Southwest Consulting Associates Blog

The 340B Summer Coalition was held earlier this month in Washington D.C.  Julie Zadecky, a Pharmacist in the Program Performance and Quality Branch for the Office of Pharmacy Affairs was asked two questions regarding the OPA’s requirement for a 340B independent audit during her presentation on July 12, 2016:

HRSA has made it clear that it is an expectation for 340B covered entities to have an annual independent audit of their contract pharmacies. Covered entities should not take the wording “expectation” lightly because in the audit process, HRSA will ask when the last independent audit of contract pharmacies was performed. HRSA set the expectation of an independent audit as a tool to ensure covered entities have adequate oversight of their contract pharmacy.

The Department of Health and Human Services (HHS) published in the Federal Register today that they are reopening the comment period for the June 17, 2015, proposed rule on “340B Drug Pricing Program Ceiling Price and Manufacturer Civil Monetary Penalties Regulation.”  Comments will be accepted on ANY aspect of the proposed rule but HHS is asking for additional comments and input in three specific areas:

Southwest Consulting Associates (SCA) continues to analyze HRSA’s posted results for covered entity audits to establish trends in the findings. Since 2012, the HRSA auditors have audit results posted for 340B covered entities in every State except one; they have even audited a covered entity in Puerto Rico. Can you guess which State has no audit results posted?

Additionally, since 2012, HRSA has audited approximately 550 covered entities, 7,000 child sites and 13,000 contract pharmacies. The last audit results were posted March 31, 2016. HRSA has now posted all of the audit results for 2012, 2013 and 2014. They have posted audit results for 190 of the 200 covered entities audited in 2015 and the results for 23 covered entities audited in 2016. We know that HRSA audited 48 covered entities in the first quarter of FY 2016 (October 2015 – December 31, 2015). If they continued at that pace, they should be near 100 audits so far this year.

In March, a few covered entities were surprised by potential HRSA findings of diversion due to discharge prescriptions for inpatients that did not qualify for 340B. This caused concern that HRSA may be implementing some of the changes found in the proposed 340B Omnibus Guidance released for comments last year.  Specifically, the proposed guidance stated that 340B purchased drugs can ONLY be used if the discharge prescription is written for a patient that is billed as an outpatient.

Only certain non-profit healthcare entities that have federal designations or receive funding from specific federal programs are eligible for the 340B Drug Pricing Program. Entities must meet and maintain certain criteria in order to register and be approved to purchase discounted drugs through the 340B Program. For-profit hospitals are not eligible to participate in the 340B program. Healthcare entities that may be eligible are:

We enjoyed visiting with our clients and meeting new friends at the 340B Winter Coalition in San Diego a few weeks ago. This 340B Coalition had a record attendance exhibiting the growing attention and focus on the 340B Program.  Captain Krista Pedley, Director of Health Resources and Services Administration, Office of Pharmacy Affairs gave an update at the winter 340B Coalition recapping 2015 and focusing on HRSA’s 2016 goals.  Topics included:

HRSA audits continue to focus on covered entities providing appropriate oversight of their contract pharmacy arrangements.  The Office of Pharmacy Affairs issued Program Updates in 2014 and 2015 stating that, “vigilant oversight [of the contract pharmacy] is critical”. One measure of vigilant oversight expected by HRSA are annual audits performed by an independent entity.  In addition to annual audits, the proposed Mega-Guidance introduced (as a separate compliance mechanism) that covered entities should be conducting quarterly audits of their contract pharmacy.  Before the proposed Mega-Guidance, HRSA’s expectation was that covered entities perform oversight through periodic review of transactions at its contract pharmacies.  The proposed Mega-Guidance defined periodic review as at least quarterly.

One of the highest compliance risk areas of the 340B Drug Pricing Program is contract pharmacy. However, the return can be great and with the proper processes and monitoring in place, I would encourage you to look hard at this opportunity. Not only do contract pharmacies allow you to increase or continue patient services in a covered entity to benefit patients, but they can also help to expand your reach to support the underserved populations in your community. Contract pharmacy arrangements support the intent of the 340B Program as much as any other portion of the 340B Program.

The covered entity is responsible for ensuring compliance of their contract pharmacy arrangements with all 340B Program requirements to prevent diversion and duplicate discounts (75 Fed. Reg. 10272, March 5, 2010). If the covered entity is not providing contract pharmacy oversight, it is considered a violation of the program requirements. The covered entity will be required to terminate the contract pharmacy arrangement and provide repayment to the drug manufacturer.

The Department of Health and Human Services Office of Inspector General (OIG) Work Plan for Fiscal Year (FY) 2016 has been released.  A majority of the 340B Program focus areas were pointed out by Ann Maxwell, OIG Assistant Inspector General for Evaluation and Inspections, at the July 340B Coalition in Washington D.C.  Maxwell’s presentation was on the “Government Watchdog’s Perspective” and anticipated that many of the studies that are mentioned in the Work Plan would be out in FY 2016.