Hospitals, Others Have Concerns With 340B Guidance

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By Bronwyn Mixter

Oct. 27 — Hospitals are concerned that HRSA's proposed guidance for the 340B drug discount program will restrict patient access to drugs and undermine the quality of care, according to recent comments.

In addition, Medicaid managed care plans have concerns about the proposed patient definition in the guidance, which is more restrictive than the existing definition. The drug firm Allergan Inc. also said the Health Resources and Services Administration should take steps to prevent cosmetic products, such as its Botox Cosmetic, from being purchased through the 340B program.

These stakeholders were among the commenters on HRSA's draft 340B guidance document released in August. The document covers several aspects of the program, which helps safety-net providers obtain discounted drugs.

Comments were due Oct. 27 (RIN 0906-AB08). The agency will consider the comments as it works on the final version of the guidance.

Hospitals Concerned About Access 

America's Essential Hospitals said that while it appreciates HRSA's “desire to provide clarity on the parameters” of the 340B program, “many of the elements in the proposed guidance fall short of this desired purpose.”

“If implemented as is, the proposed reductions in the scope of patients for whom hospitals may use 340B discounted drugs and the drugs for which such discounts are available will restrict patients' access to critical drugs and undermine quality of care,” the hospital group said. The proposed guidance “threatens 340B providers' ability to continue to offer critical services to vulnerable patients by potentially restricting the definition of a patient, adding requirements for hospital outpatient facility eligibility, and narrowing the interpretation of which drugs qualify as covered outpatient drugs.”

The hospital group said the proposed definition of patient “distorts what had been a straightforward use of the word ‘patients' in the statute into a complex, multipart legal concept that would be utterly unrecognizable to any practicing health care professional, let alone patients themselves.”

“If hospitals were required to comply with the definition as proposed, it would result in senseless distinctions between patients for whom hospitals can and cannot use 340B discounts, as well as associated administrative/compliance mechanisms to educate providers and track and audit patients based on such distinctions,” America's Essential Hospitals said. The group said HRSA should withdraw the proposed patient definition.

HRSA also shouldn't apply the Medicaid-limiting definition to the definition of 340B covered drugs, the hospital group said. HRSA proposes that “drugs bundled for and receiving such bundled reimbursement under [Medicaid] will be considered excluded from the definition of covered outpatient drug.”

America's Essential Hospitals said the limiting definition was intended to apply to Medicaid rebates, not to the 340B program, and applying it to the 340B program “would exclude from the program any number of drugs that are critical to effectively preventing and managing conditions, as well as hospitalization.”

“At a minimum, if HRSA applies the limiting definition to the definition of a 340B covered outpatient drug in its final guidance, it should only apply to drugs actually reimbursed by Medicaid in a bundled payment for Medicaid patients, and the limitation should not apply to Medicaid managed care drugs,” the hospital group said.

Medicaid Plans Weigh In 

The Medicaid Health Plans of America (MHPA) said HRSA should clarify when key 340B stakeholders should be prepared to implement the required changes outlined in the guidance.

“This information will help to guide stakeholders through planning processes and administrative and implementation requirements,” the MHPA said. The group represents Medicaid managed care plans.

It said the new patient definition in the guidance may impede access to 340B drugs. The criteria “outlined in the proposed guidance represent a much more restrictive definition of patient than the existing definition provided in the 1996 guidance,” the group said. Under the proposed guidance, a patient who receives care from a provider at a certain covered entity site and then follow-up care from the same provider at a different site wouldn't be able to receive 340B drugs, the MHPA said.

“Furthermore, the new patient definition may make it difficult for contract pharmacies to identify prescriptions that qualify as 340B claims at the point of sale, which introduces further complexities into the process,” the group said.

Also, the MHPA said the proposed guidance requires covered entities to have separate national provider identifiers (NPIs) if they plan to both bill Medicaid for 340B drugs dispensed at sites registered with the 340B program, and bill Medicaid for drugs dispensed at non-340B sites.

“We believe this provision could significantly impact the operations and processes of in-house and contract pharmacies because it would be difficult for them to identify 340B eligible claims and then divide them by two different NPIs without the help of an administrator,” the MHPA said.

The group recommended that HRSA require pharmacies to instead flag 340B claims using the National Council for Prescription Drug Programs submission clarification code. “This would denote that a claim should be excluded from the state's manufacturer rebate requests while avoiding complexities that may arise from a separate NPI system,” the group said.

In addition, the MHPA requested that the agency provide clarification in the final guidance and tools by which covered entities can identify which individuals are enrolled in a Medicaid managed care organization (MCO). The group said that without this clarification and provision of tools, it will be difficult for covered entities to determine whether claims should be carved in or carved out and also complicates the processes used by MCOs to avoid or prevent duplicative discounts.

Allergan's Concerns 

Allergan Inc. said that HRSA should take steps to prevent the purchase and use of cosmetic products through the 340B program. The company said it makes two distinct botulinum toxin biologic products, Botox and Botox Cosmetic. Botox is used to treat neuromuscular disorders and other conditions where there is excessive stimulation of muscles or glands. Botox Cosmetic is used to reduce wrinkles.

Allergan said it participates in the Medicaid Rebate Program and the 340B program and reports sales prices for both Botox and Botox Cosmetic to these programs. Because the current definition of covered outpatient drug under the 340B program includes any drug or biological approved by the Food and Drug Administration, both Botox and Botox Cosmetic are considered covered outpatient drugs under both programs, the company said.

“For Medicaid purposes, there have been almost no rebates paid for Botox Cosmetic since it is never covered,” Allergan said. “By contrast, hospitals eligible for the 340B program can and do access Botox Cosmetic at 340B prices whether or not the product is used in any covered services.”

Allergan said it “strongly” supports the definition of eligible entity in the proposed guidance because it clarifies that an off-site outpatient facility dedicated to providing aesthetic or cosmetic services would be “theoretically excluded from the definition of eligible entity.”

The company said it recommends that HRSA “give close consideration to off-site facilities that provide a mix of therapeutic and aesthetic/cosmetic services.”

“Some dermatology clinics, for instance, provide a mix of therapeutic dermatological services along with other cosmetic procedures,” Allergan said. “Under the proposed guidance these facilities could still be eligible to purchase products, including Botox Cosmetic, under 340B discount prices.”

Also, Allergan said HRSA should make it clear that individuals who seek outpatient health care for purposes of cosmetic procedures unrelated to injury or disease either at a covered entity or an affiliated facility wouldn't be considered a “patient” for purposes of the 340B program. In addition, HRSA should require a covered entity, as part of the annual recertification process, “to explicitly attest that it is not purchasing products approved solely for cosmetic uses through the 340B program, and that the covered entity is not engaging in the unlawful diversion of 340B drugs to ineligible facilities,” the drug company said.

To contact the reporter on this story: Bronwyn Mixter in Washington at

To contact the editor responsible for this story: Janey Cohen at

The proposed guidance is at

Comments are at under docket No. HRSA-2015-0002-0001.


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