Fourth Annual 340B Coalition Winter Conference

1. Fourth Annual 340B Coalition Winter Conference Constance A. Wilkinson, Esq.EPSTEIN, BECKER & GREEN, P.C.

2. 2 NDC Reporting: Retrospective Application May States claim additional rebates for prior periods if they now identify NDCs for drugs previously reimbursed? DRA requirements regarding collection and submission of utilization data for physician-administered drugs became effective beginning January 1, 2006 No indication in legislation or legislative history that States were meant to attempt to collect rebates for prior periods Mere reference to “uncollected rebates”

3. 3 NDC Reporting: Retrospective Application May States claim additional rebates for prior periods if they now identify NDCs for drugs previously reimbursed? May violate legal/contractual requirements Section 1927 (b)(2)(A), “State responsibility”, requires a State Medicaid agency to report utilization data for each covered outpatient drug to a manufacturer “not later than 60 days after the end of each rebate period” National Medicaid Rebate Agreement addresses manufacturer and Secretary responsibilities: The manufacturer agrees to make rebate payments for each quarter within 30 days after receiving Medicaid Utilization Information (Sec. II) The Secretary agrees to use “best efforts” to ensure that the State agency will report Medicaid Utilization Information within 60 days of the last day of each quarter (Sec. III(a)) “Medicaid Utilization Information” means the total number of units of each dosage form and strength (by product name and NDC number) for covered outpatient drugs reimbursed during a quarter (Sec. I (n))

4. 4 NDC Reporting: Retrospective Application May States claim additional rebates for prior periods if they now identify NDCs for drugs previously reimbursed? Medicaid Drug Rebate Program Releases permit States to correct utilization data for individual NDCs only for certain changes such as: total units reimbursed, number of prescriptions, and total reimbursement amount (Letter to State Medicaid Directors, Release No. 16) Other legal theories, such as laches, may apply In 2003, CMS requested that States identify Medicaid drugs, specifically those using HCPCS J-Codes, by their NDC numbers so that rebates could be collected for these drugs (Letter to State Medicaid Directors, SMDL #03-002) 1996 HHS OIG report found that only 6 States were collecting rebates on physician-administered drugs 2004 HHS OIG report found that in 2001, 17 States collected rebates for physician-administered drugs and 31 States did not Dispute Resolution procedures recognize need for finality and timeliness

5. 5 NDC Reporting: Retrospective Application May States claim additional rebates for prior periods if they now identify NDCs for drugs previously reimbursed? Effect on State Medicaid agency: ability to recoup costs of system changes through current and prior period rebates Effect on manufacturer: unknown contingent liability (limited ability to reserve funds); possible record retention issues Effect on 340B Covered Entities: if State attempts to collect rebates on drugs purchased in past at 340B prices, how will the duplicate discount this creates be remedied?

6. 6 NDC Reporting: Retrospective Application Questions? Connie Wilkinson cwilkinson@ebglaw.com (202) 861-1378