GREG DOGGETT ASSOCIATE COUNSEL SAFETY NET HOSPITALS FOR PHARMACEUTICAL ACCESS (SNHPA) NASTAD NATIONAL ADAP TA MEETING WASHINGTON, DC JULY 30, 2014 The.

GREG DOGGETTASSOCIATE COUNSEL

SAFETY NET HOSPITALS FOR PHARMACEUTICAL ACCESS (SNHPA)

NASTAD NATIONAL ADAP TA MEETINGWASHINGTON, DC

JULY 30 , 2014

The Intersection between ADAP and the 340B Drug Pricing

Program: 340B Pharmacy Update

Disclaimer

This presentation is not to be construed or relied on as legal advice.

Today’s Agenda

Patient Definition and Contract Pharmacy Developments

HRSA & Manufacturer 340B Audits340B Compliance

Who Is SNHPA?

Non-profit organization representing and supporting over 1,000 340B hospitals

Took lead role in including hospitals in the 340B law

Advocates on federal legislative and regulatory issues related to the 340B program

Educates members on 340B policy developments and compliance issues

Patient Definition

1996 HRSA Patient Definition Guidelines Covered Entities (CEs) Other Than ADAP

CE maintains records of individual’s health care and Individual receives health services from health care professional

employed by CE or under contract or other arrangements such that responsibility for care provided remains with CE Service must be more than dispensing of a drug for self-

administration or administration in the home setting Additional Criterion for Non-ADAP HRSA Grantees

Individuals receives health care service(s) from CE which is consistent with range of services covered by HRSA grant

ADAPs Only An individual registered in state-operated or funded ADAP that receives

Ryan White funding is considered a patient of the ADAP if registered as eligible by the State program.

Patient Definition Cont’d

HRSA intended to address patient definition in “mega-reg”

Widely differing perspectives on future of patient definition SNHPA

Basic construct of current definition is sound Specific terms should be defined to avoid confusion by stakeholders HRSA should release new guidance or regulation in proposed form,

so that the public has opportunity to comment PhRMA

Limit to “uninsured individuals” Physician must be employee or independent contractor Patient must receive “ongoing care”

Contract Pharmacy

1996: HRSA permitted a CE to enter into an arrangement with one pharmacy to dispense 340B drugs to CE’s qualifying patients if CE did not have own pharmacy

2010: HRSA allowed CEs to enter into arrangements with multiple contract pharmacies

Key 340B program requirements (i.e., patient definition and duplicate discount prohibition) apply to contract pharmacies

CE is responsible for 340B contract pharmacy compliance and must monitor contract pharmacy HRSA recommends, but does not require, independent audits

Contract Pharmacy Cont’d

February 2014 HHS OIG report on contract pharmacies Made no findings of wrongdoing Found CEs had different understandings of the

patient definition test and how to prevent diversion and duplicate discounts

Noted that some CEs do not offer 340B discounts to uninsured patients at their contract pharmacies

Found that CE oversight of contract pharmacies varies

Contract Pharmacy Cont’d

Criticisms of Contract Pharmacy Growth in number of contract pharmacy

arrangements Concern about whether uninsured benefit

from contract pharmacyHRSA planned to address contract

pharmacy in “mega-reg” Limits on number of contract pharmacy

arrangements?

Audit Background

340B statute permits HRSA and manufacturers to audit CEs

September 2011 Government Accountability Office report recommended selective audits of covered entities

HRSA began CE audits in January 2012HRSA chose entities they believed most likely to be at

risko Risk determination is based on volume of purchases, complexity

of program administration, and use of contract pharmaciesAlso did “targeted” audits based on allegations of 340B

violations51 audits in 2012 and 94 audits in 2013

HRSA Audit Results to Date

Since 2012: 70 audits posted on website At least 130 not yet posted Annual number of audits expected to double

Findings 3 types: Inaccurate database record, diversion,

duplicate discount Most audits have no findings or findings of inaccurate

database Repayment obligation

Exists for diversion findings Exists for duplicate discount only if state collected rebates

Areas for Improvement

Timeline of HRSA Audit Process Based on Hospital Reports to SNHPA

Pre-Audit: Audit notice, coordination call, data request (2-4 weeks)

Audit (1-3 days)Preliminary Report (6-15 months from audit –

average 10 months)Final Report (8-23 months – average 13 months)

CE agrees with or disputes findings Corrective action plan required if CE does not dispute

findingsFinal Determination by HRSA (if still challenging

findings) (4 months - ? (several are pending))Judicial Review

New Policies for HRSA Audits

New policies issued on July 3No preliminary audit report; just one chance to appeal

findingsHRSA no longer asking for details about how CE will

determine the scope of non-compliance and the remedyManufacturers notified of repayment obligation via public

letter that outlines duplicate discount/diversion finding(s)CE and manufacturer to determine the scope of

repayment. If parties do not agree, may pursue voluntary dispute resolution.

Audit stays open until CE reports to OPA that all repayment issues have been settled; re-audit within one year

General Lessons Learned from HRSA Audits

Important to have written policies and procedures

Accuracy of information on HRSA website Example: If using 340B for Medicaid patients, the

Medicaid billing numbers/NPIs used to bill those drugs must be listed in OPA’s Medicaid exclusion file

Manufacturer Audits

Bound by Government Auditing Standards and standards in 1996 guidance (61 Fed Reg. 65406, Dec. 12., 1996) o Must use an independent public accountanto CEs may be subject to only 1 audit at a timeo Audit period can be no more than 1 yearo Must continue to provide 340B discount during audito If parties cannot agree on audit findings, may pursue

resolution by HRSA through voluntary dispute resolution procedures set forth in 1996 guidance

o Limited to duplicate discount and diversion issues only

Manufacturer Audits Cont’d

Reasonable Causeo “Significant changes in quantities of specific

drugs ordered by a covered entity and complaints from patients/other manufacturers about activities of a covered entity may be a basis for establishing reasonable cause” (61 Fed Reg. 65406, Dec. 12, 1996)

o To show “reasonable cause,” manufacturers may make inquiries of CEs (e.g., letters)

o Important for CEs to respond to manufacturer inquiries

Manufacturer Audits Cont’d

Slow growth in number of manufacturers audits 8 approved since 2012 Results not publicly available

Increasing number of inquiries regarding 340B purchases

HRSA may audit based on manufacturer complaint

Manufacturer look-back period So far, negotiated by the parties, without HRSA

involvement No federal guidance permitting unlimited look-back

period

Audits & Repayment

Under 340B statute, violation of diversion or duplicate discount prohibition could require repayment of 340B discount

Repayment issues related to audits More than just the claim identified by HRSA; must

identify all claims that were subject to the problem Up to CE and manufacturer to identify look-back period

HRSA does not dictate actual amount of money to be repaid; determined through manufacturer and provider collaboration

HRSA does not have position on whether repayment can be done via credit or cash payment Will issue more guidance on how to calculate repayment

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340B Compliance and the Current Enforcement Environment

Increase in HRSA audits and inquiriesIncrease in manufacturer inquiriesAnnual recertification for all CEsHRSA plans to issue new guidance in many

program areas

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Purpose/Benefits of 340B Compliance Plan

Helps organization think systematically about implementing and operating 340B program

Demonstrates a covered entity’s good-faith commitment to compliance

Increases the likelihood of preventing, identifying, and correcting mistakes or improper activity Set up system to identify and correct errors

Minimizes financial loss to 340B participantsNote: Having a compliance plan does not ensure

perfect compliance 100% of the time!

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Key Elements of a 340B Compliance Plan

Policies and Procedures (P&Ps)Employee TrainingSenior management involvementInternal monitoring and auditingProactive response to deficiencies

Corrective action plans Disclosure to drug manufacturers and

government, if warranted

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340B Compliance Plan Resources

Office of Pharmacy Affairs Website: http://www.hrsa.gov/opa/ Federal Register notices, policy releases, FAQs, audit

information Regularly review FAQs even if you think you understand the

requirements!!!

Apexus/Prime Vendor Program (PVP) Website: https://www.340bpvp.com/controller.html FAQs, samples P&Ps, self-audit outlines

Regularly review FAQs even if you think you understand the requirements!!!

APEXUS Answers call center – 1-888-340-2787

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Additional Questions?

Greg DoggettAssociate Counsel

Safety Net Hospitals for Pharmaceutical Access

1101 15th Street, NW, Suite 910Washington, DC 20005Phone: 202-552-5859

[email protected]