Recent Developments with Contract Pharmacies and Other 340B Updates

By , Published On: July 6, 2018

On July 3rd, the Health Subcommittee of the House Energy & Commerce Committee announced a hearing entitled, “Opportunities to Improve the 340B Drug Pricing Program.” The hearing will be held on Wednesday, July 11th at 10 AM EST and 15 draft bills related to the 340B Drug Pricing Program accompanied the hearing notice. Although the hearing witnesses have not been announced, members will likely consider the draft bills and a recently released Government Accountability Office (GAO) report which details oversight of contract pharmacies within the 340B Program.

On June 21st, the GAO released a document entitled, “Federal Oversight of Compliance at 340B Contract Pharmacies Needs Improvement.” The GAO reviewed 30 contract pharmacy agreements (from 15 hospitals and 15 grantees); sent questionnaires to 60 covered entities; and interviewed two third-party administrators. The GAO stated in the report that Health Resources & Services Administration (HRSA) audits do not fully assess compliance with the 340B Program prohibition on duplicate discounts because HRSA only assesses the potential for duplicate discounts in Medicaid fee-for-service and not Medicaid managed care. Additionally, the GAO found that HRSA does not require all the covered entities to explain the methodology they used for determining the extent of the noncompliance, and, as a result, HRSA does not know the full extent of noncompliance. Finally, GAO found that, when closing an audit, HRSA inadequately relies on each covered entity to self-attest that all audit findings have been addressed and that the entity came into compliance with 340B Program requirements. HRSA disagreed with several of the findings in the GAO report. However, one of the draft bills released in conjunction with the announcement of the July 11th hearing would require implementation of the GAO recommendations.

Finally, the Office of Pharmacy Affairs (OPA), which is part of HRSA, confirmed recently that it has begun “spot checking” contract pharmacy agreements. In a July 2018 update, OPA explained that it will ask covered entities to produce a copy of the written contract pharmacy agreement so that it can ensure that the agreement is dated prior to the registration window, that all covered entity locations and contract pharmacy locations are listed with addresses, and that the agreement includes signatures from both the covered entity and the pharmacy.  OPA will send requests for additional registration information to the listed Authorizing Official, and the registration will be rejected if the Authorizing Official fails to respond.

The FTLF 340B Team will be hosting a webinar, Recent Developments With Contract Pharmacies and Other 340B Updates, on Wednesday, July 18 at 1:00 PM EDT. If you would like to learn more, contact Jason Reddish, Michael Glomb, or the Feldesman Tucker attorney with whom you typically work, or visit the FTLF team at the 340B Coalition Conference next week in Washington, D.C.