Our recent alert (http://www.foley.com/publications/pub_detail.aspx?pubid=7039) discussed the expansion of the Section 340B Drug Pricing Program (340B Program) to certain critical access hospitals, freestanding cancer hospitals, rural referral centers, sole community hospitals, and children’s hospitals under Section 7101 of the Patient Protection and Affordable Care Act (PPACA).
While the Section 7101 amendments to the 340B Program became effective on January 1, 2010, as of the publication of this alert, the U.S. Department of Health and Human Services (HHS) has not published guidelines describing the enrollment process for newly eligible entities, nor has the Pharmacy Services Support Center (PSSC) (the government contractor that supports the 340B Program) made enrollment information available. However, newly eligible entities should become familiar with the 340B Program and eligibility requirements. In addition, while awaiting additional guidance from the PSSC, newly eligible entities should consider collecting and submitting certain registration information to the Health Resources and Services Administration’s Office of Pharmacy Affairs (OPA) and taking some initial steps to preserve access to retroactive benefits, if such benefits become available.
Possible Access to Retroactive Benefits
In the past, HHS established a mechanism for newly eligible entities that were not immediately able to enroll in the 340B Program to secure retroactive access to 340B drug discounts. In 2006, Section 6004 of the Deficit Reduction Act of 2005 (DRA) added children’s hospitals to the list of covered entities eligible to participate in the 340B Program. The DRA provided that the changes adding children’s hospitals would apply to drugs purchased on or after the DRA enactment date (February 8, 2006). On July 9, 2007, HHS published proposed guidelines regarding the participation of children’s hospitals, followed by final guidelines published on September 1, 2009 (Final Guidelines).
In the Final Guidelines, HHS established the following requirements for children’s hospitals to be eligible for retroactive discounts back to the February 8, 2006 enactment date:
What Steps Should Newly Eligible Entities Consider Now?
HHS has not indicated that it will implement a similar mechanism for newly eligible entities to obtain retroactive benefits under the PPACA. However, despite the fact that neither the PSSC nor OPA has published formal enrollment guidance, in order to prepare for participation in the 340B Program and help ensure access to favorable pricing retroactively to January 1, 2010, it may be worthwhile for a newly eligible entity to notify the PSSC and OPA of its intent to enroll by submitting anticipated registration and certification information. Newly eligible entities should consider taking the following steps:
Contracting With Multiple Outside Pharmacies
Existing and newly eligible entities should be aware that it is not necessary for a covered entity to have an outpatient pharmacy in order to participate in the 340B Program. Covered entities may contract with external retail pharmacies to dispense 340B drugs for the covered entity’s outpatients. In the past, covered entities have been limited to one pharmacy per site and covered entities could either operate an in-house pharmacy or contract with only one external pharmacy. Covered entities seeking to use other types of pharmacy arrangements, or to implement both of the allowable methods of providing pharmacy services, were required to apply to OPA for an Alternative Method Demonstration Project. However, on March 5, 2010, the OPA published a Federal Register Notice (75 FR 10272) to finalize guidelines permitting a covered entity to use more than one pharmacy. The new guidelines, which became effective on April 5, 2010, now incorporate multiple pharmacies as a standard option for 340B-covered entities.
For More Information About the 340B Program
Foley's Friday Focus Web Conference on the 340B Program
Foley will help newly eligible entities understand the 340B Program and how to realize the program's benefits during our June 18, 2010 Friday Focus Web conference. Learn more at Foley.com/FridayFocus.
Legal News Alert is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our health care clients and colleagues. If you have any questions about this alert or would like to discuss this topic further, please contact your Foley attorney or any of the following members of Foley’s Critical Access Hospital and Rural Provider Team:
Kevin J. Egan
C. Frederick Geilfuss II
Maureen F. Kwiecinski