HRSA Relaxes Policy on GPO Prohibition During COVID-19 Pandemic

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The Health Resources and Services Administration yesterday revised an FAQ and posted another on its COVID-19 resources webpage for 340B stakeholders. Source: Shutterstock

HRSA Relaxes Policy on GPO Prohibition During COVID-19 Pandemic

The Health Resources and Services Administration (HRSA) yesterday updated its COVID-19 resources webpage to revise an FAQ on the 340B group purchasing prohibition. HRSA also posted a new FAQ on use of private label drugs by hospitals subject to the prohibition.

To the FAQ that asked HRSA whether it would let disproportionate share hospitals, children’s hospitals, and free-standing cancer hospitals buy covered drugs through a GPO during the public health emergency, HRSA added this sentence: “Will HRSA still require reporting upon use of a GPO?”

The original FAQ answer said if a hospital could not buy a covered drug at the 340B ceiling price or wholesale acquisition cost, it could use a GPO or GPO private label product

only if it immediately notifies OPA detailing the covered outpatient drug(s) involved, the manufacturer, and the communication between the parties as to why the product was not available at 340B or WAC. Entities can contact HRSA directly at A covered entity in this public health emergency should continue to ensure it has policies and procedures in place to address the purchase and dispensing of 340B drugs, and it must continue to keep auditable records.

The revised answer says if a hospital cannot buy a covered drug at the 340B price or WAC, “a hospital may use a GPO (or GPO private label products).” It continues:

Hospitals do not need to report this information to HRSA under the COVID-19 public health emergency. The covered entity should address these situations in their policies and procedures and it must continue to keep auditable records.

HRSA added this FAQ on private label drugs:

Will HRSA allow manufacturers the ability to offer their private label drugs at the 340B ceiling price to all covered entities, including those who are subject to the GPO prohibition?

To the extent a manufacturer with a 340B Program Pharmaceutical Pricing Agreement (PPA) has private label products that are covered outpatient drugs and the manufacturer has plans to make those private label products available to all covered entities at or below the 340B ceiling price, manufacturers are encouraged to contact HRSA directly at so HRSA can work to ensure compliance of both the manufacturer and covered entities subject to the GPO prohibition.

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House Ways and Means Democrat Asks HRSA to Postpone 340B Provider Audits

A senior New York Democrat on the U.S. House Ways and Means Health Subcommittee yesterday asked HRSA Administrator Thomas Engels “to postpone all ongoing and upcoming hospital audits related to the 340B program while our health system is responding to the coronavirus disease (COVID-19) pandemic.”

Noting that New York State accounts for about half of all known U.S. COVID-19 cases, Rep. Brian Higgins said hospitals there are scrambling to keep their staffs and patients safe and to obtain enough supplies.

“Preparing for and undergoing 340B program audits requires significant time and attention by multiple departments within a hospital,” Higgins wrote. “And while I understand and appreciate that HRSA has shown a willingness to allow some audits to proceed on a remote basis in order to observe social distancing best practices, transitioning to a remote audit can place additional challenges on a hospital.”

“Given the current realities hospitals are facing, all of their resources, must be diverted to treating and containing this pandemic,” he wrote. “I therefore urge you to postpone all 340B audits until after this public health crisis has abated.”

Hospital group 340B Health asked HRSA on March 20 to halt new audits, cancel scheduled audit onsite visits, and postpone remote audits. HRSA said the same day in a COVID-19 FAQ asking if it plans to suspend or cancel audits that it is “moving toward” conducting audits remotely for several months “while we monitor and assess the impact on the covered entities.”

Senate Passes Stimulus Bill, But Not Before Tabling a Rare 340B-Related Amendment

It’s not often that a U.S. senator offers an amendment related to the 340B program during final debate on legislation that’s being closely watched worldwide.

But that’s what happened March 24, when Sen. Ben Sasse (R-Neb.) asked his colleagues to amend a roughly $2 trillion economic stimulus bill to require the Health and Human Services (HHS) Secretary through Sept. 30, 2021 “to pause the process of determining whether [a 340B] entity is a covered entity…in response to the COVID-19 public health emergency to ensure that no entity that was previously determined to be such a covered entity would lose eligibility status for the program…during such emergency.”

The Senate tabled the amendment, and late last night it passed the bill unanimously. The House is to vote on the measure tomorrow.

“This amendment would insure that our hospitals that serve the most at-risk populations continue to qualify for the 340B drug discount program for FY 2020 and FY 2021 in light of the ongoing crisis,” Sasse explained in a press release. “This means that they would keep receiving prescription drugs at a discounted rate from pharmaceutical companies, freeing up resources to serve patients.” Five types of hospitals must maintain a Medicare disproportionate share (DSH) adjustment percentage greater than 11.75 percent to stay eligible for 340B. America’s Essential Hospitals and 340B Health told HHS Secretary Alex Azar in March 20 letters they were concerned that hospitals might fall below the 340B eligibility threshold due to changes in payer mix during the COVID-19 emergency. They asked Azar to waive the Medicare DSH adjustment percentage requirement for the duration of the emergency.

Key provisions in the stimulus bill affecting 340B providers include:

  • $100 billion to reimburse hospitals for expenses or lost revenues due to COVID-19
  • Elimination of the $4 billion hospital Medicaid DSH cut this fiscal year and reduction of next fiscal year’s cut from $8 billion to $4 billion
  • A 20 percent add-on to hospital payments under the inpatient prospective payment system for patients with COVID-19
  • Enhanced federal payments for telehealth services furnished by federally qualified health centers and rural health clinics
  • $1.32 billion in supplemental funding for health centers this fiscal year and an extension of legal authority for health center federal grants, now due to expire May 22, through Nov. 30. The health center “extender” bill had long been viewed as a potential vehicle for a drug pricing rider.
  • $90 million in supplemental funding for Ryan White HIV/AIDS Program grantees to respond to COVID-19 and $65 million in supplemental funding under the AIDS Housing Opportunity Act for rental assistance and other support services during the epidemic.

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Upcoming 340B University Sessions Are Still on for Now

As of this morning, Apexus, the 340B Prime Vendor, was still accepting registrations for its upcoming 340B University session at the American Society of Health-System Pharmacists summer meetings June 6 in Seattle, Wash. ASHP too continues to accept registrations for its June meetings.

We reached out to Apexus about its plans for future 340B University sessions in light of the coronavirus emergency and it referred us to HRSA for comment. HRSA noted Apexus cancelled its 340B University session at the National Association of Community Health Centers’ Policy & Issues Forum March 15 in Washington, D.C., after NACHC cancelled its conference. As for upcoming scheduled 340B University sessions, HRSA said “PVP/Apexus is monitoring the COVID-19 situation daily and as of [March 24] the 340B Prime Vendor is still accepting registrations for the upcoming sessions.” Apexus has the following 340B University sessions still scheduled, with these start dates for university registration:

  • 340B University at 340B Coalition Summer Conference, July 19, Washington, D.C., university registration opens April 1. (The 340B Coalition summer conference website indicates the July 20-22 event is still on.)
  • 340B University at National Pharmacy Purchasing Association Annual Meeting, Aug. 10, Las Vegas, Nev., university registration opens April 15. (The NPPA conference webpage indicates the Aug. 11-12 event is still on.)
  • 340B University at NACHC CHI Meeting, Aug. 29, San Diego, Calif., university registration opens June 15. (The NACHC event webpage indicates the Aug. 30-Sept. 1 event is still on.)
  • 340B University at ASHP Leaders Meeting, Oct. 18, Rosemont, Ill., university registration opens July 1. (The ASHP event webpage indicates the Oct. 19-20 event in Chicago, Ill., is still on.)
  • 340B University at ASHP Midyear Clinical Meeting, Dec. 6, New Orleans, La., university registration opens Aug. 3. (The ASHP event exhibitor microsite indicates the Dec. 7-9 event is still on.)

NY State 340B Providers Opposing Medicaid Pharmacy Benefit Change

A New York State commission tasked with recommending ways to contain Medicaid spending growth proposes moving the Medicaid managed care pharmacy benefit to Medicaid fee for service. 340B providers are mobilizing to oppose the shift, which they predict will lead to draconian reimbursement cuts for 340B drugs dispensed or administered to Medicaid MCO beneficiaries. Battles against similar proposals have been or continue to be waged in California, Kentucky, Michigan, and Georgia.

In a March 19 summary of its proposals, the state Medicaid Redesign Team II says despite past implementation of a Medicaid drug cap and elimination of pharmacy benefit manager spread pricing in Medicaid managed care, “Medicaid spending on pharmacy continues to grow faster than the rate of inflation. The Department of Health, after considerable analysis, is recommending carving the pharmacy benefit out of managed care back to FFS.” The switch, it said, will improve “visibility into the underlying cost of prescription drugs” and give state government “greater control to manage overall prescription drug spending.”

340B providers point out in recent letters to state leaders that federal Medicaid regulations require them to bill Medicaid fee for service for 340B drugs at acquisition cost. Savings that now accrue to them from billing Medicaid managed care at above actual cost would be lost, leading to service reductions or terminations. Such cutbacks during the COVID-19 emergency are untenable, they say.

According to the Albany Times-Union, the state was already facing a $6 billion budget gap, mainly due to Medicaid spending, for the forthcoming 2020-21 fiscal year before the COVID-19 pandemic. Spending in response to the public health emergency could more than double the projected shortfall. The new fiscal year begins April 1.

Tweets of Note

340B Health @340BHealth

Thank you @SenSasse for supporting rural #340B hospitals as they work tirelessly to stretch their resources and stop the spread of #COVID19 in communities throughout the U.S.

Wes Butler @wesbutleresq

.@CHFSKy KY Medicaid announced it will delay implementation of the #340B modifier requirement. It was scheduled to go into effect on 4/1/20. KY-DMS will reassess when to implement the modifier requirement after the #COVID-19 emergency. @KYHospitals @KyPharmAssoc @KentuckyPCA