340B Drug Pricing Program Omnibus Guidance Comments

October 27, 2015 was the last day to submit comments related to the 340B Drug Pricing Program Omnibus Guidance. The proposed changes to the program have the potential to adversely affect health centers and the populations they serve (For a detailed analysis, read our article How the 340B "Mega Guidance" will affect your FQHC or Look-Alike.). Following are FQHC Associates' comments:


Krista Pedley, Director
5600 Fishers Lane, Mail Stop 08W05A
Rockville, Maryland 20857

Dear Ms. Pedley,

On behalf of FQHC Associates, as well as our clients with an interest in the 340B Drug Pricing Program, we are pleased to submit the following comments in regard to RIN 0906–AB08, 340B Drug Pricing Program Omnibus Guidance. 

We appreciate and strongly agree with HRSA’s reaffirmation early in the Draft Guidance that Congress’ stated intent of 340B is to provide financial support to covered entities so they can “stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.” Without the benefits conferred them as covered entities, many Federally Qualified Health Centers (FQHCs) would be forced to cut back on services, potentially causing great harm to the patients that they serve. 

We also strongly agree that in order for the 340B program to continue to function as Congress intended, it is vitally important that systems be in place to prevent diversion and duplicate discounts. Without adequate controls, the pharmaceutical manufacturers can rightly protest the effect of this vital program upon their businesses. 

However, we believe that a number of the proposed “remedies” in the Draft Guidance would, if implemented as written, result in potentially disastrous consequences to FQHC patients. This would be unfortunate, particularly because the majority of issues cited by the HHS Office of Inspector General were unrelated to covered entities which are FQHCs. Among the issues of greatest concern:

Redefining Individuals Eligible to Receive 340B Drugs:

As written, the proposed language would remove the FQHCs’ current ability to dispense 340B drugs for specialty and other services provided by referral. The FQHC program has relied on 340B eligibility for medications prescribed to FQHC patients either in an FQHC facility, or a treating provider who sees the patients by referral. These referrals, as well as the findings of the referral provider must be documented in the patient’s medical record with the covered entities. 

For years, HRSA has vigorously promoted the FQHC as a Patient Centered Medical Home (PCMH). This makes sense, because most FQHC programs have always operated in this manner, taking responsibility for coordinating all of their patients’ care. The FQHCs have overwhelmingly complied, with over 90% achieving PCMH recognition. The ability of FQHC PCMH 340B covered entities to improve medication compliance regardless of prescribing provider has been a key component of improving patient outcomes. The proposed language would likely have the effect of erasing much of what has been achieved. 

We are also deeply concerned that this language will lead to significant pressure on FQHC providers to re-write prescriptions originating with non-FQHC providers in order to achieve technical compliance. Not only is this practice a wasteful use of scarce resources, but it also introduces significant additional liability in the case of a negative patient outcome. 

We strongly recommend that HRSA allow FQHCs and other covered entities that achieve PCMH status the ability to provide outpatient medications to all of their patients, including those prescribed by non-employed providers. Rather than restricting 340B eligibility for patients of an FQHC PCMH, we recommend that the current standards be vigorously enforced by audits and other appropriate means. 

Prevention of duplicate discounts:

We applaud HRSA recognizing and stating that the decision to carve-in 340B participation on a site-by-site and/or plan-by-plan basis rests with the covered entity, not the state Medicaid agency. 

We strongly agree that the prevention of duplicate discounts between Medicaid rebates to the states and the 340B program is vitally important. 

We strongly agree that covered entities that carve-in Medicaid must have systems in place to identify patients enrolled with the MCOs. 

We believe HRSA is correct in defining a standardized record retention requirement for contract pharmacies. 

We understand and agree that HRSA is correct in warning those covered entities that contract with pharmacies of potentially increased enforcement of anti-kickback and other violations of program conditions. 

We strongly agree that covered entities should and must audit a statistically significant number of records for each pharmacy with which they contract. 

We suggest that HRSA include stronger language requiring state Medicaid agencies to implement a system to prevent duplicate discounts, particularly for Medicaid managed care patients seeking to utilize contract pharmacies. As currently written, the draft language overtly encourages the states to work with covered entities to address this issue, while rewarding failure to do so with Medicaid rebates. As a provider in a state Medicaid program, the covered entity lacks both the authority and the ability to define how claims are processed. State Medicaid agencies have the ability to implement systems to prevent duplicate discounts on managed care pharmacy claims, utilizing data that is already routinely captured. 

We understand HRSA’s stated intention to prevent duplicate discounts by presuming that a contract pharmacy listed on the public 340B database will be presumed not to dispense 340B drugs to Medicaid FFS or MCO patients. The draft guidance provides an exception if the covered entity provides HHS with a written agreement with the contract pharmacy and the State Medicaid Agency or MCO, describing the system. 

We strongly believe that this language has the potential to cause a number of undesirable consequences. FQHC sites with no in-house pharmacy could be prevented from dispensing 340B drugs to Medicaid patients. FQHC sites which have an in-house pharmacy could still potentially dispense fewer 340B drugs, because they are not allowed to require Medicaid patients to fill prescriptions in the FQHC pharmacy. It will potentially become more difficult to contract with outside pharmacies due to potentially decreased 340B prescription volumes reducing patient choice, particularly for patients without prescription drug coverage. 

This language will almost certainly reduce the amount of 340B revenue available to the FQHC to further its mission. The reduced 340B revenue will certainly threaten the financial viability of many FQHCs, particularly those with numerous geographically dispersed small sites. 

We strongly recommend that HRSA add stronger language directing State Medicaid Agencies and MCOs to implement a system to prevent such duplicate discounts, in order to preserve the patient’s ability to access 340B medications through contract pharmacies with or without Medicaid coverage. 

We appreciate the opportunity to provide input into this process, and remain hopeful that this guidance will be adjusted to protect the FQHCs, as well as HRSA’s significant investment in this crucial program.

For the firm,

Steven D. Weinman