Mitigating drug diversion risks

Conference recap: 340B Manufacturer Summit

Just as the covered entities joined together this summer for their stakeholder conference, so too did the manufacturers. On a much smaller scale, less than a hundred manufacturers and their partners gathered to discuss the state of 340B—from different perspectives. The conference was informative and provided perspectives on state Medicaid, covered entities, manufacturers and those vendors who work closely with them. Sentry was one of the few attendees with a vested interest in the covered entity—which allowed us to gain valuable insights.

The start – Off to the races

To kick off the event, Apexus, Prime Vendor Program, provided an update on the state of 340B as the keynote. Mike Benedict, Vice President of Operations, provided updates on the valuable resources from Apexus to support covered entities and manufacturers on guidance/regulations and tools to help all stakeholders work better together. Discussions were held about the Medicaid resources being developed by the Prime Vendor Program to help establish contacts amongst the various states. Sentry inquired about the future possibility of assisting with the numerous managed care and fee-for-service insurance identifiers (BIN/PNC/Group). Currently, the work is focused on the contacts and possible policy changes.

This was a great segue to the state Medicaid perspective provided by the director of pharmacy, John Stancil of the North Carolina Department of Health and Human Services. North Carolina is currently a fee-for-service state transitioning to Managed Care Medicaid by November 2019 and utilizing Magellan to assist with claims submitted for rebates to the manufacturers. The state provided insights into the dispute process with manufacturers stating that only 1% of its claims are disputed. The state was asked if it would have specific BIN/PCN/Groups at the outset to which it replied, “we just learned at the conference the importance” and “will consider” as it moves forward. The goal is to have three plans but there could be up to 16. Stay tuned to their provider bulletin for updates as well as Sentry’s New and Noteworthy communications to our customers.

The attendees then broke into two groups to allow for a 340B boot camp and senior level think tank. Sentry joined the senior level think tank discussion. We learned that the submission modifier codes could be changed in the near future through the National Council for Prescription Drug Programs (NCPDP) government programs Work Group 9, as they are addressing 340B identification with a 2020 goal. Manufacturers were polled and had the most challenges in cross-walking multiple data sources and claims level data to assist in managing duplicate discounts. Just about every manufacturer in attendance had a dedicated 340B resource and knew the 340B implications on their sales and revenue.

Halfway point – Counterpoint

The day continued with a covered entity perspective and a point/counterpoint discussion with the firms Sidley Austin (representing manufacturers) and Feldesman Tucker Leifer Fidell (representing covered entities). The covered entity perspective was done by a hospital, University of Rochester Medical Center, and consulting firm, The Alinea Group. The hospital discussed how the covered entity decisions drive software configurations, internal audit review and how to best manage manufacturer inquiries – the good and the bad with examples to share with manufacturers. The consultant firm provided insight into the lingo of covered entities, what hinders an entity from collaborating and providing insight into the day-to-day operations and resources needed for a compliant program. The firms drilled down into possible future scenarios related to patient definition, administrative action and legislative bills.

The finale

The last day focused on the manufacturers’ desire to reform the 340B program. King and Spalding’s John Shakow, a long-standing manufacturer attorney provided insight into the thinking—what they define as key abuses, philosophical divide, regulatory divide and potential solutions. I must say—while attending and learning the perspective—this should give covered entities a gut check on just how different each side thinks. While we may agree on whether HRSA should be given additional authority, it was evident that differences exist as to defining abuse and calculating 340B savings and impact. The math was manipulated to make the audience believe that 2% (as calculated by covered entity proponents) vs 7.8% (as calculated by manufacturer proponents) of the 340B drug market is cause for reduction in a program that provides great value to the patients it serves.

Nine areas were recommended from patient definition, contract pharmacy, increasing audits to covered entities, fair market value for contract pharmacy, 340B transparency, limiting child sites, charity care requirements for transparency, requiring the extension of the discount to “poor” patients and changing the DSH calculation. Clearly the approach of the pharmaceutical industry was to paint the picture of abuse and the growth of a program out of control, but all the while, no specific examples were provided to demonstrate cause for concern that abuse exists. In fact, it was stated that the covered entities were being led to believe in a “straw man” approach by their trade associations and that what the pharmaceutical industry was asking for was somewhere in the middle—not total decimation. It will be key in the coming months for covered entities to continue to share their impact reports. The agenda was clear that a reduction in program participation was the manufacturer solution.

Sentry Data Systems has key data from the covered entities that can be analyzed to demonstrate program savings, costs, and other important factors in calculating the important program value.  Hospitals should 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 to support their low-income patients. 340B is a hospital-wide program that goes beyond the walls of the pharmacy department. Hospitals, in particular, must work with revenue cycle, financial services, compliance, and legal to fully understand the reach of their program and the benefits provided to their patients in order to fully understand the costs of participating and the savings generated.