Author Archives: Rob Nahoopii, PharmD, MS, 340B ACE

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Build Back Better Act and 340B Impact

By Rob Nahoopii

If you are like me, it feels like I have been on a roller coaster ride as I watch what is and what is not going to be included in the Social Reform Bill titled “Build Back Better Act” (BBBA) or H.R. 5376. I have also been having a hard time tracking which provisions are part of the Build Back Better Act ($1.75 trillion) or the Infrastructure Investment and Jobs Act ($1.2 trillion). Wasn’t it just one bill, why do we have 2 bills, is it so the price tag for each is under $2 trillion, how do you even abbreviate trillion, is it just a T? My apologies, that is what runs through my brain nearly every time I think about these Acts. By the way, the website says you can abbreviate trillion as T or tn, who knew! Back to the topic of this article though, the BBBA’s latest version that is being voted on the week of November 15th has included some drug pricing language, albeit paired down from previous versions that were removed. This language is not specific to 340B of course but could have an effect on 340B pricing as a side effect. Bear with me, we’ll get there by the end of this article.

To understand how 340B can be affected, we must first understand how the drug pricing component would work. The BBBA was released on November 3rd and amended on November 4th, and is 2135 pages long, with drug pricing starting on page 1977. Here is a summary of the drug pricing section in the BBBA.

  • The Secretary is to establish a Drug Price Negotiation Program.
  • Price negotiation to begin in 2023, with a start date of 2025.
  • The initial selection is no more than 10 drugs for 2025, 15 for 2026, 20 for 2028.
  • Drugs are selected based on Medicare expenditure for the previous 12 months for both Part B and D (some clarification is needed on Part B being included in initial selection).
  • The list will include the top 50 single source drugs that have been on the market for at least 7 years, biologics are 10 years, and any insulin. There are some exclusions as well (e.g., certain orphan drugs, low spend drugs).
  • Pricing (i.e., maximum fair price) is based on non-Federal average manufacturer price (AMP). The BBBA uses 3 categories for price calculation: Short Monopoly Drugs are 75% of Non-Fed AMP, Post-Exclusivity Drugs are 65%, and Long-Monopoly Drugs are 40%. Post-Exclusivity drugs are defined as at least 12 years but fewer than 16 years have passed since drug approval. Long-Monopoly Drugs are defined as 16 years have lapsed since drug approval. Oddly enough, the BBBA does not define Short Monopoly Drugs, but since I think linearly the default seems to be for drugs where fewer than 12 years have elapsed since approval (of course they would have to be past 7 years of approval unless it is insulin as noted above).   
  • Page 2033 also starts Part-2 Prescription Drug Inflation Rebates. This is similar to the 340B penny pricing penalty. This is set to start July 1, 2023, and is a rebate based on pricing inflation exceeding the consumer price index urban (CPI-U) rate.

I should add that there are also other pharmacy-related items such as maximum copays for insulin capped at $35, and this is not just for Medicare (starting in 2023). There is also a maximum out-of-pocket limit on prescription drugs that will cap at $2,000 for Medicare beneficiaries. Both of these are great for patients.

Okay, back to 340B. There is literally only one mention of 340B in the whole BBBA, and it is around Duplicate Discount clarification and the Children’s Health Insurance Program (CHIP). It appears to just be stating that there will not be a duplication of rebates. So, the real potential impact comes with the drug price negotiation and inflation rebates. However, since exemptions for 340B (yes, that was on the table at one point) are not in the language, the impact is really based on the 340B pricing calculation and drug pricing.

As a reminder, the 340B ceiling price is AMP minus the unit rebate amount (URA). The URA is calculated by CMS for the Medicaid Drug Program and includes a percent of AMP or AMP minus best price with an inflation adjustment, whichever is greater. This latter calculation is what drives drugs to a penny per unit if the manufacturer raises the AMP faster than inflation (also CPI-U) as the URA can be equal or more than AMP, which triggers the penny per unit 340B ceiling price (since a negative value would cause the manufacturer to have to pay a 340B CE to obtain the drug, which does not make sense).  

So, as best as I can see it, as the inflation rebates start, manufacturers could change their pricing to lessen the impact. As they change their pricing strategy, the same calculations that affect BBBA components will affect the 340B ceiling price. For instance, the inflation rebate may be such a disadvantage that a manufacturer may choose to not exceed the CPI-U rate of increase, which would also result in not being subjected to 340B penny pricing. For patients with Medicare and being treated with drugs on the maximum fair pricing list, there will likely be a decrease in reimbursement that could blunt the 340B savings as the actual Medicare maximum fair price for the drug would lower the drug price delta with 340B pricing. What I didn’t see is how they intend to roll this out. Will it be a rebate, or something akin to 340B, where you have a different account type with the maximum fare prices in it? Since this does not roll out until 2025, I am sure we will receive lots of information on how it will be operationalized. I know this was a lot, please feel free to reach out to me with any questions you have, and or comments.

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340B Contract Pharmacy Pricing Battle – It’s Plain For All To See!

If you are in the 340B space, then it is likely you are well aware of the 340B contract pharmacy pricing battle occurring between 6 manufacturers and HHS. Let’s do a quick update of how we got here and the recent monumental shift from HHS that is giving covered entities much needed hope.

It all started when Eli Lilly (Lilly) announced it would no longer be providing 340B pricing for Cialis at contract pharmacies starting July 1st, 2020. At the time, HHS did not respond to this deviation and Lilly eventually decided to remove pricing for the rest of its drugs in the contract pharmacy space. Following Lilly’s lead, within a few months was Astra Zeneca, Sanofi, Novartis, United Therapeutics, and by January 1st, 2021 we also lost pricing from Novo Nordisk. There are various differences between how the manufacturers rolled out their 340B pricing removal, as some allowed pricing if the covered entity (CE) signed up for the ESP program and Novartis has an interesting 40-mile rule. Many of these manufacturers also allow for a single contract pharmacy if no in-house retail pharmacies exist for the CE. In the end, the loss of pricing by these manufacturers caused a significant 340B savings loss for many covered entities. In the case of some of our smaller CEs (e.g., FQHCs, CAHs) for instance, the savings loss has impacted much needed savings to continue their mission to serve patients in a most critical time with Covid. I think HHS’s lead attorney, Robert Charrow, said it best, when he told Lilly “. . . the timing of your pricing changes is, at the very least, insensitive to the recent state of the economy.”

I won’t rehash all of the history, but want to catch up to where we are today. On May 17th, 2021, HHS sent all 6 manufacturers letters that essentially stated they have until June 1st, 2021 to “. . .provide an update on its plan to restart selling, without restriction, covered outpatient drugs at the 340B price to covered entities . . .” The letters from HHS Acting Administrator, Diana Espinosa, lays out the 340B statute sections being violated and indicated that HHS has determined the manufacturer actions to have resulted in overcharges in direct violation of the 340B statute. Another interesting point is that HHS is no longer stating that CEs need to use the administrative dispute resolution (ADR) process. Instead, HHS plans to utilize civil monetary penalties (CMPs) to enforce 340B statute overcharge violations. The CMPs could be up to $5,883 for each instance of overcharging, which is in addition to repayment to the CE. This is a critical shift for CEs as HHS had previously stated CEs had a mechanism to report and deal with overcharges through the ADR process. You can find copies of each letter on HRSA’s website at:

So yay! But not so fast, we knew it would not be that easy. Although we do give HHS credit for the attempt. We are aware of 3 lawsuits from Eli Lilly, Astra Zeneca, and Novartis. Sanofi has also sent a 30-page defense to HRSA stating the previous lawsuit’s judicial process should be allowed to playout. Eli Lilly received an extension to June 10th to reply to HHS, and has a hearing scheduled for June 17th, 2021, and HRSA granted an extension to Astra Zeneca to June 10th as well. Novartis is challenging the accuracy of the HHS letter as they claim the 40-mile rule does not limit the number of pharmacies. Astra Zeneca’s response from the US District Court judge in Delaware is the most concerning. As he has already stated he is deciding on whether to rule that HHS’ conclusion on 340B pricing in contract pharmacies may be one of various interpretations that can be made, and therefore not the only possible conclusion. This seems to have kept the door open (albeit just a crack).

Where do we think this will go? Well, the crystal ball is broken right now, but we have hope. This hope comes in the form of the “plain language of the statute.” As we learned when HHS attempted to publish a rule regarding orphan drug 340B use for impacted covered entities, they initially lost a legal challenge due to not having rule making authority regarding this part of the 340B program. HHS then published a Rule Clarification, which it can do, but they lost this legal challenge as well. The reason being that the plain language of the 340B statute does not agree with the HHS Rule Clarification that the impacted CEs could buy orphans at 340B if they were for a non-orphan indication. You see, the plain language does not mention anything about an exclusion for non-orphan indications. Let’s now look at the contract pharmacy clarification HHS put out in 2010 regarding the ability for a CE to not be limited to a single contract pharmacy. The clarification came because nothing in the 340B statute limits CEs to 1 contract pharmacy. We now have manufacturers wanting to interpret the 340B statute to mean the single contract pharmacy scenario that HHS had in place prior to the 2010 clarification. However, the 340B statute simply states that manufacturers “shall. . .offer each covered entity covered outpatient drugs for purchase at or below the applicable ceiling price if such drug is made available to any other purchaser at any price.” It is plain for all to see (you see what I did there), that the manufacturers are now on the wrong side of the plain language of the 340B statute, and this is what gives us hope.

Update: Form the time of writing to publishing, we have had significant updates on this subject. First, in the Astra Zeneca lawsuit, a Delaware U.S. Chief District Judge determined that the 340B statute is silent regarding contract pharmacies, and therefore there could be multiple interpretations. As a result, HHS withdrew the December 2020 legal advisory opinion (AO) regarding contract pharmacy and 340B pricing on 6/18/2021. HHS has left in place the six letters submitted to manufacturers on 5/17/2021. It appears the 340B statute language may be too plain. As it stands, the battle lines are drawn, and we will see how this one turns out.

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340B and Fee-For-Service Medicaid AAC Requirements

A topic we have covered in our client newsletter in the past, but is long overdue for a full discussion is 340B actual acquisition cost (AAC) requirements for fee-for-service (FFS) Medicaid billing in many states. In 340B audits we perform for clients, we review the AAC requirement and note if there is any risk. However, it is not something specifically looked at by HRSA, since the covered entity (CE) billing AAC does not impact if a Duplicate Discount occurred. To be clear, we are not talking about Duplicate Discount risk here, we are just talking about whether a CE billed an FFS Medicaid plan correctly.

You may be thinking, “if it is not a significant HRSA audit risk, then what is the big deal?” The short answer, is, Government Dollars. We don’t talk about it much, but the 340B program savings isn’t government dollars, it’s manufacturer discounts. Therefore, the legal and financial risks are smaller. When it comes to government dollars, there is the potential for a financial penalty and even legal penalties. Inappropriate billing of Medicaid and Medicare can raise Fraud, Waste, and Abuse concerns. Although this normally refers to egregious acts of commission, such as billing for services you did not actually provide, it is possible that accidental over billing could be considered a form of abuse. Typical fines are 1.5 times the issue/amount in question (e.g., overbilling in the case of charging incorrectly).

Back to 340B, we now have this interesting intersection of 340B and government dollars. This occurs when an FFS Medicaid plan requires a CE to bill at AAC. Many state’s FFS Medicaid plans require this today, and one of the more engaged (that is about the most positive term I can use) states is California. In the past year, California has been sending out self-audit letters for CEs to self-audit their AAC billing. This occurs primarily with the retail side of 340B; however, they have also sent self-audit letters to CEs for hospitals/clinic administered drugs. So far, we have not heard of penalties on top of the payback request, but it is possible. The time period they are using is December 2016 to current. California is using December 2016 because that is when the federal court’s temporary ban on the California AAC law was lifted. If you are in California, we strongly encourage you to plan on receiving a letter at some point in the near future.

Although most of the AAC enforcement is in California, it is likely that states are seeing what California is doing, and noting the positive financial result. As such, more states might try to enforce AAC billing as well. Your assignment for the month is to check your state requirements and confirm you are billing correctly, and remember to check any other states you bill. Don’t just check to make sure you are billing the right dollar amount, also make sure you are billing with the correct NPI or Medicaid provider numbers, and modifiers if needed. If you are a Turnkey (SpendMend) client, ask us for help on identifying your state’s requirements if needed.      

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340B Program Legislative & Regulatory Update

For those of us in the 340B program trenches, it feels like we are constantly under assault from our legislatures (e.g., Senate and House bills with detrimental effects on 340B), regulatory agencies (e.g., CMS reimbursement, HHS/HRSA interpretations of the law), drug manufacturer groups (e.g., PhRMA doing anything possible to dismantle the program), and even the judicial system (e.g., courts considering the viability of the ACA). I don’t know about you, but as we have gone about our work to keep the 340B program functional for the last 28 years, there is this gnawing in the back of my head that something big could happen to 340B. Oddly enough, we have not seen a significant change in the program in quite some time. The question is, are we due for a big change or with everything else going on in the country and world, are we likely to maintain 340B in its current state? My crystal ball is currently broken, but let’s break down what we do know and where the biggest risks are today.

Judicial: The Affordable Care Act (ACA) was determined to be invalid by the lower Federal courts in December of 2018. This was a lawsuit filed in February 2018 by 20 states and led by Texas (2 states have since dropped off the case, Wisconsin and Maine). In December of 2019, the 5th Circuit Court of Appeals affirmed the lower court’s decision on the unconstitutionality of the individual mandate but did not decide on whether the rest of the ACA should also be struck down. Instead, they referred the case back to the lower courts. In an interesting turn of events, the Supreme Court has stepped in and has agreed to review the case. A request was made for an expedited review, but in January, the Supreme Court said no to an expedited review and will likely hear arguments for the case in October 2020. It is highly likely that a decision will not be made until after the presidential election. If you have read this far, and are now wondering, “okay, so what does this mean for 340B,” then let me remind you of the various changes the ACA made to 340B:

  • Most Importantly: It added the rural hospitals to 340B qualification. This includes our critical access hospitals (CAH), rural referral centers (RRC), and sole community hospitals (SCH) and of course their lower (or none for CAH) DSH% thresholds for entering the program. A repeal would mean a loss of these covered entity (CE) types.
  • Medicaid Expansion: At least for the states that took the Medicaid Expansion, this increased DSH percentages and likely allowed for additional hospitals to qualify. If we see a decrease in DSH percentage, we will see a decrease in qualified hospitals (in addition to the loss of the rural hospitals).
  • MCO Medicaid: It was the ACA that allowed state Medicaid agencies to seek Medicaid rebates on MCO Medicaid paid claims in addition to the FFS Medicaid paid claims. At least this would clear up how we handle MCO Medicaid, but it will be a large budget loss for the Medicaid program.
  • Annual Recertification: Hmm, I think this was a good thing (albeit a pain sometimes). I remember when some hospitals would lose their DSH percent but “forget” to tell HRSA. I am not sure why they would stop this, but technically it was added as part of the ACA.
  • 340B Pricing Oversight: Both the HRSA ceiling price website and monetary penalties were likely the result of the ACA. Again, I hope they wouldn’t stop the website now, but it is thanks to the ACA.

As you can see, losing the ACA will have a significant impact on the 340B program. Not a ton we can do about it, I suppose hoping the RBG (i.e., Ruth Bader Ginsburg) can maintain her health through the year would be good. Many pundits believe the current Supreme Court would likely keep the ACA intact (mostly), but a switch of one of the liberal justices for a more conservative one could change the dynamics of the Supreme Court such that a full repeal of the ACA becomes more likely.

I think I used up most of my time on that one, so what else . . .

Legislative: Although we saw a slew of bills from both the Senate and House in 2019 regarding 340B, nothing actually passed. Yes, NOTHING! To be fair, some of the bills were pro-340B, so it would have been nice to see some of them come through. However, here we are in 2020, a re-election year. The House and Senate are split Democratic and Republican, respectively, and it is unlikely we will see 340B bills being passed in this session either. One area of potential risk is around drug pricing legislation. This is a hot topic and people on both sides of the aisle have an appetite to do something. Where 340B has some risk is if any of the drug pricing bills affect the 340B ceiling price calculation and/or provide exemptions to manufacturers on 340B for participating (e.g., one of the international pricing index bills had some provisions on 340B exemptions).

Regulatory: I think this is where we will continue to see an erosion of 340B savings. On both a Federal and State level. CMS is still decreasing drug reimbursement with an ASP minus 22.5% on status indicator K drugs for most hospitals (i.e., they left out CAH and SCH that are rural for now). This is in addition to the reduction in clinical payments for off-site clinics, often referred to as “site neutrality.” States, such as California, are pushing all retail prescriptions to FFS Medicaid, where an actual acquisition cost (AAC) plus a fee is required. This is where it is critical to work with your states and ensure they are aware of the impact these decisions can have on patients and the healthcare system.

I tried to not take too many sides, rather just share what we are hearing and seeing. I would like to end on a positive note. In 2019, West Virginia, Minnesota, South Dakota, Montana, and Oregon all passed laws prohibiting discriminatory reimbursement by health plans. Nice work to those states, and there are additional states working on similar legislation for 2020. I would love to see all states pass a similar law in order to protect 340B from payors harvesting 340B savings for themselves. If your state isn’t already working on it, then maybe they should be. Now is a good time (it is always a good time) to reach out to your legislatures and ensure they are aware of how important the 340B program is to hospitals, clinics, and patients in their communities.

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Medicare Site Neutral Payments – Changing Healthcare

To preface, Medicare site neutral payments refer to the technical portion of outpatient bills. This does not refer to drug reimbursement cuts down to ASP minus 22.5% for 340B sites, which is a totally different topic (especially with a federal court judge determining that the drug reimbursement Part B cuts by Medicare are in violation of federal law). Site neutrality is the Medicare change in reimbursement to mimic private physician billing and hospital outpatient departments that are more than 250 yards away from a hospital. This financial payment reduction is not 340B specific and applies to all hospitals. 

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Creating Your Impact Profile and Why?

With various pending federal legislation bills having “transparency” components, we feel it is prudent that all covered entities should have an Impact Profile. At the 340B Coalition meeting last month, a good definition of the Impact Profile was given as,

“It is a written elevator speech for your 340B program.”

I really like that definition, we should be able to accurately and concisely discuss: Who we serve, What kind of care is being provided, How 340B helps patients, and What would happen if 340B was taken away.
In addition, tell your story. The facts above are good, but what really can impact the person you are trying to educate is the story of actual patients and how they benefit. When I was a pharmacy director at a 340B DSH hospital, I would share the following story:
A young adult male patient in our Endocrinology clinic had an increase in his HgA1C (i.e., a marker for how well a patient’s diabetes is being controlled). A discussion with our pharmacist in the clinic identified that the patient was rationing his insulin toward the end of the month as he could not make his co-payment for his prescription. Because of 340B, we were able to provide this medication to the patient at a significantly reduced price, and he could not believe it, and he teared up as he thanked our staff. Three months later his follow-up visit showed his HgA1C was back inline and he was feeling better. Because of this, we started a 340B Charity Voucher program that provides this benefit to many more patients who needed help with their prescriptions, and as we looked at the data in aggregate, we were able to document a statistically significant decrease in these patient’s HgA1C measurements.

To help you create your Impact Profile, 340B Health has provided a really good resource.  Once you have created your Impact Profile, and maybe even have a story to share, then here comes the Why! 340B is under attack, and PhRMA is leveraging as many legislators and presidential contacts they have to either reduce or kill the 340B program. That is their goal! We need every covered entity to reach out to their federal senators and representative to share what 340B means to the people in their communities they represent. Please go to the 340B Health legislation page to see the anti-340B bills and ask your senators and representatives to oppose them. In addition, ask them for 5 minutes so you can share what 340B means to patients in your community. Then be ready to share your Impact Profile and your 2-minute Elevator Speech and remind them that this program costs taxpayers very little, but the impact on patient care is significant.

We can save 340B, but only if we all do our part. We can’t hope that 340B Health and other organizations will do it for us, we all need to carry the water!

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340B Update: Omnibus Withdrawal & 340B Coalition Conference

Well, big news out yesterday. As of 1/30/2017, the 340B Omnibus Guidance is officially withdrawn.

Where does that leave us?

Well, that brings be to my second topic, the 340B Winter Coalition Conference. I am in my seat on our airplane to San Francisco. I am excited for this conference, as the legislative sessions will be very hot topics. We, Turnkey, are taking 7 staff to the conference, and have our booth (come visit us at booth 57 if you are attending). In the event you are not attending, we will share some of the follow-up to what the discussion is around the post-Omnibus withdrawal 340B landscape. My personal thought is that HRSA may be waiting for rule making authority to formally write more specific rules and guidance on the 340B program. Especially around the 340B patient definition. Of course, this would require legislation, which is why I am excited to hear from 340B Health about all the bills in the senate and house. We also have to worry about the current ACA repeal potential and how that might affect our ACA covered entities (i.e., CAH, RRC, SCH, and CAN). Stay tuned my friends!

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340B Updates- Happy Thanksgiving!

We often have our name mistaken for Turkey (instead of Turnkey), and during this time of the year, we totally embrace it! Happy Thanksgiving!!!

-The Turnkey Pharmacy Solutions Team

Well, it has been awhile since you have heard from me. Some nice posts by Jen Cook and Jennifer Hagen since my last one. Speaking of which, Turnkey is super excited to have Jennifer Hagen on the Turnkey team. She became full-time with us in October. She just stepped down from her post as the ambulatory service pharmacy director for a large DSH hospital. She has experience as a 340B faculty member and with peer-to-peer. I must admit, she is starting to make me look bad!

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Each year, OPA requires each 340B Covered Entity to recertify. For Hospital Covered Entities, OPA has tentatively set Aug. 10 through Sept. 7 as the time to recertify. Emails will be sent to both the Authorizing Official as well as the Primary Contact, listed on the OPA database.
Once the recertification period begins, the Authorizing Official only will receive a username and password to perform the recertification. The Authorizing Official will be required to log into the 340B database, update information as needed, and attest to the covered entity’s compliance with 340B Program requirements.
It is imperative that both the Authorizing Official and Primary Contract are current and accurate. If recertification is not completed in the eligible window, the covered entity will be terminated from the program, and will have to re-enroll during the next open enrollment period.
If we can help you with the recertification process, or if you have any questions, feel free to reach out to Turnkey Pharmacy Solutions, at

340B covered entities must annually recertify their eligibility to remain in the 340B Drug Pricing Program and continue purchasing covered outpatient drugs at discounted 340B prices.
Advance email notifications with preliminary information about the recertification process are sent to the following contacts:

• Primary Contact
• Authorizing Official

Once the recertification period begins, the Authorizing Official only will receive a username and password to perform recertification. The Authorizing Official will be required to log into the 340B database, update information as needed, and attest to the covered entity’s compliance with 340B Program requirements.
The covered entity must ensure the contacts listed in the 340B database are accurate at all times to receive all notifications.

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340B Program Updates – Been Awhile

Is that an Elephant in the Room?

340B Elephant-in-the-RoomHi All! Yes, it has been awhile (we have been auditing, a lot!). Our sincere apologies, we need to bring back our 340B Blog A game. The team at Turnkey Pharmacy Solutions has been growing and the leadership team is learning how to handle the growth and work effectively with our team. In addition to Roxanne, we now have Jen and Annie supporting audits with our core team (and a few per diem staff as additional support). We also added an operations manager to oversee operational functions of the organization (so excited for Chelsea to start on April 4th!) We are not the only ones with change, the 340B program has had significant changes recently, and we are going to share two big ones! Hold on to your hats . . .

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