340B contract pharmacy

On July 18, 2017, just days after CMS went public with its proposal to reduce Medicare Part B reimbursement to certain 340B covered entities, Congress held its first hearing on 340B Program Oversight since March 2015.  A common thread ran through the testimony of the three testifying witnesses:  Erin Bliss, Assistant Inspector General with HHS-OIG; Dr. Debra Draper, Director of Health Care at the GAO; and, Captain Krista Pedley, Director of the Office of Pharmacy Affairs at HRSA:  Congress needs to legislatively grant HRSA more administrative authority over the 340B Drug Discount Program.  Continue Reading Witnesses at Congressional Hearing on 340B Urge Congress To Give HRSA Broader Regulatory Authority

Last week, Mintz Levin and ML Strategies released a joint Alert analyzing key provisions of the Covered Outpatient Drug final rule (“Final AMP Rule”) and their impact on manufacturers, pharmacy benefit managers (“PBMs”), and pharmacies.  The Alert focuses on the following four provisions: (i) the definition of bona fide service fees; (ii) the definition of bundled sales; (iii) the definition of retail community pharmacy; and (iv) the change in Medicaid reimbursement to reimbursement based on Actual Acquisition Cost (“AAC”).

On the heels of the release of the Final AMP Rule, CMS released a State Medicaid Director Letter providing guidance on implementation of the Final AMP Rule.  The letter provides practical instructions to the states on their obligation to adopt a Medicaid reimbursement methodology for AAC that reflects the “actual prices” pharmacy providers paid to acquire the drugs.  In addition to instructions for setting a Medicaid reimbursement methodology based on AAC, the letter advises states on their obligation to set a professional dispensing fee that reflects the pharmacist’s professional services and costs.   CMS does not dictate that states use a specific methodology or formula for establishing a professional dispensing fee, but warns that the fee must be sufficient to provide adequate reimbursement and ensure sufficient beneficiary access.

In the State Medicaid Director Letter, CMS also instructs states that their obligation to reimburse pharmacies at AAC carries consequences for the 340B Drug Discount Program. The AAC-based Medicaid reimbursement for drugs purchased through the 340B program should not exceed the 340B ceiling price – the price at which most covered entities will purchase the drug.  The requirement to reimburse at no more than the 340B ceiling price will apply regardless of whether the reimbursement is made to a 340B covered entity or its contract pharmacy. Continue Reading CMS Notifies States of AMP Rule Requirements: 340B Providers Should Take Note

Written by: Ellyn Sternfield

With all due credit to the Coroner from the Wizard of Oz, like the Wicked Witch of the East crushed by Dorothy’s house, the 340B Drug Discount Program mega-reg is “not only merely dead, it’s really most sincerely dead.”  And to quote one of my favorite sports commentators, Tony Kornheiser, “I believe I had that.”

Let’s recap.  In January 2014, HRSA announced that it would be “formalizing” existing guidance and issuing a regulation designed to cover “a number of aspects” of 340B program operations.  Termed the “mega-reg,” it was intended to address such controversial issues as the definition of a “patient” eligible to receive a 340B drug, compliance requirements for 340B contract pharmacies, and mandatory criteria for hospital eligibility as a 340B covered entity.  HRSA stated that the proposed mega-reg would be published and available for comment no later than June 2014.  And indeed the draft rule was forwarded to OMB for review in April 2014.  So what happened?  Well, let’s just say that HRSA’s Orphan Drug Rule was the tornado which carried the house to Oz, causing it to land on the witch.

Continue Reading The 340B Mega-Reg is Dead