Pharmacies Face Uncertainty Over 340B Changes

The 340B program was first enacted in response to the Medicaid Drug Rebate Program with a goal of providing financial support for clinics and hospitals that provide care for lower-income patients. Under 340B, outpatient drugs are offered to hospitals and clinics at a significantly discounted price.

This program has come under scrutiny recently due to its growth under the Affordable Care Act (ACA). In 2010, the ACA caused covered entities to explode from approximately 12,000 to 38,000, according to a session presented at the National Association of Specialty Pharmacy Annual Meeting and Educational Conference.

“Not surprisingly, with the giant increase in participation, was a giant increase in how much was going through the program financially,” Neil B. Minkoff, MD, chief medical officer, EmpiraMed, said during the session. “The overall spend in 340B more than doubled since the ACA passed and those changes were made.”

Each stakeholder sees a different impact from the program. Regardless of whether the stakeholder is a patient, payer, or pharmacy, the impact may be positive for those covered under the program who see a lower cost; however, the argument can be made that the program may have a negative impact on those who are not covered and have to pay a higher price, according to the session.

For manufacturers, the impact is a lower overall profit due to discounts, which may cut into rebates offered to other patients. These stakeholders are required to enroll in the program if they want to participate in Medicaid. Dr Minkoff reported that there is also a lack of transparency into rebate data for manufacturers, further complicating the program.

In 2015, the Health Resources and Services Administration (HRSA) released a proposed Mega Guidance. The guidance was concerning to the covered entities because it would reduce savings needed to extend services provided to patients, according to speaker Daniel Kus, BS Pharm, RPh, vice president, Pharmacy Services, Henry Ford Health System.

The HRSA proposal would change the patient definition, which would prevent patients being discharged from the hospital from receiving their drugs. It could also reduce the number of contract pharmacies participating in the program.

While the final rule was expected to be released in the first quarter of 2017, HRSA withdrew the Mega Guidance after President Donald Trump signed an executive order calling for regulatory reform. Kus said that further action would require an act of Congress.

Currently, the state of the 340B is full of uncertainty due to the Mega Guidance withdrawal, delays to the Civil Monetary Penalty rule, vacancies in the Department of Health and Human Services, and the administration’s focus on healthcare reform, according to the session.

The Centers for Medicare & Medicaid Services (CMS) also released proposed changes to reimbursement and covered entities.

The CMS is proposing to reduce reimbursement from average sales price (ASP)+6% to ASP-22.5% in order to lower costs for the agency and Medicare patients.

Under the guidance, 340B would not cover pass-through drugs or vaccines and develop modifiers to track products through the program, which may cause a burden for health systems who now have to update their software, Kus said.

These changes would likely have the most impact on hospitals, community mental health clinics, ambulatory surgical clinics, and some specialty pharmacies, according to the session.

The proposed reimbursement change of ASP+6% is codified under the Medicare Modernization Act of 2003. While the Secretary of the HHS can modify payments, Kus said he expects that it will be met with legal difficulties.

Lastly, a draft of an executive order has been released for comment. The draft indicates concerns that the 340B program is being misused or changed from its original intention. The order seeks to rectify these deviations.

Under the order, there could be a reduction in covered entities, caps on the number of covered entities, restriction of discounts for certain patients, reduction of contract pharmacies, and limits placed on tiered formularies from pharmacy benefit managers, according to the session.

Due to the proposals from various government stakeholders, it is clear that the 340B program is under the microscope and there are aspects that may be changed in the future, according to the panel.

Currently, for the 340B program, “uncertainty is the new normal,” Dr Minkoff concluded.