Only 30 Providers Are Supplying Merck with Requested 340B Claims Data

Your 340B Report for Friday Sept. 25, 2020

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Only 30 Providers Are Supplying Merck with Requested 340B Claims Data

Only 30—less than 1 percent—of the 340B covered entities that drug manufacturer Merck wrote to this summer seeking their contract pharmacy claims data are sharing their data with Merck via its contractor 340B ESP, data that a Merck spokesperson provided to 340B Report today show.

Manufacturers Merck, Sanofi, and Novartis are using 340B ESP as their agent to collect and scrub covered entity contract pharmacy claims data for duplicate 340B discounts and Medicaid, Medicare Part D, and commercial rebates on the same drugs. Merck asked entities to comply and Sanofi and Novartis required compliance. Merck gave entities an Aug. 14 deadline, Sanofi and Novartis gave entities until Oct. 1. Merck said entities that don’t cooperate could face unspecified adverse consequences. Sanofi said it would stop letting entities that fail to provide the data place bill to / ship to replenishment orders for Sanofi products dispensed through a contract pharmacy. Novartis said entities that don’t provide the data will not be eligible for 340B discounts on its products.

340B providers have pushed back against the claims data demands. They say manufacturers have no right to the data requested and covered entities have no obligation to share the data. They also say the data request exceeds the scope of Medicaid fee for service. Attorneys for covered entities note that 340B providers do not bear responsibility to prevent rebates in managed Medicaid, nor in the commercial and Medicare Part D markets.

The providers say, under the 340B statute, manufacturers must sell drugs to covered entities at 340B pricing, regardless of where the provider chooses to ship the drugs. They are threatening to go to court over the manufaturers’ actions.

Yesterday, we reported that Cardinal Health representatives told two health centers that Novartis was backing off its plan to stop providing 340B pricing on Oct. 1 to uncooperative entities. A Novartis representative told us last night that it “still expects” 340B covered entities, beginning Oct. 1, to provide their contract pharmacy claims data to vendor 340B ESP every two weeks. However, it said it “will evaluate next steps as needed” about whether it also will stop providing 340B discounts to entities that do not comply.

Sanofi told us this morning it has not changed it plan, effective Oct. 1, to stop letting entities that fail to provide the data to place bill to / ship to replenishment orders for Sanofi products dispensed through a contract pharmacy.

We asked Merck this morning if its policy, effective Aug. 14, requiring 340B entities to upload contract pharmacy claims data for Merck products to 340B ESP or possibly face more burdensome action, remained in place. We also asked how many covered entities Merck contacted, and how many were cooperating.

We got this response:

Merck supports the 340B program as a mechanism for helping safety net facilities provide health care services to the vulnerable patient populations that they serve. However, the program has grown well beyond its intended purpose and is in desperate need of greater transparency, regulatory oversight, and accountability to ensure that it is continuing to serve these patients effectively and is able to remain sustainable for the long term. Merck is implementing a voluntary program integrity initiative in cooperation with 340B covered entities to address duplicate discounts. As part of this effort, in June we contacted nearly 7,500 entities to request their voluntary participation in our program. To date, 500 covered entities have registered for the program and of those only 30 have begun sharing data. We are now in the process of considering any next steps in our effort to ensure compliance with the 340B program requirements.

That only 6.6 percent of the entities Merck contacted registered with 340B ESP, and that only 0.4 percent have begun sharing their contract pharmacy claims data, raises questions about Sanofi’s and Novartis’ response rates.

On Sept. 1, drug manufacturer Eli Lilly and Co. limited 340B pricing to covered entities and their child sites only, or to just one contract pharmacy per entity for those without an in-house pharmacy. Lilly also imposed strict conditions on 340B covered entities on charges and reimbursement for Lilly insulin.

Manufacturer AstraZeneca has said it will impose similar 340B contract pharmacy limits on Oct. 1.

On Monday, the U.S. Department of Health and Human Services (HHS) told Lilly in a strongly worded letter that it was wrong to assume that U.S. Health Resources and Services Administration (HRSA) endorsed it policy. HHS released the letter Wednesday.

Administration Releases Proposed Rule to Implement 340B Executive Order

The Trump administration late yesterday released its proposed rule to implement an executive order requiring community health centers to dispense insulin and injectable epinephrine to low income, uninsured, or underinsured patients at 340B cost plus “a minimal administration fee.” It will be formally published in the Federal Register on Sept. 28. Comments will be due Oct. 28.

A final rule might never be published and never take effect. If Democratic candidate Joe Biden defeats President Trump in the Nov. 3 election, his administration probably will withdraw the regulation. Health centers oppose the executive order and rule. They say it is unnecessary and could threaten patient access to affordable prescription drugs. As we reported yesterday, health centers were pleased that they were able to convince the administration to allow for notice and comment, rather than the administration’s initial plan to bypass the typical regulatory procedures. Last week, more than 100 Democratic U.S. House members asked U.S. Health and Human Services (HHS) Secretary Alex Azar to rescind or not implement the executive order.

According to a U.S. Health Resources and Services Administration (HRSA) fact sheet, under the proposed rule, health centers will have to pass their 340B savings on insulin and EpiPens and similar devices to patients with incomes below 350 percent of the federal poverty level and who also have health insurance with a high cost sharing requirement for either insulin or injectable epinephrine, health insurance with a high unmet deductible, or no health care insurance.

Future health center federal grant awards would require centers and their subgrantees to have “established practices” to implement the executive order. “In particular, these practices would provide information to patients in an easily understandable format regarding their  administration fees, and the low-income, high cost sharing, and high unmet deductibles standard as described in this proposed regulation,” the proposed rule says.

"Expanding affordable access to lifesaving medications like insulin and injectable epinephrine can significantly improve the health status of patients with chronic diseases, ultimately reducing or even eliminating health disparities that acutely impact underserved and minority communities nationwide,” HRSA Administrator Tom Engels said in a news release announcing the proposed rule.


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