
Title X Family Planning Clinics
STD, Black Lung, TB Clinics
Disproportionate Share Hospitals
Critical Access Hospitals
Rural Referral Centers
Sole Community Hospitals
Children’s Hospitals
Free Standing Cancer Hospitals
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340B Essentials
• 340B drugs may be dispensed only to a “patient”
of a CE and may not be resold – i.e. “diversion”
prohibited
• CE may not request payment under Medicaid for
a 340B drug if that drug is subject to the payment
of a rebate to a state Medicaid agency – i.e.
“duplicate discounts” prohibited
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Genesis of Contract Pharmacy Arrangements
• Statute does not address contract pharmacies
• Many (if not most) non-hospital CEs did not have an in-house
pharmacy, limiting benefit of 340B Program to CEs and patients
• In 1996, HRSA permitted CEs to contract with a commercial
pharmacy to dispense 340B drugs to eligible patients, on limited
basis (61 Fed Reg. 43549 (August 23, 1996))
• One contract pharmacy per delivery site
• No chain pharmacy arrangements
• No contract pharmacy if CE operated an in-house pharmacy
• More robust approaches allowed pursuant to an Alternative
Methods Demonstration Project (AMDP)
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Genesis of Contract Pharmacy Arrangements
• HRSA issued revised guidance in 2010 (75 Fed. Reg. 10272
(March 5, 2010)
• Allows contracting with multiple pharmacies,
pharmacy chains, and/or operating an in-house
pharmacy
• Applies to all contract pharmacy arrangements
• Guidance replaces all prior guidance
• AMDP still available for other arrangements, e.g.
network delivery models
• Substantial emphasis on compliance – in fact, not just
on paper
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Operational Features
• Operational Features
• “Ship to” “bill to” drug purchasing
• Separate inventories, but virtual “electronic”
inventories permitted
• “Replenishment” model widely accepted
• Premium on record-keeping and
documentation
• CE retains ultimate responsibility for
compliance
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Contract Pharmacy Compliance
• Key compliance concerns
• Diversion
• Duplicate Discounts - CE’s contract
pharmacy may not dispense drugs
purchased at 340B price to Medicaid
patients unless the contract pharmacy and
the state Medicaid agency have
established “an arrangement” to prevent
duplicate discount
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340B Service Vendors
• Since 2010 (expanded scope of pharmacy contracting)
numerous vendors offering 340B management services
have entered the market
CE cannot “outsource” its compliance
responsibility
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Procurement Tips
• Address covered CE - specific requirements
• Follow responsible/required procurement practices
• Exercise due diligence
• Read (and understand) the contract
• Focus on value received
• Pay attention to your vendor(s)
• Auditable records
• Independent audits
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HRSA Compliance Initiatives
• In response to GAO report and
Congressional interest, OPA has begun:
• Re-certification of all CEs, including contract
pharmacy arrangements
• Random and targeted compliance audits of
CEs (diversion and duplicate discounts)
• Significant uptick in 340B purchases and/or large
contract pharmacy networks attract audits
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Resources
• OPA: www.hrsa.gov/opa
• Apexus (Prime Vendor):
www.340bpvp.com
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Contact Information
Michael B. Glomb Feldesman Tucker Leifer Fidell LLP
1129 20th Street, NW
Washington, DC 20036
(202) 466-8960
Key Considerations in Drafting and Negotiating 340B Contracts
340B Contract Pharmacy
Arrangements
Friday, February 27, 2013
Alan J. Arville
Principal
Ober|Kaler 202.326.5020
SESSION OVERVIEW
What is the 340B Contract?
Preliminary Points
HRSA Essential Elements
Other Key Contractual Provisions
Pharmacy Considerations
Covered Entity Considerations
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PRELIMINARY POINTS
What is the 340B Contract?
Contract Pharmacy Services Agreement
Vendor Services Agreement
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PRELIMINARY POINTS
Ask for the contracts at the BEGINNING of
discussions (and confirm negotiability).
Are the HRSA essential elements covered?
Do the operational procedures accurately reflect
the actual arrangement?
Are the liability provisions fair?
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HRSA ESSENTIAL ELEMENTS
“Ship to, bill to” provisions
Comprehensive pharmacy services
Patient choice
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HRSA ESSENTIAL ELEMENTS
Pharmacy can provide other services…but 340B
pricing only for Covered Entity patients
Compliance with applicable law
Contract pharmacy will provide reports
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HRSA ESSENTIAL ELEMENTS
Suitable tracking system
System to verify patient eligibility
Prevention of Medicaid duplicate discounts
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HRSA ESSENTIAL ELEMENTS
Information needed for independent audits
Accessibility of pharmacy records for outside
audits
Copy of contract to OPA upon request
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OTHER KEY PROVISIONS
See HRSA Suggested Contract Provisions
Operational Provisions
Inventory Replenishment
Slow Movers
Discontinued NDCs
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PHARMACY CONSIDERATIONS
What are the pharmacy’s responsibilities?
How is the formulary set?
Operational Procedures
Are they seamless?
Can they be operationalized?
PBM Contracts
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COVERED ENTITY CONSIDERATIONS
Do the vendor and contract pharmacy have skin in
the game?
Is there an exclusivity provision? Is there an out?
Fee adjustments
Scrutiny/Future of 340B
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More questions, please contact me.
Alan J. Arville
Principal
Ober|Kaler 202.326.5020
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