CiiTA is Concerned for Covered Entities

It should come as no surprise that CiiTA fully supports the 340B Program and recognizes the important financial role it plays in the healthcare safety net. What might be less obvious is that the vast majority of pharmaceutical manufacturers support 340B as well. (Full disclosure: CiiTA’s client base is almost exclusively drug companies.) The 340B Program was originally conceived as a means for qualified providers to “stretch scarce federal dollars” so they could serve more of those in need. Enlightened manufacturers still view 340B as a relatively efficient and focused way to support the safety net’s collective mission. However, these same manufacturers have seen the Program become increasingly less efficient and considerably less targeted over the years. CiiTA has identified two principal forces that have eroded manufacturer confidence in 340B.

The first is a separation of covered entities from the day-to-day administration of their own Programs. Because the 340B Program has become both increasingly lucrative and complicated, covered entities are compelled to outsource program management to contract pharmacy services administrators (CPSAs) who specialize in claims qualification. Even though CPSAs are not regulated by the 340B Program, they are responsible for systems that qualify 340B claims based on unique interpretations of patient, provider, and ultimately prescription eligibility. These interpretations can vary widely across administrators and are often considered proprietary intellectual property. It is not uncommon for covered entities to have limited visibility into the claims qualification processes of their program administrator. The problem is exacerbated by ambiguity about eligibility requirements – patient definition, provider status, etc. – and no accepted standard for sharing the necessary data between covered entities and 340B administrators. Therefore, the data used to qualify eligible claims is often either incomplete, out-of-date, or both. This creates an environment ripe for diversion.

The second area of concern is one I’ve already written about: A rapid increase in Medicaid claims volume, thanks to the ACA rebate expansion, without a reliable mechanism to prevent duplicate 340B discounts (see my post from 12/02/15).

What these two forces have in common is they each create and perpetuate an incomplete view of a given covered entity’s 340B Program. Claims end up as records in different databases for different purposes (e.g. state Medicaid agency rebate request files and contract pharmacy 340B inventory reports) with no established process to cross-check for duplication or inaccuracies. Given the complexity of the program and abdication of administration to third-parties, covered entities are often just as much in the dark as manufacturers about possible diversion or duplicate discounts. The major difference: drug companies bear the financial risk for ineligible claims.

Ultimately, compliance is the responsibility of the covered entity. But in practice, pharmaceutical manufacturers must recognize that many covered entities are unaware of potential problems with 340B claims qualification. Further, they are unlikely to become aware unless it is bought to their attention. This is reason enough for manufacturers to develop monitoring strategies for their various 340B accounts and isolate unexpected deviations from expected purchase patterns. Doing so will protect the bottom line as well as help some of your biggest hospital clients protect the integrity of their 340B Program.

CiiTA addresses these and other 340B Program topics in our Knowledge Series: what manufacturers need to know about 340B. Click here to check it out: CiiTA 340B Knowledge Series.