340B DRUG DISCOUNT PROGRAM

340B Discount Program

The 340B Drug Pricing Program has become increasingly critical to the ability of our many of our hospital and health system clients to fulfill their missions of providing care to vulnerable patients. Yet, the relative lack of formal agency rules, ever-evolving subregulatory guidance including through feedback during audits, and scrutiny from stakeholders create operational and compliance issues for 340B covered entities. The persistent challenge of high and rising drug costs also keeps the 340B program in the spotlight.

Eyman Associates has unique expertise in assisting clients with issues related to the 340B program. We are integrally involved in federal and state legislative and regulatory policy developments and advise clients on technical compliance with the frequently shifting 340B rules. We leverage our deep involvement in 340B policymaking to advise individual clients in understanding and complying with the complex and ever-evolving rules of 340B, including permissible use of discounted drugs for different patient populations, avoiding Medicaid duplicate discounts, and hospital eligibility issues. We draft and assess 340B policies and procedures, assist with 340B audits and any related corrective actions, and advise clients regarding the impact of changes in service delivery on 340B program participation and compliance. Most recently, we have also been advisors in litigation to protect the program.

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Resources

Section 340B of the Public Health Service Act

Selected Critical Guidance
  • Medicare Reimbursement Cuts for 340B Drugs
    • 2019, 2020, 2021 OPPS final rules
    • Final 2018 OPPS Rule Implementing Medicare Reimbursement Cuts, 340B Excerpt (November 1, 2017)
    • Proposed 2018 OPPS Rule Proposing Significant 340B Reimbursement Cuts, 340B Excerpt (July 20, 2017)
  • Omnibus Guidance
  • Definition of a Patient for 340B Purposes
    • Currently Effective Definition of Patient under the 340B Program (Notice Regarding Section 602 of the Veterans Health Care Act of 1992, Patient and Family Entity Eligibility, 1996)

Definition of a Patient 

An individual is a “patient” of a covered entity (with the exception of State-operated or funded AIDS drug purchasing assistance programs) only if:

  1. The covered entity has established a relationship with the individual, such that the covered entity maintains records of the individual’s health care; and
  2. The individual receives health care services from a health care professional who is either employed by the covered entity or provides health care under contractual or other arrangements (e.g. referral for consultation) such that responsibility for the care provided remains with the covered entity; and
  3. The individual receives a health care service or range of services from the covered entity which is consistent with the service or range of services for which grant funding or Federally qualified health center look-alike status has been provided to the entity. Disproportionate share hospitals are exempt from this requirement.

An individual will not be considered a “patient” of the entity for purposes of 340B if the only health care service received by the individual from the covered entity is the dispensing of a drug or drugs for subsequent self-administration or administration in the home setting.

An individual registered in a State operated or funded AIDS drug purchasing assistance program receiving financial assistance under title XXVI of the PHS Act will be considered a “patient” of the covered entity for purposes of this definition if so registered as eligible by the State program.

  • Current DSH Outpatient Hospital Facility Eligibility Requirements
    • Currently Effective Federal Register Notice (Notice Regarding Section 602 of the Veterans health Care Act of 1992, Outpatient Hospital Facilities, 1994)
    • OPA’s Implementation through Medicare Cost Report (See “Overview” and “Hospital Registration Review Process” drop down sections for an outline of specific medicare cost report and trial balance references)
    • FAQ on ability to provide 340B discounted drugs to patients of new outpatient facility before appearance on filed cost report (HRSA FAQ ID: 4301, Last Modified: 04/08/2021)
  • Guidance Permitting use of Multiple Contract Pharmacy Arrangements (Notice Regarding 340B Drug Pricing Program – Contract Pharmacy Services)
  • OPA Covered Entity Audit Guidance
    • OPA Website Guidance on Audit Process and Standards
    • 2013 Program Notice Clarification of HRSA Audits of 340B Covered Entities
    • Findings from 340B Program Audits of Covered Entities and Manufacturers
Federal Court Decisions Limiting the Scope of OPA’s Regulatory Authority

The federal District Court of the District of Columbia ruled that OPA’s authority to issue regulations implementing the 340B program is limited to the following areas where the court said the 340B statute gives the agency explicit regulatory authority – civil monetary penalties for manufactures, calculation of the 340B ceiling price, and administrative dispute resolution. These decisions influence the scope of the nature of OPA’s governance of the program, and the

  • DC District Court Decision Vacating HRSA’s Regulations Regarding Discounts on Orphan Drugs (Pharm. Research & Mfrs. of Am. v. U.S. De’t of Health & Human Servs., 43 F. Supp. 3d 28, 42-45 (D.D.C. 2014)
  • DC District Court Decision Vacating HRSA’s Subsequent Interpretive Rule Regarding Discounts on Orphan Drugs (Pharm. Research & Mfrs. of Am. v. U.S. De’t of Health & Human Servs., No. 14-1685-RC (D.D.C. Oct. 14, 2015)

For full program guidance, see the HRSA OPA and Apexus websites