340B "Mega-Guidance": Stricter Contract Pharmacy Requirements

The 340B Program “mega-guidance” recently released by the Health Resources Services Administration (HRSA) sets stricter standards for contract pharmacy use.

This proposed guidance follows a 2011 report from the Government Accountability Office (GAO) recommending better oversight of the 340B Drug Pricing Program to ensure that funds are used in a manner consistent with the program’s intent.

HRSA’s “mega-guidance” primarily focuses on entity eligibility and program integrity measures. It includes an updated standard for records retention for all covered entities, including 340B contract pharmacies, for a period of at least 5 years.

Better recordkeeping will also be crucial because HRSA wants to strengthen its annual audit and quarterly reviews to identify issues like drug diversion early. The proposed guidance outlines a “notice and hearing” process for disputing HRSA’s audit findings.

One of the main issues that HRSA hopes to address through these auditing requirements relates to “duplicate discounts” that occur when a manufacturer rebate is redeemed for a drug that has already been discounted under the 340B program.

Pharmacy Times Health-System Edition Editor Stephen Eckel, PharmD, MHS, FASHP, FAPhA, previously wrote that the need for more stringent audits is likely the result of 2010 guidelines that allowed for the establishment of multiple contract pharmacies with 1 covered entity, which led some institutions to contract directly with chain drug stores.

“If a patient presents to one of these stores with a legitimate prescription that would quality for a 340B-priced medication, that pharmacy can replenish that medication dispensation with a 340B-priced medication as supposed to the price usually paid,” Dr. Eckel wrote.

Halena Leah Sautman, PharmD, BCPS, and Sarah Lee, PharmD, MS, previously advised covered entities to prepare themselves for a potential audit by putting procedures in place to “conduct regular self-audits to identify areas of weakness and implement corrections to any errors or oversights.”

While HRSA’s clarifications are expressly aimed at ensuring that 340B Program funds are used appropriately, some health-system leaders fear that scaling them back would terminate certain services that are “completely funded” by savings generated by the program.

Proposed changes to the responsibilities of covered entities under the 340B Program are coupled with stricter patient eligibility criteria. To establish whether or not a hospital meets the 340B discount eligibility criteria, HRSA would appraise a covered entity’s disproportionate share adjustment percentage based on its most recently filed Medicare cost report.

Public comments on this proposed guidance will be accepted until October 27, 2015.