2015 - 340B & Prime Vendor Program Update

Christopher A. Hatwig, R.Ph., MS, FASHP President, Apexus

340B Sales by Entity Types

87%

13%

Percentage of Total Apexus Participant Sales

Hospital

Non-Hospital

0.40% 1.79% 3.29%

81.14%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

Free-StandingCancer (CAN)

Children'sHospitals (PED)

Rural Hospitals(CAH/RRC/SCH)

DSH

% of Total Sales

Hospital

0.11% 0.56%

1.03%

5.83% 5.85%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

HM STD/TB Title X (FP) Ryan White(HV)

FQHC

% of Total Sales

Non-Hospital

2

GPO Prohibition

• Established in original 340B legislation in 1992 • Prevents GPO use for Covered Outpatient Drugs

• Applies to • Disproportionate Share

• Children’s Hospitals

• Free Standing Cancer Hospitals

• Such hospitals • “...will not participate in a group purchasing organization or group purchasing

arrangement for covered outpatient drugs as of the date of this listing on the OPA website.”

• Release clarifying OPA Policy • February 23, 2013 – letter of GPO Prohibition enforcement by HRSA

• Hospitals must be compliant effective August 7, 2013

3

GPO Prohibition Clarification –

Purchase Flow for Most Hospitals

Non-compliant State Compliant State

340B Registered

Hospital

All Other (Default to GPO)

Inpatient or

Non-Covered

Drugs (GPO)

340B

340B

All Other Out-

Patient Covered

Drugs (Default to Non-GPO

Account)

4

©2014 Apexus. Reproduction without permission is prohibited.

How does the Medicaid Exclusion File work?

Medicaid

Exclusion

File

Manufacturer

State

Entity

340B

Discount

Medicaid

Rebate

5

• Simple goal—prevent duplicate discounts

• Challenges for a solution—coordination of HRSA, states and CMS – Marketplace alternatives to the HRSA Medicaid Exclusion File

(ex. NCPDP standards, UD modifiers)

• State policy is variable and sometimes not informed – States refuse to use the Medicaid Exclusion File

– States require entities to share any 340B refund payments from manufacturers (from years ago)

– States require entities to self-audit for use of “non-covered outpatient drugs” in the past

• Apexus has contributed by providing education to states – 340B U for State Medicaid Pharmacy Directors (August 2014)

– Discussions regarding fair reimbursement models

Medicaid Update

6

• Increase the number of audits

– Covered entity audits focus on diversion, duplicate discounts, and GPO prohibition (for DSH, CAN and PED)

– Manufacturer audits (OIG report pending)

• Publish

– Mega-guidance (summer 2015)

– Regulations

• Civil-monetary penalties

• Administrative dispute resolution

• Drug pricing

• Focus on Medicaid Exclusion File/policy (modernize)

• Continue working toward publishing 340B ceiling prices

HRSA Activity Expected in 2015

FY

2012

FY

2013

FY

2014

FY

2015* (As of

1/13/15)

Number of covered entities

audited

51 94 99 33

•Outpatient facilities/sub-grantees 410 718 1,476 698

•Contract pharmacies 860 1937 4,028 1688

Number of finalized reports 51 75 18 0

HRSA Audits by the Numbers

Orphan Drug Update

• Chaotic marketplace

• Wholesalers are at financial risk between the manufacturers and hospitals; some are more conservative and have decided to block all sales and manage the manufacturers’ products that agreed to sell as an exception

• HRSA wrote letters of inquiry to all companies for which complaints of not offering 340B prices on orphan drugs were received

– Of the 27 companies that had orphan drugs, 14 are offering 340B pricing and 13 are not

– Feb 4th - HRSA posted the names of the manufacturers not offering 340B pricing on their website

HRSA’S 340B PRIME VENDOR PROGRAM (340B PVP)

APEXUS

Apexus Programs Supporting HRSA

and 340B Stakeholders

Brand and Generic Rx

Pricing

Wholesaler Networks

Apexus Answers

Call Center

340B University™

& 340B OnDemand

CO

NT

RA

CT

ING

AS

SIS

TA

NC

E

ED

UC

AT

ION

Benefits of the 340B PVP to Covered

Entities

• Sub-340B and Sub-WAC pricing on outpatient

pharmaceuticals

• Discounts on value added products, services, and

supplies

• Apexus’ Manufacturer Refund Service

• Pricing transparency

• Distribution solutions

• 340B Education and compliance support

Benefits of 340B PVP to

Pharmaceutical Manufacturers

• Aggregator of outpatient purchasing in the

340B space

– Works closely with HRSA under an exclusive

agreement; successful track record (10 years)

– Understands government rules, drug pricing,

contracting, and the unique needs of both covered

entities and manufacturers

– Extend full price protections on all sales to

participating covered entities

– Provides a single point of entry into a complex

market for outpatient pharmaceuticals

Adapted from a slide by Safety Net Hospitals for Pharmaceutical Access

Source: Data derived from Prices for Brand-Name Drugs Under Selected Federal Programs, Congressional Budget Office

Prime Vendor Pricing Comparison

• Apexus team is working to identify and share

leading practices used by entities to minimize WAC

expense

– Large variances among participants

– Analyzing data by split-billing vendor

– Strategies: minimizing lost charges, determining a policy

for expired medications, evaluating Medicaid carve-out

status, and identifying GPO only areas

• Apexus contracting team has worked to provide

value by contracting for sub-WAC pricing, in 2014

– 7,508 products on non-GPO/WAC contracts

Minimizing WAC Expense

Look Familiar?

• Developed to support integrity

provisions

• Inaugurated September 2011

• 2014 Graduates: > 2,000

• Sessions in 2015: 10+

• Diversity of stakeholders

• 340BUniversity@340bpvp.com

Assistance/Education

• Critical HRSA need

• Launched: October 1, 2012

• HRSA-approved answers

• Hours of operation: Mon-Fri

8:00 AM – 5:00 PM CST

• 888.340.2787

• ApexusAnswers@340bpvp.com

EDUCATION APEXUS ANSWERS

• Mega-guidance, summer 2015

• GPO Prohibition: Split-billing software

configuration/malfunction, minimizing WAC spend

• Defining material breach of non-compliance

• 340B Contract pharmacy attempting to manage

repayment/credits on behalf of entity (manufacturer

wonders “Why is this pharmacy mailing me a check?”)

• Instead of repayment or credit-rebill, some entities opt to

adjust future purchasing to correct past mistakes

• Interpretation of covered outpatient drugs

• Inquiries regarding orphan drugs

Apexus Answers: Hot Topics

19

340B University: Top Compliance-

Focused Tools

1. 340B independent audit RFP checklist

(new)

2. Split-billing tool (new)

3. Self-disclosure tool

4. Sample self-audit guides

5. Sample SOPs

Tools: https://www.340bpvp.com/340b-university/tools-and-resources/

20

Apexus Certificate Program -Curriculum Structure & Audience

Level 1

Open Course

Overview

of foundational 340B knowledge

Le

vel 2

Application Certificate

Application

in 340B operational

integrity

Level 3

Master Certificate

Policy

to practice compliance

interpretation

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• Grow sub-340B portfolio savings value

• Continue to build out portfolio of sub-WAC pricing to minimize WAC expenditures and support participants in optimizing

• Maintain high customer satisfaction and call center ratings

• Advance manufacturer refund program through strategic partnerships

• Implement specialty pharmacy solution to support participants’ access to product and 340B pricing

• Expand education offerings for advanced training and certification

Focus for 2015

ENVIRONMENTAL SCAN, ONGOING

CHALLENGES, & PREDICTIONS

23

• Manufacturers support opening 340B statute,

scrutinizing hospital eligibility criteria

• Republican control of Senate and retirement of

340B-supportive legislators change environment

for 340B

• Orphan drug lawsuit is expected to have final

briefs due in March 2015

• GAO and OIG have 340B reports underway

(Medicare)

• Reimbursement challenges with payers and

Medicaid will increase

340B Environmental Scan

340B Intent

To permit covered entities “to stretch scarce

Federal resources as far as possible, reaching

more eligible patients and providing more

comprehensive services.” H.R. Rep. No. 102-384(II), at 12 (1992)

Ongoing Points of Dispute

• Is the intent of 340B for the entity, the patient, or

both?

• Should hospital eligibility criteria (DSH %) be

revisited?

• Do contract pharmacies need to be limited in some

way?

• Should program be limited to the uninsured?

• What should be done to modernize the HRSA

Medicaid Exclusion File?

• Does HRSA have the authority to issue regulations?

Questions?

Contact Information

Apexus Answers:

M-F 8:00-5:00 PM CT

Email: ApexusAnswers@340bpvp.com

Website: www.340BPVP.com