Safety net healthcare providers are under enormous pressure on multiple fronts these days. The 340B Drug Pricing Program is under assault from drug manufacturers, CMS’s proposed 340B reimbursement cuts are tied up in the courts and the COVID-19 pandemic is putting the squeeze on finances and staffing levels.
One customer I spoke with recently said that, as a result of Eli Lilly’s decision to no longer honor 340B pricing for contract pharmacies as of Sept. 1, its annual spending on prescription drugs has risen from around half a million dollars to $862,000. Their costs are climbing as elective surgeries have plummeted due to the coronavirus, hurting their margins, and as the hospital was frantically preparing for flu season with vaccinations already under way.
Meanwhile, AstraZeneca has similarly announced it will stop replenishing 340B drugs to contract pharmacies effective Oct. 1. Sanofi, which demanded 340B claims data in exchange for 340B prices at contract pharmacies, also stopped selling 340B drugs to contract pharmacies on Oct. 1 for those that have not enrolled in their data collection third-party administered software. All the while, Novartis and Merck are still demanding 340B claims data from hospitals and clinics, yet have not fully executed on their threats to stop providing 340B drugs to contract pharmacies as of the date of this publication.
And don’t forget the proposed Medicare Part B rate cuts for 340B drugs, which have been on a legal roller coaster since they were first issued in 2017.
With all the chaos and uncertainty, it’s especially important for covered entities to capture as much savings as possible to optimize their 340B program.
Referral concerns for covered entities
Referral prescriptions are often excluded from 340B eligibility due to the complexities of managing referral provider relationships, or because covered entities are stretched thin and lack the resources to focus on chasing down referrals. Or because many CEs worry they won’t be deemed compliant.
But as we’ve previously explained, referrals for eligible patients is compliant with 340B regulations so long as the covered entity can demonstrate responsibility for the patient’s ongoing care and that it issued the referral to the specialist who ordered the prescription.
Doing the numbers
Covered entities have a lot to gain by capturing referrals for 340B savings. Consider the following:
- More than one in three patient visits results in a referral to a specialist.
- The average FQHC makes 1,313 referrals per year, according to HRSA data from 2018.
- The average visit generates 2.2 prescriptions, according to HRSA.
- The average retail pharmacy prescription is $566 per month, while the average specialty drug prescription is $6,565, according to AARP.
- Using these averages, the average clinic (generic) provides 1,313 referrals/year. Generating 2,888 prescriptions that could be considered eligible for 340B.
Add it all up, and the case for incorporating referral prescriptions into your 340B program has never been clearer. With so much upheaval and uncertainty swirling around 340B, covered entities can no longer afford to overlook referrals as a huge area of untapped opportunity.