# Presentation: 247762

## The 340B Drug Pricing Program: The Basics

**The 340B Drug Pricing Program: The Basics**

***Promoting Integrity, Access, & Value ***

*to deliver clinically and cost-effective pharmacy services. *

**Notes:**
Welcome to The 340B Drug Pricing Program: The Basics. This session is intended to provide up-to-date and relevant information about the 340B drug pricing program. This information is intended to support stakeholders as they strive to deliver clinically and cost effective pharmacy services to the nation’s most vulnerable patients. 

## Learning Objectives

**Learning Objectives**

**Notes:**
The learning objectives are focused on the most fundamental 340B Program information. These include understanding:
The intent of the program, 340B pricing determination, entity eligibility, entity enrollment procedure, program requirements and prohibitions, program guidance and policy, patient eligibility determination, drug delivery options, and available resources 
Let’s begin by discussing the circumstances surrounding the creation of the 340B Program.

## Creation of the 340B Program

**Creation of the 340B Program**

**Notes:**
In the early1990s, during a period of rapidly rising drug costs, a group of safety net providers began to strategize about the best way to provide pharmacy services to their patients.  Their efforts resulted in the federal legislation called “Section 340B” of the Public Health Service Act, hence the terminology the “340B Program.” This program requires drug manufacturers that participate in the Medicaid rebate program to provide outpatient drugs to specific entities listed in the legislation at a reduced price. 

## Intent of the 340B Program

**Intent of the 340B Program**

_**SAVINGS**_
- Improve financial stability
- Stretch dollars to serve vulnerable patients

**Notes:**
The program’s intent was to benefit the specific safety net providers. Saving on drug prices would enable these providers to improve financial stability, and would position the providers to stretch scarce dollars to serve vulnerable patients. In addition to providing a clear benefit to safety net providers, the 340B Program legislation would potentially decrease the taxpayer burden by reducing the federal dollars spent on medications by safety net providers. While 340B entities often pass the pricing discounts to patients, the entities are not required to do so. 

## The 340B Price

**The 340B Price**

**25-50%**** **
**of the average wholesale price**

**Can offer sub-ceiling prices**

**Notes:**
How “discounted” is the 340B price? The 340B discount is very steep---one of the largest discounts available on drug prices in the United States. Studies have reported the 340B price to be approximately 25-50% of the average wholesale price, or AWP, and 340B prices have been reported to represent savings of 22%, or often much greater, on  the entity’s total drug purchases. The 340B price is at least as low as the price that the state Medicaid agencies pay.  

The 340B price is actually a “ceiling” price, meaning it is the highest price a participating entity may be charged. However, drug manufacturers are able to offer entities sub-ceiling prices on drugs as well. The data used to calculate the 340B ceiling price is kept confidential. Manufacturers calculate the ceiling price using a formula found in the 340B statute. 

## The 340B Price

**The 340B Price**

**25-50%**** **
**of the average wholesale price**

**Notes:**
The manufacturers report data components used in the formula to the Centers for Medicare and Medicaid Services, or CMS, and CMS shares these components with the Office of Pharmacy Affairs. The OPA uses this CMS data to calculate and verify 340B prices. 

## 340B Entity Eligibility

**340B Entity Eligibility**

*The eligibility to purchase at the 340B price belongs only to the *_*entities*_

**Notes:**
The eligibility to purchase at the 340B price belongs only to the entities named in the legislation, and these entities may choose to provide 340B drugs to any or all of its patients. 

## 340B Entity Eligibility

**340B Entity Eligibility**

**Consolidated Health Centers**
**FQHC look-alikes**
**Family planning projects **
**(Title X)**
**Ryan White Care Act ****(Parts A, B, C, D) grantees**

**Black lung clinics**
**Comprehensive hemophilia diagnostic treatment centers**
**Native Hawaiian health centers**
**Urban Indian organizations**
**Certified tuberculosis clinics**
**Certain disproportionate share hospitals**
**Certified sexually transmitted disease clinics**

**Notes:**
This exclusive list of 340B eligible entities includes:
Consolidated Health Centers,
Federally Qualified Health Center, or FQHC look-alikes,
Family planning projects (Title X),
Ryan White Program Grantees,
Black lung clinics,
Comprehensive hemophilia diagnostic treatment centers,
Native Hawaiian health centers,
Urban Indian organizations,
Certified tuberculosis clinics,
Certain disproportionate share hospitals, and
Certified sexually transmitted disease clinics.

## 340B Enrollment Procedure

**340B Enrollment Procedure**

**ELIGIBLE ENTITIES MUST ENROLL**

**FORMS AND ENROLLMENT INFORMATION **

**ADMISSION PROCESS**

**Notes:**
Eligible entities are not automatically enrolled in the 340B program. Entities must first submit an enrollment form to the OPA. 
To find a form, go to the OPA website and click on “Legal Resources.”  
After OPA receives the enrollment form, the eligibility of the entity is verified. Once approved, the entity will be added to the official OPA database during the next quarterly database update. The database found on the OPA website is an essential tool to find and verify information about entities. Unless the entity appears on the OPA database, drug manufacturers and wholesalers will not sell at 340B prices to the entity. 

## 340B Enrollment Procedure

**340B Enrollment Procedure**

**DEADLINES**

****** ****participation begins 1 month after the enrollment deadline**

**FIND THE FORM**

**COMPLETE THE FORM**

**Notes:**
One important piece of information regarding the database is that it is only updated at quarterly intervals, and each quarterly update has a deadline for receipt of the enrollment form. Entities should be aware of the deadlines: 
December 1st for addition to the database on January 1st, March 1st for addition on April 1st, June 1st for addition on July 1st, and September 1st for addition on October 1st. 
Participation may begin 1 month after the enrollment deadline.

## 340B Statute Requirements and Prohibitions

**340B Statute Requirements ****and Prohibitions**

**340B Legislation**

**Notes:**
The 340B legislation established specific program components.  Three major components include the
340B pricing formula and the list of eligible entities, both of which we have just covered. The other major component includes requirements and prohibitions. 

## 340B Statute Requirements and Prohibitions

**340B Statute Requirements ****and Prohibitions**

**Notes:**
The first requirement is for the establishment of a Prime Vendor Program, specifically intended to negotiate prices below the 340B ceiling price for participating entities. The second requirement is for a covered entity to permit the Secretary and the manufacturer of a 340B drug to audit the entity. Some important prohibitions include the prohibition of reselling or transferring a 340B drug to an ineligible organization or to a person who is not a patient of the entity. Another prohibition involves the “duplicate discount”. The 340B legislation prohibits Medicaid agencies from collecting rebates on 340B purchased drugs. This is to protect manufacturers from providing a “duplicate discount” on a single drug. The “duplicate discount” would occur if an up-front 340B discount was provided to the entity and the state requested a Medicaid rebate on the same prescription. And then lastly there is the Disproportionate Share Hospital prohibition against concurrent participation in an outpatient group purchasing organization and the 340B program, this is also referred to as the “GPO exclusion.” 

## 340B Regulation and Policy

**340B Regulation and Policy**

- www.hrsa.gov/opa

*Interpreting the legislation and implementing the 340B Program may at times be a challenge*

**Notes:**
While the statue does address these requirements and prohibitions, the law is relatively brief, and does not address every potential situation associated with the program. Interpreting the legislation and implementing the 340B Program may at times be a challenge due to the frequent silence of the statute regarding so many areas. 
For this reason, the OPA has occasionally established 340B policy to foster program integrity and provide guidance that supports the original legislation. The mechanism for issuing policy is publication of a Federal Register Notice. The notice requests public comment on a proposed guideline, comments are received, and notices are finalized. These finalized notices lay the framework for much of the practical implementation of the 340B Program. Areas addressed by policy are available at the OPA website, www.hrsa.gov/opa. It would be nearly impossible for each and every potential 340B situation to be specifically addressed in law or policy. For the areas that do not appear to be directly addressed by law or policy, the entities are responsible for maintaining 340B Program integrity in decision-making. This might include obtaining legal counsel to ensure appropriate interpretation of the statute and guidelines. 

## 340B Regulation and Policy

**340B Regulation and Policy**

- www.hrsa.gov/opa/federalregister.htm

**Notes:**
The definition of a patient is one example of a Federal Register Notice. For the 340B Program, a person is a patient of the entity if the entity has an established relationship with the patient and maintains records of care; the patient receives health care from a health care professional employed or contracted with the entity; and the patient receives health care consistent with the range of services from the covered entity. 

Disproportionate Share Hospitals are exempt from this last requirement. ADAP patients are considered patients as long as they are registered as eligible by the State program. 

An individual will not be considered a "patient" of the entity for purposes of 340B if the only health care service received by the individual from the entity is the dispensing of a drug or drugs for subsequent self- administration or administration in the home setting.

## 340B Regulation and Policy

**340B Regulation and Policy**

- www.hrsa.gov/opa/federalregister.htm

***If three requirements are not met, the person is not eligible for 340B drugs***

**Notes:**
If these requirements are not met, the person is not eligible for 340B drugs. 

## 340B Implementation Options

**340B Implementation Options**

*Entities expressed interest in new ways to increase access to 340B drugs*

**Notes:**
Eligible entities that have signed up to participate in the 340B program have a great deal of flexibility when deciding how to deliver 340B drugs to eligible patients. The law and policy do not describe exactly how an entity should deliver pharmacy services. Methods commonly used by 340B entities to deliver medications to patients include: 
Telepharmacy, contract pharmacy, mail order, in-house pharmacy and provider dispensing.
It is worthwhile to note that the original 340B legislation did not address the possibility of an entity contracting with a separate pharmacy organization to provide pharmacy services. However due to the large number of entities expressing the need to contract with a pharmacy, in 1996 the OPA issued a policy, via the contract pharmacy guidelines published in the Federal Register, to provide guidance for 340B contract pharmacy services. More detailed information about these options and the decision process used to select the optimal pharmacy delivery method will be discussed in detail in a subsequent module. 
Soon after the 340B Program was initiated, entities began expressing interest in the possibilities of exploring new ways to increase access to 340B priced medications, previously not addressed by published policy. Advances in computers and changes in pharmacy practice have produced pharmacy options that make sense for entities and patients, but were not conceivable at the time the legislation and policy were written. 

## 340B Implementation Options

**340B Implementation Options**

**Notes:**
In some cases, entities have pursued Alternative Methods Demonstration projects which have allowed them to operate outside the realm of published 340B legislation as long as they have submitted a proposal and gained OPA’s approval to proceed. More information on Alternative Methods can be found on the Office of Pharmacy Affairs’ website. 

## 340B Program Resources:

**340B Program Resources:**

***Integrity***

***Access***

***Value***

**Notes:**
The 340B program resources all focus on the program’s mission to deliver clinically and cost-effective pharmacy services by ensuring program integrity, access, and value. These three program strategies are integral to the success of the 340B program. 

Program integrity provides confidence for stakeholders that the 340B Program’s intent is being met and the rules are being followed.
Access to the 340B Program is important because it ensures that entities and their patients have the means to fully utilize the program’s benefits.
The value the 340B Program provides to entities and their patients is essential for stretching scarce resources.
Ensuring that the 340B Program is solidly operating with integrity, access and value is paramount to the program’s continued success.

## Integrity Resource:

**Integrity Resource:**

- Develops innovative pharmacy service models and supports technical assistance

- Serves as Federal resource for pharmacy practice

- Administers
- 340B program

- Access to affordable drugs
- Application of “best practices”

**Office of Pharmacy Affairs (OPA)**

- Efficient pharmacy management
- Systems to improve patient outcome

**Notes:**
The primary integrity resource is the Office of Pharmacy Affairs, which is a component of the Health Resources and Services Administration’s Healthcare Systems Bureau. OPA has three primary functions: 
Administration of the 340B Drug Pricing Program, through which certain federally funded grantees and other safety net health care providers may purchase prescription medication at significantly reduced prices;
Development of innovative pharmacy service models and provision of  technical assistance to help entities implement effective pharmacy programs; and
Serving as a federal resource about pharmacy. 
In all of its activities, OPA emphasizes the importance of comprehensive pharmacy services being an integral part of primary health care.  Comprehensive pharmacy services include patient access to affordable pharmaceuticals, application of "best practices" and efficient pharmacy management and the application of systems that improve patient outcomes through safe and effective medication use. 

## Access Resource: 

**Access Resource: **

- Helps eligible entities, implement and optimize the 340B program

- Provides
- information resources,
- policy analysis &
- education

***Access***

**Pharmacy Services Support Center (PSSC)**

- Call Center
- Web Site

- Outreach Program
- Pharmacy Technical Assistance Program

**Notes:**
The primary access resource is the Pharmacy Services Support Center, or PSSC. PSSC was established in September 2002 through a contract between HRSA and the American Pharmacists Association. The mission of PSSC is to provide information, education, and policy analysis to help eligible entities optimize the value of the 340B program and provide clinically and cost effective pharmacy services that improve medication use and advance patient care. 

PSSC operates a call center, a web-site, and an outreach program to assist all 340B stakeholders. In addition, it offers pharmacist-expertise to 340B entities through its Pharmacy Technical Assistance Program. 

## Value Resource: 

**Value Resource: **

- Offers value added products and services
- Offered at no cost to entity

- Negotiates sub-ceiling prices
- Helps with access to drug distribution solutions

***Value***

**Prime Vendor Program (PVP)**

**Notes:**
The primary value resource for the 340B program is the Prime Vendor Program, or PVP. The PVP is the key to efficient and full utilization of the 340B program. Currently, the program is administered by Apexus Inc. The Prime Vendor negotiates sub-ceiling prices with manufacturers, helps entities access drug distribution solutions, and offers an array of value-added products and services. 
There is no cost for participating entities to enroll in the program. As more entities enroll, the Prime Vendor volume purchased increases, providing the PVP with better ability to negotiate even lower prices.  

## How to Access Resources:

**How to Access Resources:**

**Notes:**
Resources to help entities optimize participation and use of the 340B are readily available. 
The first step is to visit the Office of Pharmacy Affairs website, at www.hrsa.gov/opa.  This web site  contains guidelines, enrollment forms, and access to other 340B information. 
The second step is to contact  PSSC. The PSSC call center operates from 9:00 a.m. to 4:30 p.m. eastern standard time at 1-800-628-6297, or email questions anytime to PSSC@aphanet.org. 
Finally, detailed information about the Prime Vendor Program is available at www.340bpvp.com, or by calling 1-888-340-2787.