340 B CONTRACT PHARMACY BASICS

JULY 13, 2017 1:30 – 3:00 PM

ACPE UAN: 0107-9999-17-088-L04-P 0.15 CEU/1.5 hr 0107-9999-17-088-LO4-T 0.15 CEU/1.5 hr Activity Type: Knowledge-Based

Learning Objectives for Pharmacists and Pharmacy Technicians: Upon completion of this CPE activity participants should be able to: 1. Explain 340B program basics and commonly used terms 2. Discuss how to create a successful relationship with a 340B eligible entity 3. Describe HRSA policies and processes related to audits and expectations of the contract pharmacy Speaker: Jason Atlas, RPh, MBA Jason Atlas, Apexus' Manager of 340B Education and Compliance Support, is responsible for educating directors of pharmacy, clinicians, and hospital executives on the value of the 340B program and Apexus, as its 340B Prime Vendor. He also educates stakeholders regarding 340B regulations, procedures, and operations to ensure compliance and program integrity. Mr. Atlas has spent over 20 years in a variety of pharmacy practice settings including his family owned pharmacy in Princeton, NJ. Since relocating to Colorado he has held leadership positions for a regional retail pharmacy chain, a national publically traded long-term care pharmacy, a national pharmacy recruiting and staffing service provider, and most recently as the Director of Outpatient Pharmacy at Denver Health and Hospital Authority. Mr. Atlas holds a BS degree in Pharmacy from Rutgers University and a Masters in Business Administration from the University of Colorado Boulder, School of Business. Speaker Disclosure: Jason Atlas reports that he is employed by Apexus, a 340B Prime Vendor Program. Off-label use of medications will not be discussed during this presentation.

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340B CONTRACT PHARMACY BASICSJuly 13, 2017

Jason Atlas, RPh, MBAApexusManager of 340B Education & Compliance Support

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Disclosure• Jason Atlas reports no actual or potential conflicts of

interest associated with this presentation

Upon successful completion of this activity, pharmacists and pharmacy technicians should be able to:1. Explain 340B program basics and commonly used terms

2. Discuss how to create a successful relationship with a 340B eligible entity

3. Describe HRSA policies and processes related to audits and expectations of the contract pharmacy

Learning Objectives

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I am currently a contract pharmacy for a 340B participant?• Yes• No

Who are we?

About Apexus• Our Mission:

• Through collaboration, and innovation, Apexus delivers value to its customers by increasing access to medications and improving patient outcomes through the advancement of ambulatory pharmacy solutions and support of compliant 340B programs.

• Support YOUR program compliance and integrity

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Tools and ResourcesVisit 340BPVP.com to learn more about our tools and resources.

340B University OnDemand Education Visit 340BPVP.com to sign up for 340B University OnDemand

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340B Statute

• Resulted from a 1992 federal statute• Manufacturers participating in Medicaid Drug Rebate Program must sign a

Pharmaceutical Pricing Agreement (PPA) with the Secretary of Health and Human Services

• The manufacturer agrees to charge a price for covered outpatient drugs that does not exceed the 340B price

• Who benefits from the 340B program?• Patients and Covered Entity

• How are 340B savings passed to the patient?• Sliding Fee Schedules• Additional service expansion

340B Benefit

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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)

“ “

Pricing Comparison

100%

79%

64%51%

42%

100%

50%

0%

“BEST PRICE” 63%

A WP AMP GPO MedicaidRebate

340B V eteransAdministration

66%

ApexusPVP

W AC

83%

Disclaimer: Pricing comparisons listed are for estimation purposes only and may vary based upon GPO class of trade for an organization.

PRIVATE SECTOR PRICING

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340B Covered Outpatient Drugs (COD)

http://www.ssa.gov/OP_Home/ssact/title19/1927.htm

• Outpatient drugs• Over-the-counter drugs (with a

prescription)• Clinic administered drugs• Biologics• Insulin

FederalGrantees/Designees CertainHospitals• Federally qualifiedhealthcenter• Federally qualifiedhealthcenterlook-alikes• TitleXfamilyplanninggrantees• Stateaidsdrugsassistanceprograms• RyanWhitecareactgrantees(A,B,C,D,F)• Blacklungclinics• Hemophiliatreatmentcenters• NativeHawaiianhealthcenters• UrbanIndianorganizations• Sexuallytransmitteddiseasegrantees• Tuberculosisgrantees

• Disproportionatesharehospitals• Children’shospitals• Criticalaccesshospitals• Freestandingcancerhospitals• Ruralreferralcenters• Solecommunityhospitals

340B Eligible Entities

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I am currently a contract pharmacy for the following type of 340B participant?• Hospital (DSH, Children’s ,Critical Access, Free Standing Cancer Center, Rural Referral

Center, Sole Community)

• Community Health Center• Title X Family Planning• STD clinic• Ryan White clinic• Other

Tell me more about you

HRSA 340B Database: Statistics HRSA 340B Database• April 1st, 2017

• 39,600 registered sites; 17,100 are non-hospital sites• 19,340 unique contract pharmacies

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Registration Process• New entities, entity sites, contract pharmacies, Medicaid

information• 2 week registration periods, quarterly updates made to HRSA

340B Database• Change requests: changes to existing information, rolling

basis

Update Official October 1 January 1 April 1 July 1

Registration Period July 1 – 15

October 1 – 15

January 1 – 15

April 1 – 15

Duplicate Discount Prohibition

340B price Medicaid rebate

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Targeting Program Integrity Can we use 340B for Medicaid patients at our contract pharmacy?

Who to talk to?

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Who to talk to?

Questions

©2016Apexus.Reproductionwithoutpermissionisprohibited.

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Contract Pharmacy Basics

Initialcontractpharmacyguidanceissued:– 1contractedsitepercoveredentity

Coveredentitiescanapplytopursuealternativestocontractingwithasinglepharmacy

Newcontractpharmacyguidanceissued:– Multiplecontractpharmacies– Independentofin-housepharmacies

History of Contract Pharmacies

1996FederalRegister

2001:HRSAestablishesAMDP(AlternativeMethodsDemonstrationProject)

2010FederalRegister

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Bill To — Ship To OverviewHRSA requires the covered entity to maintain ownership of the 340B medication up to dispensing to eligible patient

• Inventory via “bill to – ship to” wholesale arrangement

• Covered entity receives invoice and T3 data

• Contract pharmacy receives inventory and T3 data without 340B pricing information

BillToShipTo

WHOLESALER

COVERED ENTITYCONTRACT PHARMACY

Considerations• What are the stakeholder benefits from this arrangement?• How does the dispensing fee compare to current third party

payers?• How will this impact my third party receivables and cash

flow?• Do I pay fees to participate?• What are the risks?• Should I anticipate any impact to my current Cost of Goods

from my existing wholesaler?

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• At a minimum, the contract pharmacy agreement should address the following “12 Essential Elements” for such agreements as outlined below and found here: http://www.hrsa.gov/opa/programrequirements/federalregisternotices/contractpharmacyservices030510.pdf

• The agreement states that the covered entity will purchase the drug, maintain title to the drug and assume responsibility for establishing its price, pursuant to the terms of an HHS grant (if applicable) and any applicable federal, state, and local laws. A ‘‘ship to, bill to’’ procedure is used in which the covered entity purchases the drug; the manufacturer/wholesaler must bill the covered entity for the drug that it purchased, but ships the drug directly to the contract pharmacy.

• The agreement will specify the responsibility of the parties to provide comprehensive pharmacy services (e.g., dispensing, recordkeeping, drug utilization review, formulary maintenance, patient profile, patient counseling, and medication therapy management services and other clinical pharmacy services).

• The agreement states that the covered entity will inform the patient of his or her freedom to choose a pharmacy provider.

Contract Pharmacy 12 Essential Elements

Contract Pharmacy 12 Essential Elements• The agreement states that the contract pharmacy may provide other services to the covered entity

or its patients at the option of the covered entity (e.g., home care, delivery, reimbursement services). Regardless of the services provided by the contract pharmacy, access to 340B pricing will always be restricted to patients of the covered entity.

• The agreement states that the contract pharmacy and the covered entity will adhere to all federal, state, and local laws and requirements.

• The agreement states that the contract pharmacy will provide the covered entity with reports consistent with customary business practices (e.g., quarterly billing statements, status reports of collections and receiving and dispensing records).

• The agreement states that the contract pharmacy, with the assistance of the covered entity, will establish and maintain a tracking system suitable to prevent diversion of section 340B drugs to individuals who are not patients of the covered entity.

• The agreement states that the covered entity and the contract pharmacy will develop a system to verify patient eligibility, as defined by HRSA guidelines. Both parties agree that they will not resell or transfer a drug purchased at 340B prices to an individual who is not a patient of the covered entity.

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Contract Pharmacy 12 Essential Elements• The agreement states that neither party will use drugs purchased under section 340B to

dispense Medicaid prescriptions, unless the covered entity, the contract pharmacy and the state Medicaid agency have established an arrangement to prevent duplicate discounts and OPA has been notified and approves of the methodology used.

• The agreement states that the covered entity and contract pharmacy will identify the necessary information for the covered entity to meet its ongoing responsibility of ensuring that the elements listed herein are being complied with and establish mechanisms to ensure availability of that information for periodic independent audits performed by the covered entity.

• The agreement states both parties understand that they are subject to audits by outside parties (by the Department and participating manufacturers) of records that directly pertain to the entity’s compliance with the drug resale or transfer prohibition and the prohibition against duplicate discounts.

• The agreement states that, upon written request to the covered entity, a copy of the contract pharmacy service agreement will be provided to the Office of Pharmacy Affairs.

Contract ChecklistüDo I need to have my lawyer review the contract?

üWhat is the process for terminating the agreement?

üCan I contract with multiple 340B covered entities?

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Common Approaches to Claims

AllClaimsModel

• Allclaimsincluded

• Potentialriskoflosstoentity

ClaimswithPositiveEntityFinancial

Impact

• Bothbrandandgenericmedicationsincluded

• IncludesclaimswithpositiveCEfinancialimpact

Brand-OnlyClaims

• Genericmedicationsareexcluded

• IncludesclaimswithpositiveCEfinancialimpact

WholesalerUse

SlowMovers

ExcludedMedications

PackageSize

DiscontinuedNDCs

MultiplePharmacies

PeriodicTrue-Ups

Contract Negotiations: Inventory Considerations

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Points to Remember

The covered entity maintains complete responsibility for ensuring compliance with all 340B requirements.

The contract should dictate HOW the covered entity will ensure compliance in avoiding diversion and duplicate

discounts, as well as WHO will be responsible for reviewing and updating processes as needed.

Inventory Models

• Segregated inventories• Higher initial inventory costs• Greater physical space requirements• Manual process• Intensive staff training required

Physical Inventory Model Virtual Inventory Model

• Single inventory• Lower initial inventory costs• Split-billing software required• Automated process• Complex record keeping

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Inventory Models – Separate vs VirtualWhat should I choose?• Servicing multiple clients?• Different wholesalers?• Out of Stock - Can I borrow

from one stock to the other?• What happens if I sell/close

my pharmacy?• DSCSA – Track and Trace

Inventory Models – Separate vs VirtualWhat should I choose?• What happens if the Covered

Entity loses 340B eligibility?• What happens if a 340B

provider opens their own private practice and leaves the entity or works part-time?

• Return to Stock• Electronic prescribing

considerations - SPI

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340B Vendor: Function

A pharmacy that enters into a agreement with a covered entity to provide services to the

covered entity’s patients, including dispensing entity-owned 340B drugs.

COVERED ENTITY CONTRACT PHARMACY 340B VENDOR

Minimizesimpactonretailpharmacyworkflow

Providesinterfacetoidentifyeligibleclaims

Collectspayerdatafromretailpharmacyatswitch

Managesinventoryreplenishment

Providesdatareportsforcompliance

Role of the 340B Vendor

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340B Vendor Contributions

• Entity arranges data exchange• Entity ensures that appropriate data

are supplied by both parties• Pharmacy identifies eligible

transactions• Entity/pharmacy responsible for

accumulation and ordering of drugs• Entity compiles data for auditable

records

Program without a 340B Vendor Program with a 340B Vendor

• Vendor arranges data exchange• Entity ensures that appropriate data

are supplied by both parties• Vendor identifies eligible

transactions• Vendor accumulates and facilitates

ordering of drugs• Vendor provides reporting services

to facilitate entity’s auditable records

Final thoughts to consider• Telephone orders?• Hard-copy prescriptions? Is that enough?• Should I carry specific medications and/or manufacturers?• Unwound claims?• Are these NEW patients or existing patients?• Should I establish the contract pharmacy agreement from my existing

pharmacy location?• Should I offer the entity to open an onsite pharmacy at the

clinic/hospital?• What about Medicaid FFS and MCO beneficiaries if I open a pharmacy

onsite?

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Questions?Jason Atlas, RPh, MBAApexusManager of 340B Education & Compliance Support