14 th Annual 340B Coalition Conference On Improving Access to Pharmaceutical Care and Ensuring Compliance with Federal and State Laws The Credit and Re-bill Process The Manufacturer Perspective Omni Shoreham Hotel, Washington D.C. Monday, July 19 th – Wednesday, January 21 st

Manufacturer Perspective Manufacturers have a heavy operational burden – Sign blanket agreement, applies to all covered products – Calculate and publish the PHS Price – Maintain accurate PHS Contract Eligibility – Process and pay the chargeback Program is very visible and high risk from compliance perspective The manufacturer has limited view to the purchasing entity – It is not the manufacturer’s accountability to ensure the entity is compliant – Manufacturer’s have limited visibility to the wholesale and the entity, rely primarily on chargeback data, which is after the purchase – Lack of guidance on what action/recourse is available 2

Various Drivers to the Process Important to understand what is driving the process – Routine/administrative Normally within a certain time period – Multi-year look-backs Applying retroactive pricing – Retroactive eligibility i.e., Children’s hospital eligibility 3

Challenges/Issues Compliance and Statutory Pricing – Driving restatements in Medicaid and PHS, as Commercial GPO purchases become exempt Government Purchases – Limited view as to whether the purchase is a legitimate out-patient PHS purchase – Manufacturers are expected to do appropriate due diligence to only honor chargebacks for what they deem to be eligible entities and purchases Accounting Challenges – Reconciling historical chargebacks – Impact on GPO Administrative Fees 4

Need to establish appropriate controls and processes Where there is a legitimate PHS purchase that needs to be “reclassified” – Was the driver a result of the product being shifted from GPO inventory to PHS Clinic inventory to fill the need? – Can the purchase to refill inventory now be through a PHS contract? Was it a case where an entity determined that they could have purchased under the PHS contract and did not? 5

Putting process and controls in place Seek an efficient way to manage the routine, operational aspect of legitimate “rebills,” while also having polices and controls in place for multi-year lookbacks 6