340B Pharmacy manufacturer challenge leads to new HRSA guidance

We have been following the ongoing challenge pharmaceutical manufacturers have brought to the 340B Program and the covered entities that utilize the program to better serve their qualifying patient population. While some criticize pharma for its poor timing because of the pandemic, it was brought up with good intentions: to ensure those that need the 340B discount receive it when filling their prescriptions at contract pharmacies. The reason for the manufacturer’s challenge is because manufacturers are unable to verify which patients are and are not receiving the 340B discount, so they’re requesting covered entities that utilize contract pharmacies to provide additional data. Covered entities do not feel the need to provide the additional data because they’ve never had to and pulling and reporting the data may be burdensome.

To add to the frustration covered entities are dealing with, additional drug manufacturers are starting to follow the lead of their fellow manufacturers. Novo Nordish announced on December 1, 2020 that [as of 1/1/2021], “it will no longer facilitate bill-to/ship-to distribution of 340B product to a contract pharmacy of any of the six hospital covered entity types.” HRSA is “aware of Norvo Nordisk’s plan and is reviewing and determining [its] next steps.” Novo Nordisk is allowing these covered entities (340B hospitals, that do not have an in-house 340B Pharmacy) to designate one contract pharmacy for distribution.

HRSA advanced a final rule to the White House on November 18 for approval. The rule was approved and creates a binding administrative resolution (ADR) process for the 340B Program. The rule was “formally published” and takes effect January 13, 2021. “In finalizing the rule, HRSA disagreed with commenters who said that, before developing the ADR process, HRSA needed to ‘establish foundational guidance on key issues,’ including finalizing HRSA’s 340B omnibus program guidelines withdrawn in 2017. ‘The 340B statute empowers the 340B ADR Pannel with reviewing a claim, as set forth in this final rule, to determine when there have been statutory violations concerning overcharges, diversion, and duplicate discounts.’ [HRSA’s] rule:

  • Set a $25,000.00 de minimis threshold for monetary claims
  • Set standards for the composition and size of dispute resolution panels
  • Declined recommendations to create a permanent board
  • Decided Office of Pharmacy Affairs (OPA) staff would serve on panels as non-voting ex officio members
  • Declined to designate United States Department of Health and Human Services (HHS) administrative law judges to settle disputes
  • Set standards for screening panelists for conflicts of interest
  • Established procedural rules and deadlines
  • Rejected recommendations that manufacturers be required to first audit covered entities before bringing claims against the entities
  • Held that challenging a manufacturers’ average manufacturer price or best price calculations was beyond the scope of an ADR panel’s jurisdiction.”

It is unknown if the incoming Biden Administration will “suspend [the rule’s] implementation” to review it or leave it as is. The American Hospital Association (AHA) asked the Biden Administration to place a high priority on protecting the 340B Program during its first 100 days in office.

This is still an unfolding issue and we’ll keep you updated as there are updates.

No matter where you are in your journey to having a 340B Pharmacy Program, we can help!

We can help you implement, manage or oversee your 340B Pharmacy Program and ensure you maintain status and compliance.

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