Pharmaceutical costs climb as the pharmaceutical industry targets the 340b program

The drug industry is trying to thwart a crucial federal drug discount program called 340B that serves to help healthcare facilities and community health centers across the country supply lower-cost medications and enhanced services to underserved patients.

The industry's profiteering has garnered the interest of Congress, insurance companies and patients. Per-unit costs on specialty drugs increased 12 percent last year, according to Express Scripts. A database organized by Bloomberg News shows the constant price increases of leading drugs throughout the previous 7 years. An EpiPen for allergic reactions climbed 222 percent. A single dosage of the medicine Benicar for hypertension is up 164 percent. The high-cholesterol drug Crestor jumped 103 percent each tablet.

Against this backdrop, the drug industry has marshaled an army of lobbyists to go to battle against poor, underserved Americans and the medical facilities that serve them. Congress created the 340B drug discount program in 1992 with bipartisan support to enable health providers that serve large numbers of low-income individuals to obtain affordable drugs from drug companies. Consequently, these safety-net health centers and clinics supply low-priced or no-cost medications to the community. The program also helps fund diabetes, HIV/AIDS, cancer, dental and primary-care facilities.

Affordable drugs are the key to improving wellness outcomes. When drug costs get too high, individuals skip doses or pass up buying prescriptions altogether. According to a study from the Commonwealth Fund, the United States leads the world in this respect, with one-quarter of adults choosing to go without their medications. Their wellness often deteriorates, and several end up back in the ER, mostly on the taxpayer's dime.

Everybody concurs, even John Castellani, CEO of the industry trade association PhRMA. In a recent interview with Kaiser Health News, he said individuals' "out-of-pocket expenses are potentially so high that we have to be concerned about whether or not people will be able to afford to continue to get their medicines.".

In fairness, Castellani was actually grumbling about high prescription deductibles in a few plans furnished under the Affordable Care Act. But what about the destructive impact of his own industry's expensive medications? Here, Big Pharma dodges accountability and conveniently selects profits over people.

With too much partisan squabbling in Washington, it is vital to keep in mind there actually are programs that not only function but enjoy bipartisan backing. The 340B program is one of them. Yes, the program is funded at the expense of extra profits by the drug companies. More important, it allows health centers and clinics to assist poor Americans stay healthier, and it actually saves taxpayer money by keeping people out of the hospital.

Big Pharma will assert that several medical facilities don't provide adequate charity care and should not be in the program. That's rubbish. It ignores the massive $28 billion in unremunerated treatment these providers bear each year to care for the underprivileged.

The 340B program helps safety-net health centers provide economical prescriptions and treatments to disadvantaged outpatients. Pharmaceutical companies are definitely raising their prices. As the cost of drugs soars, the program becomes more essential than ever. If we do not stop the pharmaceutical industry's attempts to kill it, the casualties will be America's poor and the hospitals that treat them.

www.center-rx.com/340b/pharmaceutical-costs-soar-drug-industry-attacks-340b-discount-program

Health and Human Services Delays the 340B 'Mega Rule'

The HHS Health Resources and Services Administration has withdrawn sweeping rules for the 340B drug pricing program and instead plans to provide proposed guidance addressing vital policy issues starting in 2015.

Last year, Pharmaceutical Research and Manufacturers of America submitted a lawsuit challenging a final HHS regulation that broadened the 340B drug discount program. PhRMA filed the suit in an attempt to omit all drugs with an "orphan" designation-- a pharmaceutical that has been developed specifically to treat a rare condition and frequently carries a hefty cost-- from the final rule. U.S. District Judge Rudolph Contreras ruled in favor of PhRMA, finding HHS doesn't possess the power to place policies into place which implement Patient Protection and Affordable Care Act 340B provisions.

However, HRSA consequently re-issued the policy that enables 340B-covered entities to buy orphan drugs at 340B rates when orphan drugs are used for any indicator apart from dealing with the rare disease or condition for which the drug received an orphan classification. In October, PhRMA filed an additional suit seeking to revoke the interpretive rule HRSA issued.

With HRSA opting to ditch what many in the sector are referring to as a "mega rule," health centers, health systems and pharmaceutical companies will have to wait to be given more direction regarding the program. HRSA declared there will be an opportunity for the public to discuss the guidance it issues, and American Hospital Association Executive Vice President Rick Pollack said "The AHA looks forward to working with HRSA on its efforts to improve the 340B drug pricing program, which is vital to so many vulnerable patients and communities.".

340B Aides Our Most Vulnerable Citizens

In a June 23 "Viewpoint" article titled, "Hospitals Making Hundreds Of Millions Off Program For Poor," Sally Pipes labelled the 340B drug discount program's eligibility criteria slack and indicated hospitals are not making use of the savings appropriately.

In reality, the program is crucial to the fiscally vulnerable safety net that helps millions of needy Americans receive healthcare each year.

The debate pits the drug industry with $329 billion in U.S. profits versus the financially extended not-for-profit and public hospitals that look after millions of poor individuals.

Recently, the dubious price increases for several drugs have received the attention of Congress, state governments, insurance companies and patients. A Bloomberg News database reveals that the price hikes in the U.S. for leading prescriptions have actually significantly outpaced inflation since late 2007.

An IMS Institute for Healthcare Informatics analysis discovered "a significant driver of growth in the market was price increases on protected brands, which contributed $20 billion to growth in 2013, up from $15.6 billion in 2012." This does not allow for the much-publicized high prices for new drugs such as Sovaldi for hepatitis.

Against this backdrop of soaring prices, the pharmaceutical industry is seeking to maximize profit margins by reducing accessibility to reduced rate medication and service via the 340B program.

Our lawmakers established the program in 1992 with bipartisan backing to enable health providers that help millions of low-income individuals to acquire discounted medicine from pharmaceutical companies. Consequently, these types of safety-net medical facilities and clinics offer affordable or free medicine to the community.

The program also funds medical clinics for diabetes, HIV/AIDS, cancer, dental and primary care.

The law categorically enables safety-net hospitals to distribute discounted medications to qualified patients and to sell them at negotiated prices to insured patients. Congress meant for these financial savings to maximize funds by improving low reimbursement levels from the Medicare and Medicaid programs to finance the services required to treat the underserved. This mechanism is hardly misuse-- it is precisely the way the program was designed.

To be qualified for the 340B program, a medical facility has to meet the stringent qualification requirements of serving a high percentage of low-income and impaired patients or of being situated in rural areas of the country. These covered entities must annually sign an agreement certifying that they fulfill these requirements.

Our lawmakers, in a bipartisan manner, has broadened the program to additional providers so as to confine the necessity for escalated federal funding in order to sustain the health care safety net. Despite having more Americans insured under the healthcare overhaul, medical facilities that have Medicare and Medicaid programs as their primary payers will certainly struggle to serve the remaining uninsured or underinsured.

www.center-rx.com/340b/340b-drug-discount-program-assists-vulnerable-citizens

HHS Reissues Contested 340B Policy on Orphan-Drug Discounts

In spite of an adverse court judgment, the federal government is retaining its stance on how safety-net healthcare providers may obtain discounts on drugs that might have "orphan" uses.

On July 21, HHS published a document it called an interpretive rule on the exclusion of orphan drugs from the 340B discount program. The policy takes effect without delay. The announcement follows a May court verdict which shot down the HHS's authorization to release a substantive rule regarding whether or not pharmaceuticals with a rare-disease or orphan classification could be attainable at a rebate to health centers for non-orphan uses.

The HHS stated in the document it has been notified by safety-net healthcare providers or covered entities "that some of the newly-eligible covered entities are significant purchasers of drugs with an orphan designation, and if these drugs were excluded from the 340B Program entirely, it is not clear if there would be sufficient financial benefits to participate.".

The pharmaceutical sector has contested the Obama administration's interpretation of a provision in the Patient Protection and Affordable Care Act, asserting that the administration didn't possess the jurisdiction to publish the legislative rule in 2013. The Pharmaceutical Research and Manufacturers of America, the pharmaceutical industry's lobbying organization, filed a claim against HHS in 2013, and a federal judge ruled against HHS in May. The government, however, took the stance that the ruling authorized it to reissue the exact same policy in a different framework.

The new version of the rule, posted to the Federal Register on July 21, requires drug companies to offer markdowns between 20 % and FIFTY % on orphan drugs used for non-orphan ailments or diseases to freestanding cancer hospitals, critical-access hospitals, rural referral centers and sole community hospitals that take part in the 340B program.

A spokesperson for PhRMA stated the organization's stance hasn't changed and it continues to think that the Health Research and Services Administration, which oversees the 340B program, doesn't possess the jurisdiction to issue rulemaking with regard to the regulation.

Meanwhile, the regulation is considered a victory for safety net hospitals that participate in the 340B drug pricing program. Orphan pharmaceuticals are among the most expensive pharmaceuticals on the market and discounts on these types of treatments may be a contributing reason why several health centers sign up in the 340B program.

"The agency's position on this issue has been correct all along," said a spokesman for Safety Net Hospitals for Pharmaceutical Access, a trade organization that stands for healthcare facilities that take part in the 340B program. "Orphan drug discounts are essential to helping these healthcare providers treat underserved patients.".

The intent of the 340B program is to provide reduced rates on covered outpatient drugs to health centers that service a large number of uninsured or indigent patients. The health centers may then keep the financial benefits, or revenue, from the discounts. Read More

As the Health Resources and Services Administration (HRSA) continues to increase their role in the 340B Program oversight, they have made three modifications which will certainly affect covered entities. Even though the overall procedure continues to be mostly unchanged, recently-announced improvements to post-audit procedures will impact how covered entities learn about and reply to audit results.

In a July 2014 update, HRSA announced that it will not issue preliminary reports to CEs after an audit. Instead, covered entities will learn of audit findings when HRSA provides its Final Report.

Furthermore, are presently obligated to present HRSA a letter describing findings related to diversion and/or duplicate rebates. This letter will be posted on the HRSA web site, in conjunction with the audit findings, and is intended to notify any affected suppliers and wholesalers of potential payment they might be due. Instances of letters are currently published along with FY12 audit findings on the HRSA website.

Finally, all CEs whose results include payment will promptly be subject to a follow-up audit the next year. As HRSA continues to enhance the audit process, they will likely publish additional updates here.

More information from CenterRx

HHS Does Not Want Judge to Revisit Lawsuit - Even Though the Ruling Was Against Them

The Obama government and the pharmaceutical drug sector are still battling in court about HHS' jurisdiction to compel drugmakers to provide 340B rebates on orphan pharmaceuticals in some cases.

In the most recent battery, HHS is urging a federal judge to decline to revisit his May judgment that the government exceeded its rulemaking authority. HHS asserts that the ruling-- despite the fact that the administration technically lost-- allows administrators to reissue the same policy in a different form. The pharmaceutical manufacturers are requesting the court to clarify that he genuinely meant to prevent the policy.

A stipulation of the Patient Protection and Affordable Care Act left out orphan drugs from the 340B drug-discount program. HHS, nevertheless, has interpreted this omission to apply just when the costly drugs are used to cure the rare conditions in which they were actually created and certified to target.

The Pharmaceutical Research and Manufacturers of America last year filed a legal action arguing that HHS exceeded its rulemaking power by limiting the exclusion. The court of law conceded. But the Health Resources and Service Administration, the HHS agency that oversees the 340B program, later stated it would certainly maintain its interpretation and continue requiring the rebates.

HHS is now crafting the argument in which it can put out an interpretative policy or guidance that establishes the very same guidelines as the legislative rule that the judge struck down, according to court documents filed July 14 in U.S. District Court for the District of Columbia.

"The agency's position on this issue has been correct all along," said a spokesman for the Safety Net Hospitals for Pharmaceutical Access, a trade group for hospitals participating in the 340B program. "We agree that HHS can legally move forward without additional action by this court.".

The lawsuit is one of just one component of an evolving and controversial battle over how the 340B program is utilized. Quick expansion under the Affordable Care Act has actually been an issue for drug manufacturers that are obliged to provide rebates up to FIFTY % on certain outpatient drugs. Some legislators, meanwhile, have stated that some hospitals are inappropriately making use of profits and savings from the program.

Even as both sides wait for future action from the court associated with the law suit, additional concerns still remain about whether or not the suit will further delay the release of proposed policies that were actually anticipated in June. The so-called mega-reg will most likely clarify other elements of the 340B program. David Ivill, a partner with law firm McDermott Will & Emery, stated he expects that the statutes will not be published before the end of the year.

Read more about this 340B story

Who Qualifies to Receive 340B Discounted Drugs

One of the main restrictions in the 340B discount program is the condition that rebated medications can be dispensed only to patients of a covered entity. Presently there are numerous instances where CE could unintentionally furnish products to a consumer who is not a patient. As an example, a health center that operates an internal pharmacy may have non-patient members of the community buy medications from their pharmacy. Contracted pharmacies will surely serve both CE individuals along with other consumers.

CEs will need to make certain that procedures are in place to guarantee that only patients of the covered entity receive 340B priced medications while others receive non-340B priced medicines.

As indicating by HRSA, an individual is not regarded as a patient of the CE if the only health care services supplied by the health center to the individual is the dispensing of medications. Furthermore, OPA policy is that a covered entity individual is one who has an established affiliation with the covered entity and who obtains typical health care services by a health center provider.

The selling or delivering of a 340B priced drug to a non-patient is described as drug diversion. Covered entities are definitely accountable for making sure this type of diversion does not occur by developing appropriate tracking systems. Covered entities must possess some way to monitor drug buying and distributing separately for their 340B patients and their non-340B patients. Covered entities are required to manage both buying and distributing files and make these records available for audit by HHS. Furthermore, states may place conditions on health centers regarding splitting 340B and non-340B products for record keeping.

To be entitled to obtain 340B-purchased drugs, individuals need to receive medical care services apart from drugs from the 340B covered entity.

A person is a patient of a 340B CE only if:.

•   The CE has developed a relationship with the person, such that the health center maintains records of the individual's medical care; and...
•   The individual obtains medical services from a medical professional that is either employed by the health center or delivers healthcare under legal or other arrangements (e.g. referral for consultation) such that responsibility for the services supplied remains with the CE; and...
•   The person gets a healthcare service or variety of services from the CE that is consistent with the service or range of services for which grant funding or Federally-qualified health center look-alike status has been granted to the CE. 

A patient will not be regarded as a patient of the health center if the only healthcare service received by the patient from the covered entity is the dispensing of a drug or medications for subsequent self-administration or management in the home setting.

The obligation to guarantee compliance with 340B Program requirements stays with covered entities and manufacturers that participate. Information acquired from contractors, consultants and other third parties should not be presumed to be compliant with HRSA policy. Therefore we encourage all information and guidance obtained from external associations is confirmed by HRSA.

CenterRx Offers 340B Virtual Inventory Management Services

CenterRx - 340B Solutions
CenterRx offers inventive pharmacy delivery strategies for the flourishing market of federally qualified community health centers servicing America's most at risk populations. We are completely aware of the 340B laws by virtue of our partnership with, Feldesman Tucker Leifer Fidell LLP, top counsel for 340B as it pertains to FQHCs.

Comprehensive 340B Solution
CenterRx offers a totally thorough 340B program. The processor-centric model is developed to leverage the existing pharmacy infrastructure in place throughout America. We team up with eligible entities and their specific 340B business needs.

Virtual Inventory
The CenterRx virtual inventory system eliminates the need to manage distinct 340B physical inventories. As medicines are dispensed to eligible patients, our system monitors this utilization virtually and re-supplies drugs to contracted pharmacies at the 340B discount price.

True-up Design
As a part of its processor-centric model, CenterRx has developed a complete financial reconciliation process, consisting of all invoicing and claims reconciliation. Applying the claims information either through the switch or through CenterRx POS, CenterRx manages all billing and financial reconciliation on behalf of the FQHC. CenterRx supplies clients with an every three months true-up report.

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340B "MegaRule" on the Way

In 1992, the US government informed drug companies they needed to provide steep rebates to health centers that treat a large percent of poor patients. This government program, designed to enable certain safety-net healthcare facilities and medical clinics to save cash on pharmaceutical purchases is under fire from critics, who say the facilities are using that money for profits instead of aid patients.

The legislation received bipartisan support and it was a benefit for healthcare facilities and the federal government. In the ten years that followed, the drug discount program has certainly grown in leaps and bounds. But this spring as the feds have been composing fresh rules for the program, a battle royal has broken out between medical facilities and drug companies who say the program, named 340B, is now puffed up and poorly regulated.

"A federal program designed to allow certain safety-net hospitals and clinics to save money on drug purchases is under fire from critics, who say the facilities are using that money to pad profits rather than help patients. The 340B drug-pricing program lets thousands of hospitals, community health centers and family-planning clinics buy outpatient prescription medications from manufacturers at an estimated 25 to 50 percent discount. Participants can then charge higher rates to insured patients and keep the additional revenue." Read More 

Sometimes, rather than passing on drug discounts to individuals, medical centers offer the medicines at higher prices to their insured patients. The hospitals use the profits to finance clinics, personnel and additional services that the healthcare facilities point out benefit everybody. The law allows them to do that, the medical facilities point out, due to the fact that it's a means to stretch "scarce federal resources"-- a phrase which is in the law.

These obvious abuses have the drug manufacturers on the offensive. "Everyone sees this as a cash cow," says Maya Bermingham, vice president and senior counsel at Pharmaceutical Research and Manufacturers of America, a drug-industry business organization. "You can actually make money off of this program, and that was not really the intent of the program when it was originally formed.".

"The U.S. Dept. of Health & Human Services is moving forward with its plan to allow certain hospitals to receive discounts on orphan drugs when they are used for non-orphan conditions despite a court ruling that said the agency did not have the authority to do so." Read More

For all the disagreement, both equally the medical centers and the pharmaceutical manufacturers agree that the federal government ought to define or re-write the 340B rules. A new court judgment had brought into question whether the new rules would be introduced, but the federal Health Resources and Services Administration that supervises 340B is actually expected to introduce those new rules this month.

What is the 340B Discount Drug Program

Established in 1992, the 340B Drug Pricing Program was formulated by the U.S. Congress and signed into law by then-President George H. W. Bush as a means to provide low-cost outpatient drugs to qualified patients. This particular government program is open to healthcare service providers sought by people with finite budgets as a method for such organizations to present regulated federal financial sources and to allow these health care providers provide more programs.

After the Medicaid Drug Pricing Program was created in 1990, Congressional hearings in 1992 uncovered a predicament. The 1990 program mandated drug companies to give out rebates to states covering Medicaid expenses in order for drugs from the drug companies to be covered by Medicaid. Subsequent discounts were based on drug costs to individuals that weren't covered by Medicaid and not on previous voluntary discounts from drug companies, so drug pricing actually increased to Medicaid recipients.

The Congressional remedy was the 340B Drug Pricing Program, where any drug company participating in the Medicaid Drug Rebate Program must offer marked down drug rates to qualified health care facilities determined to be safety net health care providers. These types of discounts assist patients who need discounted pharmaceuticals, but who aren't eligible for Medicaid. Read More