To Be or Not to 340B
Posted by Roy Wilkinson on Fri, May 01, 2009 @ 04:06 PM
A pending new proposed rule may enable some pharmacy
benefit plan sponsors to take advantage of reduced drug pricing made available to them through expanding the number of pharmacies that can qualify for favorable 340B treatment.
The 340B Drug Pricing Program resulted from enactment of Public Law 102-585, the Veterans Health Care Act of 1992, which is codified as Section 340B of the Public Health Service Act. Section 340B limits the cost of covered outpatient drugs to certain federal grantees, federally-qualified health center look-alikes and qualified disproportionate share hospitals. Significant savings on pharmaceuticals for outpatient prescriptions can be realized by those entities that participate in this program, with discounts approximately 50% below AWP.
The program is administered by the Health Resources and Services Administration ("HRSA"), which is a unit of the U.S. Department of Health and Human Services.
Existing regulations require 340B entities to dispense outpatient drugs from a single contact pharmacy or from an on-site pharmacy.The proposed pending regulations would establish the use of multiple 340B pharmacies, in order to provide more convenience to patients. This could also enable some payors to take advantage of the reduced cost pricing (hospitals and universities, for example). Eligibility for 340B drugs is not determined by a patients income, but whether the member is a patient of a covered 340B entity.
The University of Michigan and our friend, Ken Bruhnsen, manager of the UM pharmacy benefit program, is one institution that's exploring new options. According to Ken, roughly 50% of the university's employees receives medical care from UM Hospitals and Health Centers ("UMHHC"), which qualifies under 340B. Ken was quoted in a recent Drug Benefit News story that approximately 150 plan members received specialty drugs last year under 340B, resulting in estimated savings of almost $900,000. UM has applied for a demonstration project with HRSA that would create a 340B network. This would greatly expand the number of patients that could be served, and according to Ken, could create $6 million in savings.
A word of caution, however, is advisable. Abuse of the system will not be judged kindly. It's a very politically-sensitive issue, and the thought of employers using a "loophole" to reduce their own costs would get Washington up in arms (as if their are not enough corporate necks on the chopping block already).
You can read the proposed rule on expanding 340B by visiting http://www.hrsa.gov/opa/ frn011207.htm