Screenshot of Zoom webinar panelists
340B Report's May 18 webinar panelists included (clockwise from top left) Aaron Vandervelde, Jason Atlas, Ashley Mains Espinosa, Tom Mirga, Ted Slafsky, and Sue Veer.

The New Rules of 340B Contract Pharmacy—a Recap of 340B Report’s First-Ever Webinar

340B Report held a webinar for its subscribers last week on Second Sight Solutions’ 340B ESP platform that administers drug manufacturers’ conditions on 340B pricing when covered entities use contract pharmacies. More than 800 subscribers registered to attend—a clear sign that interest in 340B ESP is intense.

The drug company restrictions that 340B ESP manages are controversial. Federal courts are deciding whether they are legal, and it could be years before the courts rule definitively. In the meantime, many 340B entities face a hard choice: Reject the requirements and forfeit 340B revenues that sustain their missions or submit the data despite deep concerns about doing so.

The webinar speakers were

  • Aaron Vandervelde, Founder and Business Development Lead, 340B ESP
  • Jason Atlas, Vice President, 340B Enterprise Strategy & Solutions, AmerisourceBergen
  • Ashley Mains Espinosa, V.P. of Clinical Operations, DocStation and co-founder, The 340B Collaborative
  • Sue Veer, President and CEO, Carolina Health Centers
  • Ted Slafsky, Publisher and Chief Executive Officer, 340B Report.
  • Tom Mirga, Editor-in-Chief, 340B Report

The speakers described

  • manufacturers’ policies and lawsuits over them
  • previously unpublicized statistics about 340B ESP
  • the process of restoring an entity’s 340B pricing for drugs shipped to multiple contract pharmacies
  • barriers that can impede restoration of 340B pricing
  • covered entities’ views about manufacturers’ policies.

Much of the time was devoted to answering questions that viewers submitted in advance of and during the webinar.

This is a recap of the May 18 webinar. Click here for the webinar slides. 340B Report will make the recording available to subscribers soon.

Slafsky: Setting the Stage

340B Report’s Ted Slafsky set the stage by describing 16 drug manufacturers’ restrictions on covered entities’ use of multiple contract pharmacies. He focused on the 10 that condition access to 340B pricing in the multiple contract pharmacy setting on entities submitting their 340B contract pharmacy claims data to 340B ESP—AbbVie, Amgen, Gilead, GlaxoSmithKline, Johnson & Johnson, Lilly, Merck, Pfizer, Sanofi, and United Therapeutics.

“Our news organization doesn’t take a stand on 340B ESP,” Slafsky explained. “We are here just to provide information and be a resource so you can learn more and be educated by top experts in the field today.”

Slafsky next summarized and gave a status report on the various drug industry lawsuits challenging the federal government’s declarations that the companies’ conditions on 340B pricing are illegal and must stop or the companies could face potentially large civil monetary penalties. The five federal district court decisions to date were mixed, Slafsky said, with some largely favorable to the government and others to the manufacturers.

But all have told the U.S. Health Resources and Services Administration that the agency cannot enforce its cease-and-desist letters, he said.

HRSA says manufacturers must offer 340B pricing to covered entities on outpatient drugs no matter how entities dispense the products. Manufacturers say the 340B statute is silent on contract pharmacy. They also say HRSA’s 340B contract pharmacy guidelines are illegal on several grounds.

Vandervelde: 340B ESP Metrics

Second Sight Solutions is the wholly owned subsidiary of consulting firm Berkeley Research Group (BRG) that provides the 340B ESP platform. Aaron Vandervelde is a BRG Managing Director in addition to being 340B ESP’s founder and Busines Development Lead. 

Vandervelde shared 340B ESP metrics during the webinar not known to have been publicly disclosed before. He said:

  • More than 1,300 covered entities are registered on and use 340B ESP, whether to designate a single contract pharmacy to receive 340B-purchased drugs, to claim an exception for a wholly owned pharmacy, or to submit 340B pharmacy claims data for multiple contract pharmacies.
  • More than 500 entities actively submit 340B claims on a regular basis through 340B ESP
  • More than 30,000 distinct pharmacy locations have retained 340B pricing eligibility through entities’ use of 340B ESP (the total includes single contract pharmacies designated to receive 340B drugs, wholly owned pharmacies granted exemptions, and multiple contract pharmacies whose eligibility was restored after entities began submitting claims)
  • 340B ESP provides information submitted by entities to more than 30 national and regional wholesalers that administer 340B contracts on behalf of manufacturers and entities
  • Vandervelde said claims submissions via 340B ESP encompass about 600 distinct NDCs. (A slide he presented put the figure at over 1,000 NDC, but during the webinar he said it was closer to 600.) “What’s common to these products is that they’re ultimately dispensed through third-party contract pharmacies,” he said.
  • Entities submit more than 100,000 340B claims to 340B ESP twice monthly, at the beginning and middle of each month.
  • 340B ESP gets about 250 requests per week for user support via chat, telephone, and email.

Vandervelde: 340B ESP’s Three-Stage Process

Vandervelde described the three successive multi-step stages in 340B ESP that entity-supplied information flows through to maintain or re-enable contract pharmacy eligibility for 340B drug shipments—Eligibility Determination, Contract Administration, and 340B Contract Pharmacy Purchasing.

The first phase “encompasses those steps necessary to establish and communicate pharmacy eligibility,” according to a webinar slide. The second involves those taken by wholesalers to administer 340B contracts. The final phase involves those taken by entities and third-party administrators (TPAs) to identify and place orders for 340B-eligble prescriptions.

Vandervelde said it “admittedly is a complex process with several handoffs of information.”

Atlas: Wholesaler, Customer, and Vendor Challenges

Jason Atlas of AmerisourceBergen described common reasons for delays in restoring 340B pricing after an entity begins submitting claims data to 340B ESP. Ashley Mains Espinosa, who until recently oversaw the 340B program for SCL Health, a Colorado-based religious hospital system, advised viewers who are experiencing challenges in getting 340B pricing restored “to put a star next to” this portion of the webinar as it “is worth revisiting.”

Atlas said delays in 340B pricing restoration generally fall into two categories: Eligibility Defects and Delays/Inaccuracies.

Regarding Eligibility Defects, Atlas advised viewers to ensure the data they submit to 340B ESP is correct and complete. If it is inaccurate or incomplete, he said, wholesalers will be unable to match it in their systems to restore pricing, he said. He cited examples of

  • entity names entered by mistake in fields for contract pharmacy names
  • mismatches between data in wholesalers’ platforms and in the 340B program database, 340B OPAIS, due to changes entities made in OPAIS but did not pass along to their wholesalers
  • incorrect Health Information Numbers (HINs)
  • incorrect 340B ID numbers, for example due to a provider changing its 340B entity type (e.g., from DSH to RRC)
  • all contract pharmacies belonging to a chain not having 340B pricing restored at once, because manufacturers might restore pricing to such pharmacies in phases.

Atlas also listed common business circumstances that might contribute to delays in an entity having 340B pricing restored despite submitting claims data to 340B ESP:

  • wholesalers receiving late or incomplete price files from manufacturers, especially at the beginning of a quarter
  • wholesalers not receiving price files from manufacturers for technical reasons (e.g. files sent too large to open or sent insecurely)
  • the fact that wholesalers typically have from three to 15 days to upload files received from manufacturers
  • the fact that TPAs might receive digital catalog price files (also known as 832 files) from wholesalers only weekly or monthly, not daily.

Atlas said contract pharmacies sometimes tell AmerisourceBergen pricing is correct in the wholesaler’s ordering platform but not in the TPA platform. He said this often is due to delays in TPAs’ receipt of 832 files and delays in TPAs’ ingestion of that data. Atlas said entities sometimes cannot access 340B pricing that has been loaded because TPAs have not yet removed blocks in their systems to make sure that 340B claims are not qualified on products that are ineligible.

Atlas said unavailability of 340B pricing may be due to the effective date of a manufacturer’s conditions on 340B pricing. For example, Merck’s policy will take effect on May 31—the day after the federal Memorial Day holiday. Orders placed on May 27 or May 28, he said, might not be delivered until May 31 due to the holiday, he pointed out. Because Merck’s policy will be in place on May 31, orders placed on May 27 or 28 may be invoiced with a non-340B price.

Atlas described paths entities should take, and the order in which they should be taken, if an entity does not see anticipated 340B pricing restored for a contract pharmacy. He recommended beginning with 340B ESP’s email, online chat, and telephone support, then turning next to the entity’s TPA. If the issue remains unresolved, entities should reach out to their wholesaler, he said.

Mains Espinosa and Veer: Stakeholder Perspectives

Ashley Mains Espinosa and Sue Veer (a health center president and CEO) shared their and covered entity contacts’ views on accepting and implementing manufacturers’ conditions on 340B pricing.

Mains Espinosa described “how heavy and weighted” the decision is to accept manufacturers’ claims data submission requirements. “It feels as if it is under duress, it is something I have to do to access the extended outreach this affords my covered entity. It can be gut wrenching,” she said.

Mains Espinosa said the experience has been a letdown for those that have decided to participate. Pricing in exchange for data has not come quickly or has come with significant challenges. The delay of expected pricing by weeks has been detrimental to entities, especially to those that held off complying with manufacturers’ requirements for a long time. “There may have been an opportunity much before this webinar to educate each stakeholder,” she said.

Veer said health centers “have been very slow to sign on” for multiple reasons. They do not understand why small nonprofit entities operating on very tight margins must bear the significant burden, cost, and downstream risk of voluntary business decisions between two for-profit entities, she said. They also worry that third-party payers will use the claims data they provide to manufacturers to shift the financial benefit of 340B away from entities and the communities they serve, she added. And health centers also have concerns about privacy and potential misuse of proprietary information.

“Health center covered entities are hoping manufacturers can help us find a way where everybody stays whole in this,” Veer said.

Questions and Answers

Potential conflict of interest

Vandervelde was asked if his research at BRG on the 340B contract pharmacy program on behalf of the drug industry and legal briefs he has filed in lawsuits over manufacturers’ conditions on 340B pricing create a conflict of interest for 340B ESP.

Vandervelde answered that BRG’s establishment of Second Sight as a separate stand-alone legal entity “created a clear line of demarcation” between the two and “can help ensure that the claims data we collect is used solely for the purposes outlined in our terms of service. The covered entity community can have confidence that that information is not going to be provided to BRG and is not going to be used in a consulting fashion.”

Stakeholder feedback

Vandervelde was asked what feedback 340B ESP has received from stakeholders and what is the best way to offer feedback.

He said feedback to date generally is consistent with Atlas’s descriptions of challenges involved in restoring entities’ access to 340B pricing for drugs shipped to contract pharmacies.

“The complexity of turning on pricing after pricing has been restricted … the process has been more complex, there have been more handoffs, more stakeholders,” Vandervelde said. “And we’ve heard a lot about that. We spend a lot of our time trying to troubleshoot that. We are actively working on way to ease that process.” He noted that 340B ESP recently gave entities the ability to view their contract pharmacies and the pharmacies’ eligibility status “as it exists in our system.”

Vandervelde said the best way to provide feedback is through 340B ESP’s support center.

Manufacturers’ 45-day lookback periods

Vandervelde was asked about several manufacturers’ inclusion or addition of 45-day time limits for replenishment orders and claims submissions to their 340B contract pharmacy policies.

He said the reason for the lookback periods is that manufacturers have a limited amount of time to use the claims data they collect from entities to address ineligible rebates.

Atlas added that “in instances where pricing has not been restored by the wholesaler, both the manufacturers and 340B ESP have been more than gracious in terms of the timing where we’re able to go back and retrospectively date eligibility backwards in the event there are any purchases. We can work through that in a credit and rebill process.”

340B ESP functionality improvements

Vandervelde was asked if 340B ESP’s functionality is being improved in response to feedback.

He said 340B ESP is working to provide information in the platform in as close to real time at possible. He said 340B ESP has been getting requests for access to information on its platform to enable entities to ensure that data they have submitted has in fact been received. Vandervelde said 340B ESP is also exploring whether many of the current handoffs of information in the process of restoring access to 340B pricing can be alleviated.

Reducing administrative burdens

Vandervelde was asked what could be done to ease the compliance burden on entities.

He observed that some entities have hundreds of contract pharmacies and may use multiple TPAs. To make collecting and aggregating data from so many sources less burdensome, he said 340B ESP lets entities establish different mapping to reflect differences in TPAs’ claims data formats. He said 340B ESP has reached out to TPAs about creating direct data transfers such that a TPA could submit data on an entity’s behalf.

Veer asked if it would be acceptable for health centers to share staff and otherwise collaborate in the submission and subsequent reconciliation of claims data sent to 340B ESP. Vandervelde said he agreed that would be a way to spread effort across a base of users and would happily support it.

Manufacturer standardization

Vandervelde was asked if manufacturers could do more to standardize their policies.

He said drug manufacturers “understandably are very wary of either the perception or reality of collusion” and that concern has “put cold water on the notion.” He said he was sure manufacturers would listen “if there are good ideas about how that could be done.”

Slafsky noted there is bipartisan legislation in Congress to require the U.S. Health and Human Services Department to contract with a neutral third party to serve as a clearinghouse for data needed to prevent duplicate discounts under Medicaid. The bill, which would also protect 340B providers from discriminatory reimbursement from commercial payers, is pending in the U.S. House and has 90 sponsors.

Privacy protections

Vandervelde was asked if 340B ESP’s privacy protections for entities and their patients are adequate.

“We think they are,” he replied. He said 340B ESP collects the least amount of data possible to meet its business objectives, does not collect information directly related to a patient’s identity, and anonymizes data elements considered protected health information under HIPAA— the prescription number, the fill date, and the prescribe date—to meet HIPAA’s definition of a de-identified data set.

Vandervelde was asked if Second Sight has secured business associate agreements (BAAs) with manufacturers regarding manufacturers’ access to protected health information.

He said Second Sight has not because it does not collect any protected health information from manufacturers.

Access to medication

Veer said many health centers are concerned about the impact of manufacturers’ pricing restrictions on patient access to affordable medicines.

Vandervelde some manufacturers will continue to grant an entity’s contract pharmacy or pharmacies access to 340B purchased drugs if the entity attests that the pharmacy or pharmacies serve uninsured patients only. Another manufacturer (Lilly) offers an exemption to its contract pharmacy policy for penny-priced insulins if the entity agrees to pass the 340B discounted price to the patient.

“It’s an area where the manufacturer community certainly would be very interested in trying to understand how we can create solutions to address that concern,” he said. “I think there’s an opportunity to collaborate there.”

Veer noted that health centers are concerned not just about uninsured patients’ access to affordable medicines, but about insured patients’ access too.

User fees

Vandervelde was asked if 340B ESP would begin charging entities a fee to use its platform.

“We were very deliberate in ensuring that the covered entity community was not charged to use the platform in its design as it exists currently and that remains our commitment,” he answered. “So no, for the functionality that exists in the platform today, we have no plans to charge for that functionality.”

Validating 340B patient eligibility

Vandervelde was asked if 340B ESP validates or invalidate claims as being 340B eligible.

He said 340B ESP in its current design is unable to make a determination about 340B patient eligibility. He said he often is asked if an entity could open itself up to a manufacturer audit if it provides claims data to 340B ESP. “I would note that audits are expensive, and there have been very few to date,” Vandervelde said. “I can’t sit here and tell you what a manufacturer will or won’t do as it relates to historical utilization. But I would note it’s an expensive process, one that has been used very sparingly.”

Additional manufacturers

Vandervelde was asked if any other manufacturers are considering using 340B ESP to administer conditions on 340B pricing?

“I’m sure there are,” he answered. “I’m sure that are some we are not aware of, and there are some we are aware of.”

Volume of ineligible rebates prevented

Vandervelde was asked for data on the volume of Medicaid duplicate discounts and commercial ineligible rebates that 340B ESP has prevented.

He said the percentage of claims submitted that result in the identification and withholding of a rebate—commercial, Medicare, Medicaid, or TRICARE—is “well north” of 50% and for some manufacturers is approaching 90%.

Vandervelde said he could not yet provide a breakout for Medicaid duplicate discounts prevented because most manufacturers using 340B ESP have been doing so for less than four months and there typically is a six-month lag between the time a drug is dispensed and “when the [Medicaid] rebate shows up.”

340B ESP’s use of data collected

Vandervelde was asked, if 340B ESP does not intend to commercialize the claims data it collects in any way, then why not say specifically in its terms that it will share collected data only with manufacturers, absent any revision of the terms and after obtaining covered entities’ consent?

Vandervelde said 340B ESP anticipates some payers may ask it to prove “that a particular withheld rebate is in fact 340B. So we write in our terms of use that we can disclose those data to those individuals in the event of a dispute. That is our only intended use of that data for those stakeholders. We do not and we will not proactively provide 340B claims to a payer. We will only use that information in the event of a dispute over a withheld rebate.”

Why create a solution for manufacturers but not entities?

The last question for Vandervelde was: Why did you create and offer a process to manufacturers but not to covered entities?

Vandervelde said he and his team spoke with covered entities and TPAs before 340B ESP’s launch about ways to address ineligible rebates. “We could not find a path forward,” he said.

“Our hope for the platform is obviously broad adoption, one that does not come with a loss in reimbursement for the covered entities and contract pharmacies and one that could ultimately be used to address a real issue in the marketplace, one beyond Medicaid duplicate discounts,” he said. “If we can get to a place where there is equilibrium as it relates to transparency and data and the ability of manufacturers to address those rebates, we may find that also is of benefit to the covered entity community as well.”

Editor at Large | Website | + posts