Pennsylvania ADAP & 340B

1. Pennsylvania ADAP & 340B John Haines, Pharm.D. 2014 National ADAP TA Conference

2. Discussion • Pennsylvania ADAP • 340B Program • Drug Pricing & Reimbursement • Rebates • Resources

3. Pennsylvania ADAP

4. PA ADAP Eligibility

5. 340B Drug Pricing Program • Established by Section 340B of the Public Health Service Act of 1992 (42 U.S.C. § 256B) • Requires drug manufacturers to provide discounted drugs to 340B covered entities • The manufacturer may not charge a covered entity more than the 340B ceiling price for drugs as defined in the legislation • There is no prohibition against the manufacturer from providing sub-340B discounted prices

6. Requirements for 340B Covered Entities • Prevent duplicate discounts • Prevent diversion to ineligible patients • Maintain auditable records • Keep 340B database information accurate and up to date • Recertify eligibility every year • Not participate in a group purchasing organization for covered outpatient drugs

7. 340B Covered Entity Responsibility • The covered entity holds the primary responsibility for ensuring compliance with all aspects of the 340B program • The covered entity, in conjunction with the 340B contract pharmacy, must prevent duplicate discounts and drug diversion • The covered entity and contract pharmacy are subject to audit by the manufacturer or federal government • The 340B covered entity is ultimately liable for failure to comply with 340B requirements and is subject to removal from the program if found to be non-compliant

8. Challenges Identified • Increase in 340B contract pharmacies (& covered entities) • Drug reimbursement • Reimbursement of drugs at full commercial rates • Ensuring identification of 340B purchased drugs • Medicaid exclusion file does not apply to ADAP’s • Determination of 340B acquisition cost by pharmacies • Retrospective determination of 340B patients and drug purchases by pharmacies • Replenishment model • Separate 340B and non-340B drug inventory • Pushback from 340B contract pharmacies and covered entities due to a change in 340B reimbursement rates • Changes in reimbursement rate = Law/regulation or contract • Rebates • Inability for ADAP to collect 340B rebates • Collection of ADAP Crisis Task Force supplemental rebates on 340B drugs • Changes to PBM’s rebate system • Multiple invoices to a single manufacturer

9. 340B Contract Pharmacies • Covered entities are permitted to use contract pharmacies in a ship to bill to arrangement • Starting in 2010, Health Resources and Services Administration (HRSA) allowed covered entities to utilize multiple contract pharmacies

10. Growth in Contract Pharmacies July, 2014 17,622 Hardin, J. E. & Murray, D. (Jan. 2012). Update on 340B Drug Pricing Program [PowerPoint slides]. Retrieved from http://www.nastad.org/Docs/084644_ADAP%20TA%20webinar%20-%20340%20Program%20-%20January%202012.pdf

11. Best Price • Ryan White Part B Grant Requirement • Both HHS and Congress expect that States will use every means at their disposal to secure the best price available for all products on their ADAP formularies in order to achieve maximum results with these funds. RWHAP Part B grantees must adopt at least one defined cost saving practice for their ADAP program that is equal to or more economical than the 340B Drug Pricing Program and its Prime Vendor Program. If your organization is eligible to be a covered entity under Section 340B of the Public Health Service Act, and the assessment shows that participating in the 340B Drug Pricing Program and its Prime Vendor Program is the most economical and reasonable manner of purchasing or reimbursing for covered outpatient drugs (as defined in that section), failure to participate may result in a negative audit finding, cost disallowance, or grant funding offset. • Ryan White Part B National Monitoring Standards • Requires ADAP’s to have a process to secure best price available for all products including 340B pricing or other

12. Covered Entity’s Access to 340B Discounted Prices Direct Purchase vs. Rebates

13. Access to 340B Discounted Prices

14. Access to 340B Discounted Price - Direct Purchase Manufacturer 340B Drug Shipped to Distributor Wholesale Distributor Covered Entity Purchases Drug at 340B Price 340B Drug Shipped to Pharmacy 340B Covered Entity (Direct Purchase) Pharmacy 340B Drug Dispensed to Patient Patient

15. Access to 340B Discounted Price – Rebate Manufacturer Non-340B Purchased Drug Shipped to Distributor Wholesale Distributor Non-340B Drug Shipped to Pharmacy 340B Rebate Paid to Covered Entity Pharmacy Purchases Drug at Commercial Price (non-340B) Pharmacy Covered Entity Reimburses Pharmacy at Commercial Rates 340B Covered Entity (Rebate Model = ADAPs Only) Non-340B Drug Dispensed to Patient Patient

16. Two Covered Entities – 340B direct purchase & rebate? Manufacturer 340B Drug Shipped to Distributor Wholesale Distributor Covered Entity Purchases Drug at 340B Price 340B Drug Shipped to Pharmacy 340B Covered Entity (Direct Purchase) 340B Rebate Paid to Covered Entity Pharmacy Covered Entity Reimburses Pharmacy at Commercial Rates 340B Covered Entity (Rebate Model = ADAPs Only) 340B Drug Dispensed to Patient Cannot purchase the drug at the 340B price and receive a 340B rebate on the same drug = Duplicate Discount Patient

17. Pharmacy Agreements • Identification of 340B purchased drugs – full pay and copay claims • Reimbursement rates established for 340B and non-340B drugs • Dispensing fees for 340B and non-340B drugs • Pharmacies/340B covered entities have the option to submit commercial or 340B claims to PA ADAP

18. Pharmacy Agreements • Other options: • Require all claims to be submitted using drugs purchased at commercial prices (non-340B) • Collect 340B rebates on all claims • Change the PA ADAP model to a hybrid model (allows for the option to either directly purchase 340B drugs or collect a rebate) • Limited pharmacy network (1 mail order pharmacy) • ADAP would be able to purchase at 340B or non-340B depending on what is more cost effective to the program • Other pharmacies and 340B covered entities would not be involved in the drug procurement and dispensing process • ADAP patients would have to switch to the ADAP pharmacy

19. Identification of 340B Pharmacies & Drugs • Office of Pharmacy Affairs 340B database allows for identification of 340B contract pharmacies and covered entities • Does not allow ADAP to determine if 340B drugs will be submitted to ADAP for reimbursement • National Council for Prescription Drug Programs (NCPDP) – 340B Information Exchange process • Submission clarification code – Value 20 • Basis of cost determination – Value 08 • Ingredient cost – 340B actual acquisition cost (AAC)* • *PA ADAP Defined AAC as the amount paid by the provider for a drug, including any discounts, rebates, chargebacks, refunds, price reductions, credits or other seller adjustments received by the provider • Original vs. informational drug claims • PA ADAP requires original (B transactions) to be submitted when identifying 340B drugs • Allows ADAP to reimburse 340B drugs at the 340B reimbursement rate • Informational claims (N transactions) for 340B drugs are not accepted • Allows for identification of previously submitted original (B1) drug claims as 340B purchases • N transactions do not include a pricing segment • ADAP would be unable to adjust the reimbursement rate to the 340B rate when a claim was originally submitted as a non-340B claim

20. Drug Reimbursement • Non-340B Drugs (commercial drugs) • Reimbursement rate • Brand drugs = Lower of U&C, AWP-14%, or WAC+7% • Generic Drugs = Lower of U&C, AWP-25%, WAC+66%, or FUL • Dispensing Fee = $4 • 340B Drugs • The PA ADAP reimbursement rate for drugs purchased at 340B prices is based on the average 340B acquisition cost plus appropriate dispensing fees • ADAP is unable to collect a rebate on drugs purchased at the 340B price • The only way for ADAP to access the 340B price, is to reduce the amount that is reimbursed by ADAP to match the discounted price paid by the 340B pharmacy/covered entity • Reimbursement rate • Brand drugs = Lower of U&C or WAC-49% • Generic drugs = Lower of U&C, WAC-49%, of FUL • Dispensing fee = $12

21. Drug Reimbursement • 340B Drugs (continued) • If PA ADAP is the only payer (primary claims) • Reimbursement is based on the average 340B acquisition cost of the drug plus dispensing fee • Increased the dispensing fee to $12 for 340B drugs • If the cardholder has insurance and SPBP is the secondary payer (copay claims) • The ADAP pharmacy agreement does not impact the reimbursement paid by the other insurance plan • ADAP pays the deductible, copay or out-of-pocket expenses

22. Previous Pharmacy Network

23. *Percentile Interpretation: Counties shown with higher percentiles of PDLWH/A have a higher % of PDLWH/A among all PDLWH/A in PA PA ADAP-Network Pharmacies – Old Pharmacy AgreementOverlaid on the Percentile Distribution of Persons Diagnosed & Living with HIV/AIDS (PDLWH/A) by County, 1/1/2012 (n=4; 0.14%) Out of state, not shown on map:-Out of State Mail Order (n=14; 0.5%)-Out of State Others (n=18; 0.64% )*See tabulation of county locations of all SPBP-contracted pharmacies on next slide (n=6; 0.21%) (n-=370; 13.21%) (n=2388; 85.29%)

24. New Pharmacy Network

25. **Percentile Interpretation: Counties shown with higher percentiles of PDLWH/A have a higher % of PDLWH/A among all PDLWH/A in PA PA ADAP Network Pharmacies – New Pharmacy Agreement*Overlaid on the Percentile Distribution of Persons Diagnosed & Living with HIV/AIDS (PDLWH/A) by County, 1/1/2012 Out of state, not shown on map:-Out of State Mail Order (n=6; 0.31%)-Out of State Others (n=14; 0.71% )*Based on agreements received as of July 11, 2014 **See tabulation of county locations of all SPBP-contracted pharmacies on last slide (n=1; 0.05%) (n=2; 0.10%) (n-=231; 11.82%) (n=1,692; 87.00%)

26. Rebates • 340B rebates • ADAP’s are the only 340B covered entity that are able to access 340B discounted prices by collecting a drug rebate • Unit rebate amount is based on the Medicaid rebate calculation • AMP x 23.1% or AMP - best price; CPI-U adjustment • AMP x 13% • Commercial drugs - ADAP can collect 340B rebates on full pay and copay claims • 340B purchased drugs – ADAP cannot collect 340B rebate on full pay or copay claims • ADAP Crisis Task Force supplemental rebates – generally can collect the supplemental rebate on all drugs

27. Rebates (continued) • ADAP Crisis Task Force supplemental rebates • Negotiated by the Task Force on behalf of all ADAP’s • Eligible for ADAP supplemental rebate on most 340B and non-340B drug claims, refer to manufacturer’s term sheet • Individual State manufacturer rebate agreements • Required in PA by the Prudent Pharmaceutical Purchasing Act • PA ADAP cannot reimburse a prescription drug without a rebate agreement between the ADAP and the manufacturer

28. 340B Resources

29. Office of Pharmacy Affairs (OPA) • Primary oversight of the 340B program • Detailed information about the 340B program available on OPA’s website • 340B covered entity recertification (yearly) • 340B database – search for covered entities and contract pharmacies in your state • Submit change requests to OPA to keep records up to date • Questions about 340B – call or email OPA/Apexus

30. A-133 Audit Compliance Supplement • A-133 Audit Compliance Supplement for HIV Care Formula Grants • Suggested audit procedures for the 340B drug pricing program • Accurate information – compare latest change form submitted to OPA to the actual physical location • Determine if 340B drugs purchased were identified throughout the procurement process, including payment at the discounted price and proper identification as a 340B drug upon receipt • For 340B drugs purchased, determine if the required authorizations were received, to whom the drugs were dispensed, and if individuals were eligible patients before dispensing the drugs • Verify that the grantee did not claim, receive, or retain a duplicate rebate for those drugs under the Medicaid program

31. 340B Prime Vendor Program • All ADAP’s are eligible to enroll • Access to 340B PVP Contract Catalog • Including 340B ceiling price data • Resources available such as sample 340B Policy & Procedure documents • www.340bpvp.com

32. NASTAD • ADAP specific 340B information available • ADAP and 340B 101, FAQ • ADAP and 340B best practices • www.nastad.org

33. Contact Info John Haines, Pharm.D. Clinical Manager & Pharmacist Pennsylvania Department of Health Special Pharmaceutical Benefits Program c-johaines@pa.gov 717-703-9171