340B Supply Chain Partners Push Back Against Manufacturer Contract Pharmacy Requests

Your 340B Report for Thursday August 20, 2020

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Note from Publisher and CEO Ted Slafsky: We are pleased that Bronwyn Mixter is filling in for Tom Mirga for the next two weeks while Tom takes a late summer break. Bronwyn is a veteran health care reporter who covered the 340B program and other pharmaceutical issues for many years at Bloomberg BNA. If you have tips or story ideas for Bronwyn, reach her at bronwyn.mixter@340breport.com. Next week, we plan to publish an issue on Wednesday rather than our usual schedule of Tuesday and Thursday. Of course, if breaking news occurs, you will hear from us.

On another note, I encourage you to read LicenseTrak’s Tony Zappa’s new piece on setting a up a good system to maintain compliance with grant rules and requirements. We are pleased to have LicenseTrak as a 340B Report sponsor.

Business units of two of the nation’s largest health care conglomerates warned a major U.S. health system yesterday to carefully consider whether to obey drug manufacturers’ requests or demands for their 340B contract pharmacy claims data. 

340B Supply Chain Partners Push Back Against Manufacturer Contract Pharmacy Requests

Business units of two of the nation’s largest health care conglomerates warned a major U.S. health system yesterday to carefully consider whether to obey drug manufacturer Merck’s request and manufacturer Sanofi’s demand to upload their 340B contract pharmacy claims data to a vendor so the companies can identify duplicate 340B discounts and Medicaid, Medicare Part D, and commercial rebates.  

Optum Specialty & Diplomat (the specialty pharmacy division of pharmacy benefit manager Optum Rx, itself a part of managed care company UnitedHealth Group), told the health system yesterday “we have concerns” that “some drug manufacturers are requesting that you upload certain contract pharmacy claims data related to 340B eligible prescriptions” to prescription drug information technology company Second Sight Solution’s 340B ESP platform. The health system, which requested anonymity, contracts with Optum Specialty to provide 340B purchased drugs to patients. “Such claims data includes information that is protected under applicable law and the terms of our agreement,” Optum Specialty said. It told the hospital it was concerned about potential disclosure of confidential patient information to Second Sight plus information that “may be considered ‘confidential’ under the terms of our pharmacy services agreement and/or non-disclosure agreement.”

Also yesterday, the health system received a letter from one of its 340B third party administrators, Wellpartner, a division of CVS Health. “The terms and conditions of the manufacturers’ 340B ESP program raise numerous issues that a covered entity may want to consider before enrolling in the program,” Wellpartner said. “Our agreement with you, for example, requires the confidentiality of data, pricing, and other information and prohibits disclosure to a third-party without prior written consent.”

Wellpartner said, “CVS is willing to authorize a covered entity’s disclosure of Medicaid fee-for-service claims to 340B ESP for the sole purpose of reviewing potential Medicaid duplicate discounts, provided the manufacturer is willing to enter into an appropriate nondisclosure agreement. If desired, CVS may also authorize release of managed Medicaid claims. CVS will work with covered entities to create a claims report that includes the limited data elements requested by 340B ESP.”

“As it is not a required element for 340B compliance, at this time CVS does not authorize a covered entity’s disclosure of any other data to 340B ESP, including, but not limited to, Medicare Part D claims and commercial claims,” Wellpartner said.  340B Report has learned that other third party administrators (TPAs)  have also told its customers that they have no obligation to provide such a broad claims request and that providing this information could violate the terms of their contract with their TPA.

Second Sight Solutions Business Development Lead Aaron Vandervelde told 340B Report yesterday that the company “is in active discussions” with seven 340B TPAs “regarding direct data submissions” to its 340B ESP platform.


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Grant Management: Best Practices to Reduce Stress and Ensure Compliance

Tony Zappa, CEO of ZAA Technologies, LLC, makers of LicenseTrak

Many 340B covered entities receive at least partial funding through public and private grants. Leaders and staff do a lot of work to win grants and may think they can relax when the award is made. But this is when the work really starts.

Maintaining compliance with the grant’s rules and requirements can be daunting if recipients don’t have a good process and system to manage it. Start during the application process: Set your team, define your procedures, and implement a management system to help record, track, and report your performance against requirements. Then, when you’ve won the award, start actively managing the grant and your program:

  • Call a kick-off meeting to get everyone aligned with the grant’s objectives and requirements. Identify any operational or reporting gaps and brainstorm ideas to fill them.

  • Define the measurement, documentation, and reporting requirements in as much detail as possible. What needs to be measured? Who will do it? Where will the data come from? How will it be collected and reported? How will tasks be kept on schedule? These questions likely affect multiple departments and all stakeholders need to be included and consulted.

  • Build in regular checkpoints with key leaders and staff. These will help identify challenges and gaps that need to be solved and filled. Regular meetings will also help foster communication and integration between and within departments, and make sure everyone understands how your organization is performing. Transparency and urgency should be two of your communication goals, with no reprisals for bad news.

  • Communicate with external partners and grantors. Help people understand how you’re performing and the challenges you’re facing. Be clear about your progress, including areas where you may need help. Your partners and grantors likely have rich networks they can use to lend aid when needed.

  • Be sure you are holding to contractual commitments and timelines. This includes expenses, services provided, and reports. Use a system that can provide reminders of key milestones and due dates to avoid delays or program lapses.

This is just a short list of considerations when managing grants, and broader descriptions can be found on a number of web sites. All of them have a common theme: Plan early, communicate often, and have a system that can support your requirements. For example, LicenseTrak’s Accreditation Management System module can keep a list of all requirements, track their due dates, alert team members when items are coming due or overdue, and record all pertinent details. LicenseTrak’s other modules can record and track program details including staff licenses and credentials, training programs, service incidents, and much more. Even using applications like Excel and Outlook to manage tasks will give you an edge over organizations that don’t have any systems.

Grant management can be challenging but doesn’t have to overwhelm your organization. Planning, communication, and good systems are the keys to good performance.

Tony Zappa, Pharm.D, M.B.A., is CEO of ZAA Technologies, LLC, makers of LicenseTrak. He has 35 years of executive experience in pharmacy and health care, including 10 years with 340B-related businesses. You can reach him at tzappa@zaatechnologies.com or on 844-542-8725.


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Novartis Begins Requiring 340B Entities’ Contract Pharmacy Claims Data

As we first reported in a breaking news item on Aug. 18,  drug manufacturer Novartis is the latest company to request contract pharmacy claims data from 340B providers. Since then, covered entities have started to receive letters about the manufacturer’s use of Second Sight Solutions’ 340B ESP platform to address duplication of 340B discounts and Medicaid, Medicare Part D, and commercial rebates in 340B contract pharmacy. Novartis is the third manufacturer to disclose it has signed up with Second Sight.

In a letter dated Aug. 17, Novartis said beginning Oct. 1 all covered entities “will be required to register and upload all 340B claims data originating from contract pharmacies” to 340B ESP. A covered entity’s “ability to continue to benefit from the 340B discount on [contract pharmacy] transactions” will not be affected “as long as the requested claims data is provided.”

In an attached FAQ document, under the heading “What happens if my organization does not provide 340B contract pharmacy claims data?” Novartis said, beginning Oct. 1, all 340B covered entities must register with 340B ESP “and provide claims data originating from [contract pharmacy] utilization in order to receive 340B reimbursements from Novartis.”

Some 340B stakeholders who read the FAQ said it is unclear what Novartis means by “340B reimbursements.” Novartis has not responded to a request for clarification.

Attention 340B covered entities and other stakeholders: If you receive communications from drug manufacturers or their agents adding new conditions on your participation in 340B or denying 340B discounts, we would appreciate hearing from you. Please contact us at info@340breport.com. We will shield your identity if you wish.

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Hospital Groups Slam Manufacturers’ Push Against 340B Contract Pharmacy

The heads of two national hospital associations separately issued statements Tuesday blasting drug manufacturers’ recent push against 340B contract pharmacy.

America’s Essential Hospitals President and CEO Bruce Siegel said:

Recent actions by pharmaceutical manufacturers hinder access to affordable medications for millions of people who face financial hardships and defy clear statutory requirements that they provide drugs to 340B Drug Pricing Program covered entities.

These manufacturers have threatened punitive actions—including withholding 340B drugs to contract pharmacies—for failing to comply with arbitrary reporting requirements. These data requests have no clear link to program integrity. Rather, they seem to be little more than a fishing expedition.

The federal government already has sufficient safeguards in place to avoid duplicate discounts under Medicaid and the 340B program. Particularly concerning is that the manufacturers’ data requests unduly exceed the scope of these federal protections by including commercial and Medicare activity.

These requests also burden the same hospitals now on the front lines of our COVID-19 response and put access to vital medications at risk for millions of people disproportionately affected by the pandemic. We call on the Department of Health and Human Services to intervene and put an end to these unwarranted manufacturer requests.

340B Health President and CEO Maureen Testoni said the following about AstraZeneca’s recent decision to limit 340B pricing to one contract pharmacy per covered entity:

The action of AstraZeneca is a direct attack on the 340B drug pricing program that will hurt hospitals, health centers, and clinics as well as the low-income and rural Americans who rely on them for care. We believe that refusing to offer discounts that the 340B statute requires is a violation of federal law. We are calling on Health and Human Services Secretary Azar to exercise his authority to stop these overcharges before they cause permanent damage to the health care safety net.

AstraZeneca is one of several major manufacturers that recently have cut off access to 340B pricing—or threatened to do so—for hospitals, health centers, and clinics that partner with pharmacies in their communities to deliver needed medications to patients. AstraZeneca’s serious escalation of this trend would punch holes in the system of 340B discounts that Congress mandated. If the administration will not use its authority to enforce the law, we will pursue all legislative and legal avenues available to us to defend the safety net.

Ryan White Clinics Seek To Reverse New York State Medicaid Reimbursement Changes 

The New York State chapter of Ryan White Clinics for 340B Access (RWC-340B) launched a campaign this week to persuade Gov. Andrew Cuomo (D) and state lawmakers to reverse the scheduled transfer of Medicaid managed care pharmacy benefits to Medicaid fee for service effective April 2021.

In early April during the height of the state’s COVID-19 outbreak, state lawmakers passed budget legislation shifting the Medicaid drug benefit from managed care to FFS and basing reimbursement for such drugs on actual acquisition cost plus a dispensing fee. The New York State Health Department has started laying the groundwork to implement the transfer.

RWC-340B said in a news release the transfer “would harm Ryan White Clinics, Federally Qualified Health Centers, Safety Net Hospitals, and other safety net providers in the 340B drug discount program and adversely impact the financial stability of health care clinics across New York State.”

“Clinics rely on this funding to operate food pantries, provide transportation assistance, STI screenings, and run harm reduction programs—services that often grossly underfunded by the state. If the carve out is not reversed, many patients across the state will simply have nowhere to turn,” the group said.