On August 20 in Alexandria, VA, 340B manufacturers and their partners gathered to discuss the state of 340B at the fifth annual CBI 340B Manufacturers Summit, covering a wide variety of perspectives. The conference provided information about state Medicaid, covered entities, manufacturers and those vendors who work closely with manufacturers. Sentry was one of the few attendees who held an interest in what impacts the covered entity, which allowed us to gain valuable insights.
Think tank versus boot camp
Attendees had two pre-conference workshops to choose from—a 340B boot camp that served as a primer on the program, as well as a senior-level think tank discussion covering best practices and complex issues. The think tank workshop focused on the perspective of the manufacturer. Discussions there centered around Medicaid resources and preventing duplicate discounts, and more specifically, the lack of consistency between the states. The fact is that not every state provides claims-level detail, which has led manufacturers to make inquiries to covered entities in certain states more frequently.
Good faith inquiries from manufacturers to covered entities was also a major topic during this event. One speaker pointed out that the current reimbursement system does not work with the way the Medicaid rebate program is designed. Upon further review and discussion, presenters concluded that the replenishment model is ideal, as rebates are not provided on 340B transactions under this model.
Covered entity perspective
The collaboration during this conference between manufacturers and covered entities was a breath of fresh air, as both sides worked to understand the complex 340B environment, in areas from data integrity to audit practices. The hospitals discussed how covered entity decisions drive software configurations, internal audit review and how they manage manufacturer inquiries. Discussions covered the good and the bad, with real-world examples to illustrate the points. Presentations from Sentry and covered entities provided insight into data channels, the mapping of locations and reporting requirements. Manufacturers who attended these presentations commented that they walked away with a much greater appreciation for the datasets required and how data integrity is a key factor in compliance.
A big focus this year was drug pricing proposals and the resulting impact on the 340B program. Topics covered included everything from how changes to URA or AMP could reduce the 340B price to Medicaid bundled billing. It was clear that manufacturers and their industry stakeholders were misunderstanding the way 340B transactions move through the supply chain—they were using the term “reclassification” to describe what was actually retrospective inventory management.
Sentry was able to add some clarity as a participant in the discussion, sharing with the audience that inventory is bought ‘neutral,’ and it’s only when a purchase qualifies for 340B and a unit of issuance is met that a purchase can be made under 340B, according to the replenishment model. Retail pharmacy Medicaid claims are typically excluded from 340B unless the state and covered entity have an agreement in place. The objective under this model is to prevent duplicate discounts.
Attending this event and learning more about different perspectives about what’s going on in the 340B space should offer covered entities a wake-up call regarding just how differently manufacturers and hospitals view the issues and the importance of understanding where and how our beliefs on 340B originate. While both sides may agree on some aspects, it was evident at this event that differences exist, especially around topics such as defining abuse of the program and calculating 340B savings and impact.
Clearly, the focus of the pharmaceutical industry this year is on building a strategy to limit distribution of costly specialty drugs through 340B. The number of letters from manufacturers to HRSA about limiting drug supply has increased by 100 percent from 2012 to 2019. The most recent trend around this issue is for manufacturers to fail to provide a possession-taking option to covered entities, in addition to offering no replenishment mechanism or pricing availability. Entities and other stakeholders should monitor this trend and be prepared to voice their concerns to government regulators and program advocates.
As debates continue, it’s important for hospitals to know that Sentry Data Systems has key savings and cost data from our covered entity customers that can be leveraged and analyzed to demonstrate program savings, costs and other important factors in calculating the total program value to the covered entity and the communities they serve.
Even more critical to the conversation, Sentry also supports key compliance data including patient eligibility parameters, Medicaid and Medicare identification, and the types of accounts where purchases are made according to the eligibility and covered entity policies and procedures.
Entities should continue to work with their multi-disciplinary teams to understand the hospital-wide impact 340B has on the patients they serve, from the community benefit to key financial assistance programs that support their low-income patients.
Finally, based on conversations at the conference, there was clear evidence of third parties working on behalf of manufacturers to conduct good-faith inquiries, calling into question the time period of data requests, number of inquiries, and areas of focus. Because 340B is a hospital-wide program that goes beyond the walls of the pharmacy department, often including the assistance of legal and compliance teams, entities are so far not being asked to deliver unreasonable amounts of data in impossible timelines.
Manufacturer good-faith inquiries, HRSA audits, and third-party vendors working on behalf of manufacturers is on the rise. How many inquiries have you had? Who do you engage? Rest assured that Sentry’s Apexus-certified audit and compliance teams will continue to aid or customers as needs increase in these areas.