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Big Changes Expected for 340B Program in 2016

Agency to issue new ‘mega-guidance’

The 340B discount drug program is expected to have one of its biggest transition periods ever in 2016, according to an opinion piece published online in Lexicology.

The Health Resources Services Administration (HRSA), which oversees the 340B program, plans to publish its final 340B “mega-guidance” in September 2016, write Elizabeth S. Elson and Anil Shankar, health care attorneys with the firm Foley & Lardner. The agency originally released its long-awaited mega-guidance in August 2015 and received more than 800 comment submissions, many of which raised legal concerns related to the agency’s proposal. In addition to those comments, the HRSA must consider the effect of a recent federal court decision, which vacated the HRSA’s orphan drug rule, calling into question the agency’s rulemaking authority.

The new mega-guidance is the HRSA’s attempt to regulate some of the controversies that are associated with the 340B program, including the reselling of the steeply discounted drugs that hospital can purchase, as well as consistent record-keeping by the program participants.

The HRSA also plans to issue a final rule related to the implementation of civil monetary penalties for drug manufacturers that overcharge 340B program-covered entities. The regulatory agenda indicates that this rule is scheduled for publication in May 2016. The rules were first proposed in June 2015.

Finally, the HRSA plans to propose a rule regarding the 340B program administrative- dispute resolution process that would be available to covered entities and drug manufacturers. According to the regulatory agenda, this proposed rule is scheduled to be issued in May 2016, as well. The rule was originally scheduled to be issued in 2015 but has been delayed.

In November 2015, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) issued a report that analyzed the potential effects of reducing Medicare Part B payments for drugs purchased through the 340B program. The report was provided in response to policymakers who had questioned whether some of the savings that 340B-covered entities currently retain should be passed on to the Medicare program and its beneficiaries. Prior OIG reports found that Medicare payments to covered entities for 340B-program drugs substantially exceeded the covered entities’ costs; however, 340B program and Medicare rules allow those savings to be retained by the covered entities, thereby allowing them to stretch their resources to serve their patients. The OIG’s report found that shared savings arrangements between the Medicare program and 340B-covered entities would result in substantial savings to the Medicare program while providing covered entities with incentives to purchase drugs through the 340B program.

Currently, the OIG’s work plan includes assessing the risk of duplicate discounts for drugs purchased through the 340B program that are paid through Medicaid managed care organizations (MCOs). The Patient Protection and Affordable Care Act requires states to collect rebates for drugs paid through MCOs and prohibits duplicate discounts under the 340B program for those drugs. The OIG points out in its work plan that existing tools and processes used to prevent duplicate discounts in fee-for-service Medicaid may not be sufficient to prevent duplicate discounts for drugs paid through Medicaid MCOs. The OIG’s report is expected in 2016.

Sources: Lexicology; December 7, 2015; and FierceHealth Finance; December 7, 2015.

 

 

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