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The 340B Drug Pricing Program is a federal program that requires drug manufacturers participating in the Medicaid drug rebate program to provide outpatient drugs to enrolled “covered entities” at or below the statutorily-defined ceiling price. This requirement is described in Section 340B of the Public Health Service Act and codified at 42 USC 256b. The purpose of the 340B Program is to permit covered entities “to stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.” H.R. Rep. No. 102-384(II), at 12 (1992).
The Affordable Care Act amended to the definition of covered entity in the 340B statute to also include:
There is no means test or income limit regarding patient eligibility. Any patient of a participating 340B entity is considered a 340B eligible patient, regardless of payer status, provided that the patient definition criteria are met: An individual is a patient of a covered entity (with the exception of individuals registered in a State-operated or funded AIDS Drug Assistance Programs) only if all of the following criteria are met:
Exception: An individual registered in a State operated AIDS drug purchasing assistance program receiving financial assistance under title XXVI of the PHS Act will be considered a “patient” of the covered entity for purposes of this definition if so registered as eligible by the State program. For more information, please refer to the October 1996 Final Notice Regarding Section 602 of the Veterans Health Care Act of 1992 Patient and Entity Eligibility.
Any patient of a participating 340B entity is considered a 340B eligible patient, regardless of payer status, provided the definition of a patient is followed
The 340B Program does not prohibit covered entities from providing 340B drugs to individuals with private insurance as long as the individual is a qualifying patient of the covered entity and the drug is not subject to a duplicate discount under Medicaid.
No. Section 340B pricing applies to covered outpatient drugs only.
The “ship to, bill to” arrangement refers to an arrangement set up by the covered entity who is responsible for purchasing 340B drugs from wholesalers and/or manufacturers and directs those 340B drugs to be shipped to the contract pharmacy. In other words, the covered entity maintains title of the 340B drugs as required, but the contract pharmacy(ies) houses the drugs and provides dispensing services to patients of the covered entity.
Covered entities can choose whether they will use 340B drugs for their Medicaid patients. If they choose to do so, they must provide the Office of Pharmacy Affairs (OPA) with their pharmacy Medicaid Provider number, which is placed in the HRSA Medicaid Exclusion File. OPA makes the HRSA Medicaid Exclusion File available to state Medicaid agencies and manufacturers so that the state does not request a Medicaid rebate from a manufacturer for the already discounted 340B drugs. If an outpatient facility or sub-grantee/sub-contractor bills under a different Medicaid Provider Number or NPI than the parent site, those need to be appropriately listed with the sites.
The most common benefit realized to the entity from 340B participation is that participating covered entities report savings that range between 25-50% of Average Wholesale Price (AWP) for covered outpatient drugs as a result of the 340B discounts. These savings can be converted into unrestrictive revenue for the organization.
An FDA-approved prescription drug, an over-the-counter (OTC) drug that is written on a prescription, and a biological product that can be dispensed only by a prescription (other than a vaccine) or FDA-approved insulin. Medical/surgical supplies (ex. syringes, etc.) are not covered drugs, but manufacturers may voluntarily give clinics a discounted price.
There is no designated formulary for the 340B Program. Any manufacturer participating in Medicaid program must sign a Pharmaceutical Pricing Agreement (PPA) with the Secretary of the Department of Health & Human Services (HHS) and provide its drugs at or below the 340B ceiling price to 340B participating entities. Only 340B covered entities enrolled with the Office of Pharmacy Affairs have the ability to purchase at 340B prices, and the covered entity is responsible for 340B Program integrity. Therefore, a 340B enrolled entity must ensure that the 340B Program Definition of a Patient is met. Beyond meeting the patient definition described above, there is no definitive list of drugs that an entity may purchase. Decisions about the appropriateness of 340B drug purchases will ultimately be fact based on each unique situation
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