1. The 340B Prime Vendor Program; Supporting All 340B Stakeholders
Christopher Hatwig, President, Apexus

2. 340B Intent
To permit covered entities “to stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.”
H.R. Rep. No (II), at 12 (1992)
We know the intent of the 340B Program by reading reports that summarize the legislative discussion during the time the 340B Program was enacted. The intent of the 340B Program is summarized as: To permit covered entities “to stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.”
There has been some discussion recently, and considerable dispute about the intent of the 340B Program. At 340B University, we are present material aligned with HRSA’s perspective, and so that is what is on the slide.
There are some payers/PBMs, contract pharmacies, and other stakeholder groups that have different perspectives and have developed business practices that indicate a different perspective about program intent, but we are not going to discuss those today.

3. Top Three C-Suite Myths
“This program can run itself—or at least the pharmacy director can just manage it.”
“Proposals from contract pharmacies or 3rd party vendors must be in our best interest if the bottom line looks good.”
“The team can probably pull together the data for a 340B audit without much effort.”

4. Prime Vendor Program History
Statutory requirement
Competitively bid contract
1999 first Prime Vendor contract awarded
Apexus awarded Health Resources and Services Administration (HRSA) agreement in & 2009

5. Prime Vendor Program Entity benefits No cost to participate
Exclusive access to:
Sub-340B and sub-WAC pricing on pharmaceuticals
Discounts on value added products, services, and supplies
Apexus Generics Program
Pricing transparency
Spend optimization reports and tools
340B University
ApexusAnswers Call Center

6. PVP Enrollment: 20,485 (83%) HRSA Total: 24,768 (March 1, 2014)
340B Eligible Sites
PVP Participants

7. Breakout of 340B Sales by Entity
Why would a manufacturer want to contract with Apexus?
Expedite product placement in a preferred position
Access to influential IDN systems and/or teaching hospitals
Increase contracting efficiency
Gain federal price protection (non-FAMP, ASP, BP)
Minimize credit/rebill activity, mitigate diversion
Increase market share via 340B market

8. Relative Pricing Private Sector Pricing “Best Price” 63% PVP 42%
Compared to other types of drug pricing in the marketplace, the 340B price is very competitive: here it is shown to be approximately 51% of Average Wholesale Price. Notable also is that the 340B price is less than the Medicaid Rebate.
Adapted from a slide by Safety Net Hospitals for Pharmaceutical Access
Source: Data derived from Prices for Brand-Name Drugs Under Selected Federal Programs, Congressional Budget Office (June 2005)

9. Apexus Focus Contract Services Apexus Answers Call Center
TEAMWORK
Contract Services
TRUTH
Apexus Answers Call Center
TEACHING
340B University & 340B OnDemand

10. TEAMWORK:
CONTRACT SERVICES

11. Apexus Responsive to HRSA Policy
As HRSA issues policy clarifications, Apexus must be flexible to offer solutions to enable entities to comply
Examples
Refund Service
GPO Prohibition

12. GPO Prohibition Clarification – Purchase Flow for Some Hospitals
Non-compliant State
Compliant State
340B Registered Hospital
340B
340B
All Other
(Default to GPO)
Inpatient or
Non-Covered Drugs
(GPO)
All Other Out-Patient Covered Drugs
(Default to Non-GPO Account)

13. Minimizing WAC Exposure Tool
Accessible on the Apexus public website, under the Resource Center tab, you will find a document on how to minimize your WAC exposure.

14. 340B Covered Outpatient Drugs
Prescription drugs
Over-the-counter drugs (with a prescription)
Clinic administered drugs
Biologics
Insulin
Inpatient drugs
Vaccines
Inpatient drugs
Drug not directly reimbursed
The 340B Statute refers to Section 1927 (k) of the Social Security Act to define the term “Covered outpatient drugs.” It is a long and complex definition, but we’ve simplified it for you here. 340B Covered outpatient drugs are basically outpatient prescription drugs sold by a manufacturer participating in the Medicaid Drug Rebate Program. This may include over the counter drugs sold with a prescription, clinic administered drugs, biologics, and insulin.
There is also a limiting definition: The term “covered outpatient drug” does not include any drug, biological product, or insulin provided as part of, or as incident to and in the same setting as, any of the following (and for which payment may be made under this title as part of payment for the following and not as direct reimbursement for the drug).
Also excluded is any drug for which a National Drug Code number is not required by the Food and Drug Administration or a drug or biological used for a medical indication which is not a medically accepted indication.
To try and simplify this for you, we’ve put the types of drugs that typically meet the definition of covered outpatient drugs in the green circle, and the types of drugs or attributes that do not meet the definition of covered outpatient drugs in the red circle.
The definition of covered outpatient drug has recently become of great interest to entities, particularly those entities which are not allowed to purchase through a GPO. The reason: certain 340B entities may not purchase COVERED OUTPATIENT DRUGS through a GPO. But if a drug doesn’t meet this definition, then the drug could be purchased through a GPO.
FDA doesn’t require NDC

15. Strategy #1: Covered Outpatient Drug
Q: Can a hospital subject to the GPO Prohibition use a GPO for drugs that are part of/incident to another service and payment is not made as direct reimbursement of the drug (“bundled drugs”)?
A: If the entity interprets the definition of covered outpatient drug referenced in the 340B Statute (Social Security Act 1927 (k)) and decides that bundled drugs do not meet this definition, a GPO may be used for drugs that are not covered outpatient drugs. The decision the entity makes should be defensible, consistently applied in all areas of the entity, documented in policy/procedures, and auditable.
It is the expense in the middle (non-GPO/WAC) account that has troubled many hospitals. So, let’s talk about a few strategies we can use to minimize our expenses.
Since entities may interpret the definition of covered outpatient drug, there are some key product areas that might be able to be purchased on a GPO. Examples might include anesthesia gases, IV solutions, some contrast media.

16. Strategy #2: GPO “Only” Clinics
340B University
Strategy #2: GPO “Only” Clinics
May , 2013
In certain off-site outpatient hospital facilities that meet all of the
following criteria:
Are located at a different physical address than the parent;
Are not registered on the OPA 340B database as participating in the 340B Program;
Purchase drugs through a separate pharmacy wholesaler account than the 340B participating parent; and
The hospital maintains records demonstrating that any covered outpatient drugs purchased through the GPO at these sites are not utilized or otherwise transferred to the parent hospital or any outpatient facilities registered on the OPA 340B database.
To assess compliance with the GPO Exclusion, does the entity use a GPO for covered outpatient drugs only when all of these criteria are met?
Are located at a different physical address than the parent;
Are not registered on the OPA 340B database as participating in the 340B Program;
Purchase drugs through a separate pharmacy wholesaler account than the 340B participating parent; and
The hospital maintains records demonstrating that any covered outpatient drugs purchased through the GPO at these sites are not utilized or otherwise transferred to the parent hospital or any outpatient facilities registered on the OPA 340B database.
There have been some situations where entities have non-entity owned (but umbrella organization owned) pharmacies offsite of a 340B registered facility, and the entity uses a GPO in that location.

17. TRUTH: APEXUS ANSWERS CALL CENTER

18. Look Familiar?
Call Center Confessional? Confidential, access to staff who have “heard it all before….” We are not a tattle-tale facilitator service.

19. Apexus Answers National 340B source of truth, communicates HRSA policy
Staff in constant communication with HRSA to ensure messaging is consistent
FAQs available here:
Average monthly interactions ~2,000
Tiered levels of response: can handle from basic to complex
Avg 2013 monthly interactions=1826 (calls + + chat)

20. TEACHING: 340B UNIVERSITY

21. Learn. Share. Prepare.
National experts share leading practices at this one or two day live educational program
Aligned with HRSA policy, compliance-focused
Only HRSA-endorsed compliance training
CE for pharmacists and technicians offered
Interactive, opportunities to network, leave with tools to equip your entity
10+ Sessions in 2014
E-based learning coming in Summer 2014 (including C-suite modules)

22. Free and Trusted 340B Tools
Strategies to Minimize WAC Exposure
Sample 340B Standard Operating Procedures
Self-Reporting Non-Compliance
Self-Audit Tool

23. 340B U attendance prior to audit No 340B U attendance prior to audit
FY 2012 Audits and 340B U Attendance and Sanction/Finding Rate (In Entities with Sanctions/Findings)
340B U attendance prior to audit
No 340B U attendance prior to audit
Sanction Rate 0%
100%
Finding Rate 3%
97%
340B U attendance prior to an audit had a 0% sanction rate and a very low finding rate. There could be a confounder that some behavior other than 340B University attendance was causing these low rates of sanctions/findings (for example, entities that are already more compliance-focused attend 340B U). So we are not saying the 340B U caused the low rates, but attendance was definitely associated with it. Who wouldn’t want to associate with the types of entities that attend 340B U and end up with stellar audit findings?

24. 340B Contract Pharmacy - Overview
HRSA guidance permits entities to partner with outside pharmacies to provide eligible patients with 340B medications
Identification via shared patient and provider data
Inventory via "Bill To - Ship To” wholesale arrangements
Entity-Contract Pharmacy relationship types :
Direct Contracting with Pharmacy
Contracting through 340B vendor with Pharmacy

25. 340B Contract Pharmacy Process
Contract Pharmacy dispenses drug (non-340B inventory) to 340B entity’s eligible patient
When a full package size of the Rx is reached, the pharmacy or vendor orders a 340B drug to replace it
Replacement 340B drugs are “billed to” the entity and “shipped to” the contract pharmacy
Entity pays contract pharmacy for its services
This slide covers the highest level overview of 340B contract pharmacy—there are a few players missing, but this helps to convey the big picture.
Covered Entity purchases product (bill to ship to) and contracts with administrator.
Administrator determines eligibility and proportional billing by contract with pharmacy and entity.
Administrator gets a processing fee for eligibility, program management (including contracting), virtual inventory and record keeping. It is the program of the covered entity that is responsible for the outcomes.
Pharmacy bills third party and receives payment from third party with whom they have a separate network contract, they can do a “pay to” to the administrator for ease of funds allocation if desired.
Covered entity receives a cost for product and a proportion of total funds received from third party as determined by contract and consistent with value of the services provided.
Pharmacy dispenses the product to patient.
Pharmacy uses in house inventory and replenishes product from orders through covered entity wholesaler account.
Bills third party payer (MCO or Medicaid) at contracted rate set by network contract between pharmacy and third party payer .
Payment is made to pharmacy through provider agreement, may be “pay to” administrator if desired.
Pharmacy is liable for the professional dispensing activity, the inventory (especially if product is a controlled substance), and the conduct related to the contract with the third party and the separate contract with the covered entity.
Periodic true-up
If the pharmacy is not able to use an entire container of product over a quarter because the product utilization did not consume the total units of use (bottle of bills), then the covered entity pays the pharmacy the cost of the partial package at regular wholesaler cost.

26. What is a 340B Vendor?
A company providing 340B contract pharmacy program implementation and management services
Not a HRSA requirement
Minimizes impact on retail pharmacy workflow
Collects data from retail pharmacy at the switch
Provides the interface to identify eligible claims (matches entity data and pharmacy data)
Manages inventory replenishment
Establishes contracts with pharmacies
Provides reports and transparency for auditing

27. Contract Negotiation, Summary
Entity pays flat fee per claim
Stop-loss function (prevents 3rd party transmission if loss to entity)
Entity does not pay fees on claim reversals (net paid claims)
Entity pays lowest of U&C, MAC, and 340B
Entity has access to ALL data (including prescriptions presented vs. filled with 340B)
High complexity data management systems
HL7 interface
Entity pays fees based on % of revenue or drug cost
Entity does not keep 3rd party reimbursement
Vendor recruits patients to its mail order pharmacy
Early cancellation fees
Entity not permitted to select wholesaler
Entity may end up purchasing partial bottles at high rates due to non-replenishment
Entity not permitted to contract with other 340b vendors

28. Split Billing or Contract Pharmacy Vendors - Buyer Beware
Not two vendors are the same
Rules applied can vary
Various levels of sophistication and and experience
What if HRSA reported vendors associated with all covered entity audit findings?
Responsibility for 340B program compliance cannot be delegated to a 3rd party. Read the fine print of the agreements.
Some Vendors do not feel it is their obligation to support 340B compliance (and offer non-compliant alternatives)
Apexus is developing new tools to assist covered entities evaluate and select vendors

29. Entities Take Action

30. Contract Pharmacy OIG Report
Contract Pharmacy Arrangements in the 340B Program (OEI ) released Feb. 5, 2014
Contract pharmacy arrangements create complications in preventing diversion and duplicate discounts, and covered entities addressed the complications in different ways.
Some covered entities in the study offer the 340B discount to uninsured patients at the contract pharmacy and others do not.
Most covered entities in the study do not conduct all of the HRSA-recommended oversight activities.
OIG Issues 340B Contract Pharmacy Memorandum Report
The OIG Released a report Contract Pharmacy Arrangements in the 340B Program (OEI ) in final form on February 5, This Memorandum Report was released in final form and there were no recommendations. The report had the following conclusions:
Contract pharmacy arrangements create complications in preventing diversion and duplicate discounts, and covered entities addressed the complications in different ways.
Some covered entities in the study offer the 340B discount to uninsured patients at the contract pharmacy and others do not.
Most covered entities in the study do not conduct all of the HRSA-recommended oversight activities.
This report was the first of three expected OIG reports regarding the 340B program slated in its 2014 work plan. The OIG recently announced that 2014 will include the OIG:
Examining the extent to which HRSA and 340B covered entities oversee compliance by 340B contract pharmacies;
Examining the extent to which HRSA has implemented prior OIG recommendations regarding 340B covered entities’ access to 340B ceiling prices; and
Examining whether changes in practice or procedure might allow Medicare Part B to receive the benefit of 340B discounts when reimbursing for 340B drugs. 

31. Contact Information
Apexus Answers:
M-F 8:00-5:00 PM CT
Website:

32. Questions?

33. Wholesaler Account Setup -DSH/PED/CAN with GPO Prohibition
Inpatient
GPO
GPO Contract
DSH Inpatient GPO Contracts (DSH only)
GPO or Wholesaler Generic Source Program
Individual Hospital Agreement
Outpatient
(not 340B eligible)
Non-GPO/WAC
WAC Pricing
PVP Sub-WAC
(if enrolled in PVP)
Apexus Generic Portfolio (AGP) (if enrolled in PVP)
Individual Hospital Agreement (single entity only)
Outpatient
(340B eligible)
340B
PHS/340B
PVP Sub-340B
(if enrolled in PVP)
Apexus Generic portfolio (AGP) (if enrolled in PVP)
Individual Hospital Agreement (single entity only)
There is an inpatient account (where you can use a GPO), and 2 outpatient accounts (non-GPO/WAC and the 340B account). This middle account was created to give hospitals an alternative to paying WAC. Apexus has been actively contracting in this space for its members with its PVP Sub-WAC contracts. One primary difference between the two outpatient accounts is shown in orange vs. red, as the PVP sub-340B contracts and the PHS/340B contracts are loaded only to the 340B account. The other major difference between these accounts is that WAC prices are in the non-GPO/WAC, and 340B prices appear ONLY in the 340B eligible account. Making sure this account set-up is correct is critical for GPO Prohibition compliance.
PVP Non-340B/WAC account is THE area of focus.
The two Apexus contract portfolios are now named:
PVP 340B = which is the 340B sub ceiling priced pharmacy items
PVP Non-340B = which is everything else
Account #1
Account #3
Account #2