greg doggett associate counsel safety net hospitals for pharmaceutical access (snhpa) nastad...
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GREG DOGGETTASSOCIATE COUNSEL
SAFETY NET HOSPITALS FOR PHARMACEUTICAL ACCESS (SNHPA)
NASTAD NATIONAL ADAP TA MEETINGWASHINGTON, DC
JULY 30 , 2014
The Intersection between ADAP and the 340B Drug Pricing
Program: 340B Pharmacy Update
Today’s Agenda
Patient Definition and Contract Pharmacy Developments
HRSA & Manufacturer 340B Audits340B Compliance
Who Is SNHPA?
Non-profit organization representing and supporting over 1,000 340B hospitals
Took lead role in including hospitals in the 340B law
Advocates on federal legislative and regulatory issues related to the 340B program
Educates members on 340B policy developments and compliance issues
Patient Definition
1996 HRSA Patient Definition Guidelines Covered Entities (CEs) Other Than ADAP
CE maintains records of individual’s health care and Individual receives health services from health care professional
employed by CE or under contract or other arrangements such that responsibility for care provided remains with CE Service must be more than dispensing of a drug for self-
administration or administration in the home setting Additional Criterion for Non-ADAP HRSA Grantees
Individuals receives health care service(s) from CE which is consistent with range of services covered by HRSA grant
ADAPs Only An individual registered in state-operated or funded ADAP that receives
Ryan White funding is considered a patient of the ADAP if registered as eligible by the State program.
Patient Definition Cont’d
HRSA intended to address patient definition in “mega-reg”
Widely differing perspectives on future of patient definition SNHPA
Basic construct of current definition is sound Specific terms should be defined to avoid confusion by stakeholders HRSA should release new guidance or regulation in proposed form,
so that the public has opportunity to comment PhRMA
Limit to “uninsured individuals” Physician must be employee or independent contractor Patient must receive “ongoing care”
Contract Pharmacy
1996: HRSA permitted a CE to enter into an arrangement with one pharmacy to dispense 340B drugs to CE’s qualifying patients if CE did not have own pharmacy
2010: HRSA allowed CEs to enter into arrangements with multiple contract pharmacies
Key 340B program requirements (i.e., patient definition and duplicate discount prohibition) apply to contract pharmacies
CE is responsible for 340B contract pharmacy compliance and must monitor contract pharmacy HRSA recommends, but does not require, independent audits
Contract Pharmacy Cont’d
February 2014 HHS OIG report on contract pharmacies Made no findings of wrongdoing Found CEs had different understandings of the
patient definition test and how to prevent diversion and duplicate discounts
Noted that some CEs do not offer 340B discounts to uninsured patients at their contract pharmacies
Found that CE oversight of contract pharmacies varies
Contract Pharmacy Cont’d
Criticisms of Contract Pharmacy Growth in number of contract pharmacy
arrangements Concern about whether uninsured benefit
from contract pharmacyHRSA planned to address contract
pharmacy in “mega-reg” Limits on number of contract pharmacy
arrangements?
Audit Background
340B statute permits HRSA and manufacturers to audit CEs
September 2011 Government Accountability Office report recommended selective audits of covered entities
HRSA began CE audits in January 2012HRSA chose entities they believed most likely to be at
risko Risk determination is based on volume of purchases, complexity
of program administration, and use of contract pharmaciesAlso did “targeted” audits based on allegations of 340B
violations51 audits in 2012 and 94 audits in 2013
HRSA Audit Results to Date
Since 2012: 70 audits posted on website At least 130 not yet posted Annual number of audits expected to double
Findings 3 types: Inaccurate database record, diversion,
duplicate discount Most audits have no findings or findings of inaccurate
database Repayment obligation
Exists for diversion findings Exists for duplicate discount only if state collected rebates
Areas for Improvement
Timeline of HRSA Audit Process Based on Hospital Reports to SNHPA
Pre-Audit: Audit notice, coordination call, data request (2-4 weeks)
Audit (1-3 days)Preliminary Report (6-15 months from audit –
average 10 months)Final Report (8-23 months – average 13 months)
CE agrees with or disputes findings Corrective action plan required if CE does not dispute
findingsFinal Determination by HRSA (if still challenging
findings) (4 months - ? (several are pending))Judicial Review
New Policies for HRSA Audits
New policies issued on July 3No preliminary audit report; just one chance to appeal
findingsHRSA no longer asking for details about how CE will
determine the scope of non-compliance and the remedyManufacturers notified of repayment obligation via public
letter that outlines duplicate discount/diversion finding(s)CE and manufacturer to determine the scope of
repayment. If parties do not agree, may pursue voluntary dispute resolution.
Audit stays open until CE reports to OPA that all repayment issues have been settled; re-audit within one year
General Lessons Learned from HRSA Audits
Important to have written policies and procedures
Accuracy of information on HRSA website Example: If using 340B for Medicaid patients, the
Medicaid billing numbers/NPIs used to bill those drugs must be listed in OPA’s Medicaid exclusion file
Manufacturer Audits
Bound by Government Auditing Standards and standards in 1996 guidance (61 Fed Reg. 65406, Dec. 12., 1996) o Must use an independent public accountanto CEs may be subject to only 1 audit at a timeo Audit period can be no more than 1 yearo Must continue to provide 340B discount during audito If parties cannot agree on audit findings, may pursue
resolution by HRSA through voluntary dispute resolution procedures set forth in 1996 guidance
o Limited to duplicate discount and diversion issues only
Manufacturer Audits Cont’d
Reasonable Causeo “Significant changes in quantities of specific
drugs ordered by a covered entity and complaints from patients/other manufacturers about activities of a covered entity may be a basis for establishing reasonable cause” (61 Fed Reg. 65406, Dec. 12, 1996)
o To show “reasonable cause,” manufacturers may make inquiries of CEs (e.g., letters)
o Important for CEs to respond to manufacturer inquiries
Manufacturer Audits Cont’d
Slow growth in number of manufacturers audits 8 approved since 2012 Results not publicly available
Increasing number of inquiries regarding 340B purchases
HRSA may audit based on manufacturer complaint
Manufacturer look-back period So far, negotiated by the parties, without HRSA
involvement No federal guidance permitting unlimited look-back
period
Audits & Repayment
Under 340B statute, violation of diversion or duplicate discount prohibition could require repayment of 340B discount
Repayment issues related to audits More than just the claim identified by HRSA; must
identify all claims that were subject to the problem Up to CE and manufacturer to identify look-back period
HRSA does not dictate actual amount of money to be repaid; determined through manufacturer and provider collaboration
HRSA does not have position on whether repayment can be done via credit or cash payment Will issue more guidance on how to calculate repayment
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340B Compliance and the Current Enforcement Environment
Increase in HRSA audits and inquiriesIncrease in manufacturer inquiriesAnnual recertification for all CEsHRSA plans to issue new guidance in many
program areas
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Purpose/Benefits of 340B Compliance Plan
Helps organization think systematically about implementing and operating 340B program
Demonstrates a covered entity’s good-faith commitment to compliance
Increases the likelihood of preventing, identifying, and correcting mistakes or improper activity Set up system to identify and correct errors
Minimizes financial loss to 340B participantsNote: Having a compliance plan does not ensure
perfect compliance 100% of the time!
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Key Elements of a 340B Compliance Plan
Policies and Procedures (P&Ps)Employee TrainingSenior management involvementInternal monitoring and auditingProactive response to deficiencies
Corrective action plans Disclosure to drug manufacturers and
government, if warranted
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340B Compliance Plan Resources
Office of Pharmacy Affairs Website: http://www.hrsa.gov/opa/ Federal Register notices, policy releases, FAQs, audit
information Regularly review FAQs even if you think you understand the
requirements!!!
Apexus/Prime Vendor Program (PVP) Website: https://www.340bpvp.com/controller.html FAQs, samples P&Ps, self-audit outlines
Regularly review FAQs even if you think you understand the requirements!!!
APEXUS Answers call center – 1-888-340-2787
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Additional Questions?
Greg DoggettAssociate Counsel
Safety Net Hospitals for Pharmaceutical Access
1101 15th Street, NW, Suite 910Washington, DC 20005Phone: 202-552-5859