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Amended by section 2302 of HCERA. Effective January 1, 2010, broadens eligibility for participation in the 340B drug discount program to certain children’s hospitals and free-standing cancer hospitals; critical access hospitals; and rural referral centers or sole community hospitals meeting certain criteria. Excludes orphan drugs from 340B discounts for newly qualifying entities.
HHS issued a press release on August 2, 2010, announcing the expansion of the 340B program under this section. HRSA published a Federal Register notice on July 24, 2012, alerting stakeholders of the revised deadlines for registering new covered entities to the 340B Program. HRSA’s Office of Pharmacy Affairs (OPA) website has additional information regarding eligibility and registration. Additionally, HRSA released a May 20, 2011, proposed rule regarding the exclusion of orphan drugs for newly eligible covered entities.
2013
On February 27, 2013, HRSA posted FAQs on the GPO prohibition – including, if a DSH, children’s hospital or freestanding cancer hospital registers with OPA to participate in the 340B Program, when does their participation become effective and the GPO prohibition apply? – which was clarified in February 7, 2013, guidance. On March 7, 2013, HRSA released guidance restating the criteria that hospitals that are not publicly owned or operated must meet to be eligible for the 340B Drug Pricing Program.
On July 22, HRSA issued a final rule codifying that the exclusion of orphan drugs from 340B drug discount program for certain covered entities newly eligible under the ACA applies “only to drugs transferred, prescribed, sold, or otherwise used for the rare condition or disease for which the orphan drug was designated under section 526 of the Federal Food, Drug, and Cosmetic Act (FFDCA).” Additionally, HRSA posted FAQs on the orphan drug rule.
On August 8, HRSA convened a webinar to discuss the agency’s July 28 final rule regarding the exclusion of orphan drugs from 340B drug discount program for certain covered entities newly eligible under the ACA. An archive of the webinar is available here and a presentation slide deck here.
In related news, throughout September 2013, HRSA posted new information pertaining to the 340B program, including: Orphan Drug Exclusion Update for Critical Access, Free-standing Cancer and Sole Community hospitals and Rural Referral Centers (September 12); and updated Results for Audits (September 4).
On September 30, HRSA posted updated information on the latest round of the 340B Peer-to-Peer Program, available here. HRSA noted that, despite the temporary lapse in federal appropriations during the month of October, it still received registrations under the program and therefore “will not extend the registration period at this time.” The agency notes here that it “will assume normal review processes beginning October 17, 2013.” Note also that, on October 1, HRSA’s Office of Pharmacy Affairs (OPA) made available its quarterly list of entities terminated from the 340B Program. More information is available here.
In a related development, on Nov. 4, 2013, HRSA issued 340B program integrity audit results the details of which are here and here.
2014
On January 2, 2014, HRSA made available a list of 340B covered entity sites with terminations effective on January 1; see here. On a related note, on January 8, 2014, HRSA announced that the recertification for CDC STD/TB and HRSA Ryan White Program entities will be delayed until the first quarter of 2014 (see here for details). Also, in a January 9, 2014 update, HRSA released findings from audits of entities participating in the 340B Drug Discount Program and specified a June 2014 timeline for issuing a proposed rule on 340B program issues that include the definition of an eligible patient and hospital eligibility criteria, among others. Detailed results from the 51 audits, spanning 410 covered entity sites, are available here.
On April 8, 2014 HRSA issued information regarding its revised 340B hospital registration process.
On July 23, 2014, HRSA issued an interpretive rule in which the agency affirms its previously finalized policy (June 23, 2013) whereby orphan drugs are excluded from the 340B Drug Pricing Program only when used for the orphan-designated indication but not when used for broader uses.
On August 4, 2014, HRSA highlighted some of the most frequently asked technical assistance questions and the answers for 340B Program from hospitals and clinics. Additionally HRSA reminded hospitals of requirements for recertification and issued passwords for hospitals on August 6, 2014.
On a related note, on August 7, 2014 HRSA updated its list of entities that agreed to the HRSA Final Report audit. The list is here and information on Corrective Action Plans and Sanctions will be updated once approved by HRSA.
Additionally, on August 20, 2014, Four health clinics and centers were terminated from the 340B Drug Pricing Program (340B Program) and indicated to HRSA that they made purchases when they were not eligible to do so. Entities are encouraged by HRSA to work with affected manufacturers regarding possible repayment.
On Sept. 16, HRSA published a presentation that reviews procedures for auditing 340B covered entities. The agency notes that over the past 3 fiscal years, it has audited 236 covered entities that span 2,475 outpatient facilities and subgrantees and more than 6,600 contract pharmacy sites.
On Sept. 29, HRSA released slides from a September 16 presentation on the procedures for auditing 340B covered entities. The agency notes that over the past 3 fiscal years, it has audited 236 covered entities that span 2,475 outpatient facilities and subgrantees and more than 6,600 contract pharmacy sites.
On Oct. 8, HRSA announced that registration for the 340B Drug Pricing Program was taking place for Health Center Program grantees and look-alikes. The agency noted that any sites must have an ‘active’ status in the health center’s scope of project (Form 5B: Service Sites) in order to complete the site’s registration for the 340B Program. The deadline for registration was Wednesday, October 15, 2014.
On Oct. 29, as part of an ongoing focus on program integrity and with a 340B proposed rule on still pending regulatory clearance at the federal Office of Management and Budget, the Health Resources and Services Administration convened a webinar the 340B Drug Pricing Program during which contractors and program participants discussed covered entity eligibility and provided guidance to assist facilities in being “audit ready.”
On Nov.14, HRSA officially withdrew a proposed rule on the 340B Drug Pricing Program. The rule had been pending regulatory clearance at the OMB since April 2014 and was well beyond its June/July 2014 target date for release. Coinciding with the withdrawal, HRSA’s Office of Pharmacy Affairs posted a brief statement saying that in 2015, the agency plans to issue “proposed guidance for notice and comment that will address key policy issues raised by various stakeholders committed to the integrity of the 340B program.”
On Nov. 20, HRSA’s Office of Pharmacy Affairs convened a webinar on the 340B Drug Pricing Program as part of an ongoing focus on program integrity and with a long-anticipated 340B proposed rule that was recently withdrawn. Contractors and program participants discussed patient eligibility and provided guidance by discussing strategies to achieve compliance with responsibility for care and by providing scenarios of compliance and non-compliance.
On Dec.15, HRSA posted a policy clarification on its oversight role in preventing duplicate discounts – via Medicaid rebates – on outpatient prescription drugs acquired through the 340B Drug Pricing Program. Specifically, HRSA addressed the Medicaid Exclusion File’s current use in stemming duplicate discounts in fee-for-service Medicaid. The agency also alluded to its ongoing efforts to develop future guidance specific the same scenario when 340B drugs are paid through Medicaid managed care organizations (MCOs).
On Dec. 17, HSRA’s Office of Pharmacy Affairs (OPA) 340B Peer-to-Peer Resource Network convened a webinar to continue a discussion from last month’s webinar about the definition of an eligible patient in the 340B program. The focus of the webinar centered on how a covered entity (CE) can retain responsibility of care for a patient when the patient has been referred to an outside provider, like a specialist.
On Dec. 19, HHS released its customary semi-annual regulatory agenda, an inventory of forthcoming rules that the Department plans to release in the “foreseeable future.” Among the broader updates in OMB’s online listing, HRSA lists upcoming proposed rules on: 340B Civil Monetary Penalties for Manufacturers and Ceiling Price Regulations (April 2014 target date); and 340B Administrative Dispute Resolution Process (September 2015 target date).
2015
On Jan. 14, HRSA hosted a webinar as a part of it 340B Audit Readiness Webinar Series. The presentation addressed Patient Eligibility (Clinic and Multi Grantee) audit readiness. Specifically, strategies, priorities and methodology to improve processes, controls and documentation related to a complaint 340B program were discussed.
On Feb. 2, HRSA posted an on-demand webinar on the 340B recertification for all covered entities except hospitals and family planning clinics; the process began on Jan. 28 and extends through March 11. On Feb. 13, reiterating and elaborating on the 340B guidance agenda, HRSA Office of Pharmacy Affairs Director Krista Pedley said HRSA will proceed more targeted rulemaking this year (e.g., on manufacturer civil monetary penalties, the 340B ceiling price and administrative dispute resolution) and issue proposed “omnibus” guidance in June 2015 for comment addressing additional topics (e.g., patient definition, hospital eligibility, contract pharmacies, audits, manufacturer limited distribution plans and duplicate discounts, including Medicaid managed care). On Feb. 25, HRSA hosted a webinar to address stakeholder questions on the 340B Drug Pricing Program. The webinar is the latest in a series focused on 340B audit readiness, with this installment dedicated to patient eligibility in hospitals.
On Mar. 30-31, HRSA posted updated FY 2014 and FY 2015 340B audit results. On Ap4. 21, HRSA released its March 2015 program integrity update highlighting best practices for its new hospital registration process. On April 24, HRSA released a bulletin noting that it is developing a verification system for “manufacturer-calculated 340B selling prices against HRSA’s calculated 340B ceiling prices”; the agency requests that manufacturers verify on-file database records for each labeler code by May 15 as part of this process.
On May 6, HRSA sent omnibus guidance on the 340B program to OMB for regulatory clearance; the target date for the guidance’s release was changed to September 2015 as of the HHS’ spring 2015 unified regulatory agenda, which was updated in late May.
On June 15, MedPAC issued its June Report to Congress, including some discussion of 340B (see chapter 3 on Part B drug payment issues). On June 16, HRSA released a proposed rule on the calculation of ceiling prices for outpatient drugs through the 340B Drug Pricing Program as well as the application of manufacturer civil monetary penalties in specified instances. Comments are due by Aug. 17.
On July 6, GAO released a report comparing financial characteristics of 340B hospitals and non-340B hospitals and examining Medicare Part B drug spending for all drugs and for oncology drugs compares across such facilities. The report recommended that “Congress should consider eliminating the incentive to prescribe more drugs or more expensive drugs than necessary to treat Medicare Part B beneficiaries at 340B hospitals.”
On July 17, Sen. Charles Grassley (R-IA) requested a Senate Finance hearing on the 340B Drug Discount Program, citing recent GAO findings.
On Dec. 18, President Obama signed the Consolidated Appropriations Act, 2016, the explanatory statement for which directs HRSA to provide a briefing to update the House and Senate Committees on Appropriations on the status of 340B guidance, the secure website, and covered entities in the 340B drug program.
2016
On Jan. 11, 2016, HRSA released a 340B update highlighting some FY 2016 changes in 340B Drug Pricing Program audit procedures, including the agency’s process for public notice of audit findings, acceptance of electronic audit submissions and pending duplicate discount cases.
On Jan. 15, MedPAC approved a 2017 payment update recommendation for hospitals that would:
On Feb. 17, HRSA posted a covered-entity notice regarding the ceiling prices for Amgen’s Epogen (epoetin alfa), Neulasta (pegfilgrastim), Neupogen (filgrastim), Vectibix (panitumumab), Nplate (romiplostim), Prolia (denosumab), and Sensipar (cinacalcet) and for Aranesp (darbepoetin alfa) and Enbrel (etanercept).
On July 1, HRSA posted a notice to 340B covered entities regarding 340B ceiling prices for Ascend Laboratories’ products.
On July 20, HRSA conducted a webinar, “340B Drug Pricing Program: Participation, Eligibility, and Program Integrity,” to address re-certification-related issues for hospitals. An archived version is accessible here. The agency notes that re-certification begins on Aug. 10, 2016, and concludes on Sept. 7, 2016.
On July 29, HRSA’s Office of Pharmacy Affairs updated the most recent FY 2016 finalized audit results of 340B covered entities.
In August, HRSA posted the following reminders and tips for covered entities using contract pharmacies.
On Sept. 1, HRSA sent the final 340B Drug Discount Program Omnibus Guidelines to the OMB for regulatory clearance.
In early September, HRSA’s OPA distributed a notice from the manufacturer, Pharmacyclics, regarding the limited distribution plan for the drug Imbruvica (ibrutinib).
On Sept. 27, HRSA’s OPA announced that it is extending the upcoming quarterly 340B program registration window to span Oct. 1-17, 2016. Details are available here.
In October, HRSA’s Office of Pharmacy Affairs (OPA) published a list of entities that were terminated from the 340B Program and had indicated to HRSA that they made purchases when they were not eligible to do so. HRSA encourages entities to work with the affected manufacturers regarding possible repayment.
On Nov. 1, Baxalta US Inc, now part of Shire, announced the market availability of VONVENDI, which is an on-demand treatment and used to control bleeding episodes in adults with von Willebrand disease. Shire was able to accelerate its manufacturing capacity, so while its limited distribution system remains in place, its patient activation program that was originally in place following its commercial launch in August is no longer required. Shire’s specialty network includes CVS/Caremark and Option Care. In addition, hospitals and hemophilia treatment centers can purchase directly from Shire.
2017
On Jan. 5, the Health Resources and Services Administration (HRSA) published a final rule in the Federal Register on the calculation of ceiling prices for outpatient drugs through the 340B Drug Pricing Program as well as the application of manufacturer civil monetary penalties (CMPs) in certain instances. Following the Jan. 20 Trump Administration regulatory moratorium, the effective date twice has been delayed. On Mar. 2, it was delayed until Mar. 21. On Mar. 17, HRSA issued an interim final rule delaying the effective date until May 22. In addition, HRSA sought comment “on whether a longer delay of the effective date to Oct. 1, 2017 would be more appropriate.”
On Jan. 30, HHS withdrew the 340B “mega-reg” from OMB review. The withdrawal followed the Jan. 20 Trump Administration’s regulatory moratorium.
In April, HRSA issued a list of entities that were terminated from the 340B Drug Pricing Program that indicated to HRSA that they made purchases when they were not eligible to do so. HRSA encouraged the entities to work with affected manufacturers regarding possible repayment.
On May 5, Takeda Oncology provided information about its exclusive oncology distribution network for ICLUSIG (ponatinib). Under the program, all pharmacy sales of the product are to a single specialty pharmacy.
On May 10, HRSA announced that Amgen had completed the issuance of credits to covered entities as the result of adjustments made to Amgen’s 340B ceiling price for a number of products.
On May 18, HRSA published a final rule that delayed the effective date of the final rule titled “340B Drug Pricing ceiling Price and Manufacturer Civil Monetary Penalties.” The new effective date is Oct. 1, 2017. The Jan. 5 final rule was supposed to become effective on March 3, but has been delayed three times by the Trump Administration.
On May 23, President Trump unveiled his budget for Fiscal Year (FY) 2018. The budget for HRSA proposed to “update regulatory authority in the 340B Drug Pricing Program to increase transparency and improve program integrity.”
On June 1, House Energy and Commerce Committee Chairman Greg Walden (R-OR), along with two Subcommittee Chairs, sent a letter to HRSA expressing concern about the “340B program’s rapid growth without additional and proportional oversight.” The Committee members asked for documents related to audits of covered entities.
On June 23, 29 members of the Senate and House sent a letter to President Trump, urging him not to scale back the 340B Drug Discount Program in an Executive Order reported to be in the works on drug pricing. The letter voices concern that a reported draft Executive Order “targets the 340B drug pricing program.”
On July 13, as part of the CY 2018 hospital outpatient prospective payment system proposed rule, CMS proposed to pay separately payable, non-pass-through drugs (other than vaccines) purchased at a discount through the 340B drug pricing program at the average sales price (ASP) minus 22.5 percent, rather than ASP plus six percent.
In August, HRSA issued a list of entities that were terminated from the 340B Drug Pricing Program that indicated to HRSA that they made purchases when they were not eligible to do so. HRSA encouraged the entities to work with affected manufacturers regarding possible repayment.
In August, HRSA updated its new 340B Office of Pharmacy Affairs Information System (340B OPAIS), which included a new registration system and a new secure pricing system.
Aug. 20, HRSA published a proposed rule that would delay the effective date of the final rule titled “340B Drug Pricing ceiling Price and Manufacturer Civil Monetary Penalties” from Oct. 1, 2017 to July 1, 2018. On Sep. 28, HRSA finalized that proposal. The Jan. 5 final rule was supposed to become effective on March 3, but has been delayed three times by the Trump Administration.
On Sep. 8, House Energy and Commerce Committee Chairman Greg Walden (R-OR) and Oversight Investigations Subcommittee Chair Tim Murphy (R-PA) sent letters to 19 covered entities across the country, requesting details on their participation in the 340B Drug Pricing Program, such as how program savings are used.
On Nov. 1, as part of the calendar year 2018 hospital outpatient prospective payment system (OPPS) final rule with comment period, CMS finalized its proposal to pay separately payable, non-pass-through drugs (other than vaccines) purchased at a discount through the 340B drug pricing program at the average sales price (ASP) minus 22.5 percent, rather than ASP plus six percent. The cuts are scheduled to take effect on Jan. 1, 2018.
On Nov. 13, three hospital groups and three health systems filed suit to block the 340B provisions of the OPPS final rule from taking effect. The suit was brought by the American Hospital Association, Association of American Medical Colleges, America’s Essential Hospitals, Eastern Maine Healthcare Systems, Henry Ford Health System, and Fletcher Hospital Inc.
2018
On Nov. 29, HRSA finalized the October 31 proposal to move the effective date of its final rule on 340B ceiling prices and manufacturer civil monetary penalties (CMPs) up to Jan. 1, 2019.
2019
On May 7, the United States District Court for the District of Columbia ruled against HHS’s 2019 cuts to the 340B reimbursement rates, citing the same reasons as it did in its similar judgement for the 2018 cuts.
On Nov. 1, in the calendar year (CY) 2020 hospital outpatient prospective payment system (OPPS) final rule, CMS finalized its decision to continue the reduced rate of Average Sale Price (ASP) minus 22.5 percent for 340B drugs, noting that it intends to pursue appeals.
On Nov. 8, MedPAC convened a session to share research findings in response to a congressional request from the House Committee on Energy and Commerce Chairman Frank Pallone (D-NJ) regarding hospital-hospital consolidation, physician-hospital integration, and the effect of the 340B program. Staff plan to consider Commissioner feedback and present on the 340B program in January 2020.
SEC. 7101. EXPANDED PARTICIPATION IN 340B PROGRAM. (a) EXPANSION OF COVERED ENTITIES RECEIVING DISCOUNTED PRICES.—Section 340B(a)(4) of the Public Health Service Act (42 U.S.C. 256b(a)(4)) is amended by adding at the end the following: ‘‘(M) A children’s hospital excluded from the Medicare prospective payment system pursuant to section 1886(d)(1)(B)(iii) of the Social Security Act, or a free-standing cancer hospital excluded from the Medicare prospective payment system pursuant to section 1886(d)(1)(B)(v) of the Social Security Act, that would meet the requirements of subparagraph (L), including the disproportionate share adjustment percentage requirement under clause (ii) of such subparagraph, if the hospital were a subsection (d) hospital as defined by section 1886(d)(1)(B) of the Social Security Act. ‘‘(N) An entity that is a critical access hospital (as determined under section 1820(c)(2) of the Social Security Act), and that meets the requirements of subparagraph (L)(i). ‘‘(O) An entity that is a rural referral center, as defined by section 1886(d)(5)(C)(i) of the Social Security Act, or a sole community hospital, as defined by section 1886(d)(5)(C)(iii) of such Act, and that both meets the requirements of subparagraph (L)(i) and has a disproportionate share adjustment percentage equal to or greater than 8 percent.’’. øSee additional amendments to section 340B of PHSA made by section 2302 of HCERA, p. 954¿ (b) EXTENSION OF DISCOUNT TO INPATIENT DRUGS.—Section 340B of the Public Health Service Act (42 U.S.C. 256b) is amended— (1) in paragraphs (2), (5), (7), and (9) of subsection (a), by striking ‘‘outpatient’’ each place it appears øBut see amendments made by section 2302(1) of HCERA on p. 954¿; and (2) in subsection (b)— (A) by striking ‘‘OTHER DEFINITION’’ and all that follows through ‘‘In this section’’ and inserting the following: ‘‘OTHER DEFINITIONS.— ‘‘(1) IN GENERAL.—In this section’’; and (B) by adding at the end the following new paragraph: ‘‘(2) COVERED DRUG.—In this section, the term ‘covered drug’— ‘‘(A) means a covered outpatient drug (as defined in section 1927(k)(2) of the Social Security Act); and ‘‘(B) includes, notwithstanding paragraph (3)(A) of section 1927(k) of such Act, a drug used in connection with an inpatient or outpatient service provided by a hospital described in subparagraph (L), (M), (N), or (O) of subsection (a)(4) that is enrolled to participate in the drug discount program under this section.’’. (c) PROHIBITION ON GROUP PURCHASING ARRANGEMENTS.—Section 340B(a) of the Public Health Service Act (42 U.S.C. 256b(a)) is amended—øBut see amendments made by section 2302(1) of HCERA on p. 954¿ ø(1) in paragraph (4)(L)—¿ ø(A) in clause (i), by adding ‘‘and’’ at the end;¿ ø(B) in clause (ii), by striking ‘‘; and’’ and inserting a period; and¿ ø(C) by striking clause (iii); and¿ ø(2) in paragraph (5), as amended by subsection (b)—¿ ø(A) by redesignating subparagraphs (C) and (D) as subparagraphs (D) and (E); respectively; and¿ ø(B) by inserting after subparagraph (B), the following:¿ ø‘‘(C) PROHIBITION ON GROUP PURCHASING ARRANGE- MENTS.—¿ ø‘‘(i) IN GENERAL.—A hospital described in subparagraph (L), (M), (N), or (O) of paragraph (4) shall not obtain covered outpatient drugs through a group purchasing organization or other group purchasing arrangement, except as permitted or provided for pursuant to clauses (ii) or (iii).¿ ø‘‘(ii) INPATIENT DRUGS.—Clause (i) shall not apply to drugs purchased for inpatient use.¿ ø‘‘(iii) EXCEPTIONS.—The Secretary shall establish reasonable exceptions to clause (i)—¿ ø‘‘(I) with respect to a covered outpatient drug that is unavailable to be purchased through the program under this section due to a drug shortage problem, manufacturer noncompliance, or any other circumstance beyond the hospital’s control;¿ ø‘‘(II) to facilitate generic substitution when a generic covered outpatient drug is available at a lower price; or¿ ø‘‘(III) to reduce in other ways the administrative burdens of managing both inventories of drugs subject to this section and inventories of drugs that are not subject to this section, so long as the exceptions do not create a duplicate discount problem in violation of subparagraph (A) or a diversion problem in violation of subparagraph (B).¿ ø‘‘(iv) PURCHASING ARRANGEMENTS FOR INPATIENT DRUGS.—The Secretary shall ensure that a hospital described in subparagraph (L), (M), (N), or (O) of subsection (a)(4) that is enrolled to participate in the drug discount program under this section shall have multiple options for purchasing covered drugs for inpatients, including by utilizing a group purchasing organization or other group purchasing arrangement, establishing and utilizing its own group purchasing program, purchasing directly from a manufacturer, and any other purchasing arrangements that the Secretary determines is appropriate to ensure access to drug discount pricing under this section for inpatient drugs taking into account the particular needs of small and rural hospitals.’’.¿ ø(d) MEDICAID CREDITS ON INPATIENT DRUGS.—Section 340B of the Public Health Service Act (42 U.S.C. 256b) is amended by striking subsection (c) and inserting the following: øSection 2502(f)(1)(B) of PPACA strikes subsection (c) of section 340B of PHSA, as in effect on the date of PPACA, and redesignates subsection (d) of section 340B of PHSA, as in effect on such date, as subsection (c). This subsection strikes and replaces the redesignated version of subsection (c). Section 2302(a)(2) of HCERA strikes the version of subsection (c) inserted by this subsection.¿¿ ø‘‘(c) MEDICAID CREDIT.—Not later than 90 days after the date of filing of the hospital’s most recently filed Medicare cost report, the hospital shall issue a credit as determined by the Secretary to the State Medicaid program for inpatient covered drugs provided to Medicaid recipients.’’.¿ (e) EFFECTIVE DATES.— (1) IN GENERAL.—The amendments made by this section and section 7102 shall take effect on January 1, 2010, and shall apply to drugs purchased on or after January 1, 2010. (2) EFFECTIVENESS.—The amendments made by this section and section 7102 shall be effective and shall be taken into account in determining whether a manufacturer is deemed to meet the requirements of section 340B(a) of the Public Health Service Act (42 U.S.C. 256b(a)), notwithstanding any other provision of law.
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