POST OUTLINE
1) Introduction / Overview
2) What is the 340B Drug Pricing Program?
3) A brief history of 340B ESP
- The reporting burdens 340B ESP place on covered entities.
- The real reason behind 340B ESP?
4) How we help eligible entities deal with 340B ESP
- Reporting your eligible prescriptions to 340B ESP.
- Tracking your 340B price reinstatements by manufacturer & contract pharmacy.
- Verifying 340B price availability by manufacturers, wholesaler accounts and contract pharmacies.
- Verifying the accuracy of 340B ESP’s pricing information.
- Working with your TPAs to ”turn-on” replenishment, ensuring they replenish appropriately.
- Ordering the appropriate 340B-eligible drugs.
5) The good news about 340B ESP, for covered entities
- VytlOne’s success in overcoming 340B ESP and other manufacturer restrictions.
VytlOne can help
For more information, contact Howard Hall. C: 214.808.2700 | howard.hall@vytlone.com
FULL POST
Over the years, we’ve served dozens of non-profit hospitals. We’ve seen the profound impact the 340B program has had in supporting those hospitals’ mission of serving the most vulnerable members of their communities. And while we respectfully acknowledge the drug manufacturers’ incalculable contributions to our very way of life, we resolutely disagree with their reasoning in undermining the intent of the 340B program. That said – –
According to its website, “340B ESP allows 340B covered entities and pharmaceutical manufacturers to work collaboratively to resolve duplicate discounts.” In truth, the site’s intent, and its impact, is nothing less than a ploy by many drug manufacturers to evade the discounts they are legally obligated to offer eligible entities — by placing extraordinary, and unnecessary, reporting burdens on hospitals submitting claims for 340B savings.
If you are already aware of 340B ESP and the burdens it places on eligible entities, Click Here to go straight to this post’s section detailing how VytlOne minimizes those burdens, while maximizing savings and ensuring compliance, for the healthcare systems we serve.
What is the 340B Drug Pricing Program?
The 340B drug pricing program was created by Congress in 1992 to provide discounts on prescription drugs to eligible health care providers (all non-profits), as a means of filling revenue gaps that are inherent to their business models. To learn more about the 340B program, Click Here.
Over the years, certain lobbying interests have published articles claiming the 340B program is one of the primary reasons drug costs in America are so high. However, as reported in a March, 2021 Fact Sheet published by the American Hospital Association, according to HRSA estimates, the value of the 340B program amounts to just 5% of the total U.S. drug market. Moreover, even with the “lost revenues” associated with the program, the drug manufacturing industry’s S&P 500 companies generate, on average, nearly double the profits of non-pharmaceutical companies (13.8% margins vs. 7.7% margins).
A brief history of 340B ESP
First, and this cannot be stressed highly enough, the 340B ESP platform is not a government entity. It is an online portal operated by Second Sight Solutions — a privately owned corporation (created and run by a man with a long history of drug-industry advocacy— see bottom of post), with no legal right to impose its restrictions on covered entities.
In June 2020, Merck became the first manufacturer to engage 340B ESP’s services, when it issued a letter “requesting” that 340B Covered Entities begin submitting a broad range of 340B contract pharmacy claims data, as part of what it called an “integrity initiative.”
While Merck described its letter as a request, the company threatened recipients who declined to cooperate that it “may take further action to address 340B program integrity, which may include seeking 340B program claims information in a manner that will be substantially more burdensome for covered entities.”
Not surprisingly, several other manufacturers soon followed, in lockstep, Merck’s lead in placing unlawful restrictions on 340B prescription discounts — including Sanofi, Astra Zeneca, Novartis and Eli Lilly. At latest count, there were 24 manufacturers imposing restrictions on 340B health systems and the contract pharmacies working with them. For the complete list, refer to this article on our blog.
The industry actions described above began almost immediately after the Health Resources and Services Administration (HRSA) admitted publicly that, for all practical purposes, it has no real power to enforce 340B program guidelines — an admission it made shortly after the U.S. House Appropriations Committee turned down HRSA’s request for broad regulatory authority over the 340B program.
In short, drug manufacturers have learned from experience that they can often unilaterally determine which of the 340B program’s legal guidelines they’ll follow, and which ones they’ll ignore. And let’s remember: The 340B program was established to support non-profit, community and charitable hospitals and clinics — most of which operate in the red, many with annual deficits in the tens of millions.
The reporting burdens 340B ESP place on covered entities
Under the requirements set down by drug manufacturers on 340B ESP, covered entities must report, twice monthly through the platform, their covered prescriptions from every TPA with whom they work. Because every TPA uses a different technology interface, this profoundly complicates matters for covered entities managing their own 340B programs — where employees are already overwhelmed with the program’s legal requirements.
Extracting accurate, up-to-date, covered-prescription data from some TPAs is literally impossible for those health systems to do, given the lack of available 340B pricing in the 340B wholesaler account. Moreover, the idea that covered entities and their contract pharmacies will regain access to their 340B discounts is an illusion — as some manufacturers have placed 45-day time-frame restrictions from the dispensing of the prescription to replenishment, knowing the covered entities will not be able to meet this requirement.
In short, many of the restrictions imposed by manufacturers through 340B ESP are designed to make the job of submitting contract pharmacy claims data for 340B drug discounts exponentially more difficult for covered entities than the system prescribed by Congress. And the simple truth is that the harder it is to submit data, the fewer eligible 340B claims result in savings, and the more the manufacturers can avoid making payments to eligible entities.
Making matters worse, as we reported in a blog post on the topic, TPAs working under the normal, legally-prescribed reporting requirements (outside 340B ESP) routinely misqualify 340B-eligible prescriptions. Moreover, two-plus years (and counting) after the introduction of 340B ESP, most TPAs serving 340B entities lack the reporting capabilities to adequately deal with the website’s requirements. Adding insult to injury, TPAs are charging covered entities for their additional time to deal with the site’s myriad complications and problems — which includes submission uploads routinely failing.
It gets even worse. The website claims prescription discounts will be issued to entities within 10 days of claims being made. Numerous reports indicate that, after periods as long as 2 to 3 months, only 50% of the manufacturers had restored 340B discounts. What’s more, entities are now forced to track their submissions, to determine whether or not they’ve been restored. For most covered entities, this involves tracking literally thousands of submissions, with thousands of different price points.
Many covered entities have found that even when their 340B discounts were regained, they were subsequently pulled-away for no known reason.
All of which means that covered entities managing their own 340B programs are faced with hiring several additional staff to attempt to meet manufacturers’ requirements, and then track whether the discounts were restored and honored.
Sadly, 340B covered entities, starved for the savings to which they are legally entitled — with no effective protection from the government which established the program — have been forced into taking whatever they can get from drug manufacturers.
How effective has 340B ESP been in enabling drug manufacturers to avoid their legal obligations? In the first year of its relationship with 340B ESP, Merck alone saved $2 billion. Money which would, in most cases, have been used by eligible hospitals to better serve patient populations who are uninsured and/or financially incapable of paying for their own healthcare needs.
The real reason behind 340B ESP?
We believe that the primary driver behind the creation of the 340B ESP system is the extensive range of commercial rebates that the manufacturers themselves have extended to PBMs — rebates which, in total, far exceed the combined discounts of the 340B program.
How we help eligible entities deal with 340B ESP
If you choose to report claims data to 340B ESP, we’ll report on your behalf. Then we’ll track 340B price reinstatement — by manufacturer, and by contract pharmacy — whether you work with a single contract pharmacy or several. We’ll also verify 340B price availability for each manufacturer, in each wholesaler account, for each of your contract pharmacies. Once verified pricing has been restored along the entire chain, we’ll work with your TPAs to ”turn-on” replenishment — and ensure they replenish appropriately.
NOTE:
Every single contract pharmacy with whom covered entities have relationships has a separate 340B wholesaler account. Wholesalers have either loaded Wholesale Acquisition Cost (WAC) prices for the restricted National Drug Codes (NDCs), or they’ve removed the NDCs from their 340B account catalog in response to manufacturer restrictions. There are many points along the way where price restoration has to be verified, and subsequent actions must be taken — which, of course, we’ll also take on your behalf.
Reporting to 340B ESP
- We track per-manufacturer / per-pharmacy 340B price eligibility according to what 340B ESP says it is.
- We verify in each 340B account — by Consumer Pricing and by manufacturer — if what 340B ESP says is accurate.
- Once we’ve verified each data point, we’ll notify your TPAs of newly restored pricing — then ensure that the TPAs request new price files from wholesalers.
- Once your TPAs have 340B prices, we’ll order the 340B eligible drugs.
There are many places where communication-failure can and does occur. We’ll communicate with manufacturers, 340B ESP and wholesalers on your behalf. We’ll then fight for reinstatement of the prices to which you’re entitled under the 340B statute.
Further complicating the process, many manufacturers have implemented a 45-day “lookback window” — without specifying what that window actually is: 45 days from prescription-dispensing at your contract pharmacy, or 45 days from reporting? No one really knows, because manufacturers’ rules are utterly inconsistent.
The good news about 340B ESP, for covered entities
Despite 340B ESP and manufacturer restrictions, VytlOne continues to generate significant savings and revenues for the health systems we serve. Savings and revenue which, for many of those health systems, literally means the difference between solvency and closure.
One of the health systems VytlOne serves employs three experienced and well-trained full-time professionals — who monitor their system’s 340B claims on a full-time basis. And yet, during the first six weeks VytlOne supported their efforts, we provided matching justification for, and generated $187,000 worth of, 340B savings that they’d overlooked.
Since 2019, VytlOne has supported the 340B programs of 33 health systems and 38 health centers. We’ve generated nearly $1 billion in total pharmacy-related savings for the clients we serve. Since the advent of 340B ESP and other drug manufacturer restrictions, every one of the health systems whose 340B programs we manage has enjoyed significant 340B-revenue increases. Naturally, results vary from system to system. However, one of the rural hospitals we support recorded a monthly net savings increase of more than 900% over their average returns once manufacturer restrictions were implemented.
For Further Reading:
7 Steps For Overcoming 340B ESP & Other Pricing Restrictions
VytlOne can help you overcome manufacturer restrictions.
For more information, contact Howard Hall. C: 214.808.2700 | howard.hall@vytlone.com
This article has also been published on RxInsider.com.
*As managing director of Berkeley Research Group, 340B ESP CEO and founder Aaron Vandervelde has written or co-written articles about the 340B program on behalf of Pharmaceutical Research And Manufacturers Of America (PhRMA). He has also produced work for AIR 340B (a drug company-led advocacy group) and other organizations — which cite his research in various misleading and inflammatory arguments that 1) Hospitals benefit from the 340B program, but 2) Low-income and uninsured patients do not, and that 3) The program raises the cost of cancer care.
