by admin | February 13, 2014 12:58 pm
February 13, 2014—The Health Resources and Services Administration (HRSA) plans to propose a rule that will address the extent to which state AIDS Drug Assistance Programs (ADAPs) can collect full 340B rebates from drug manufacturers when the ADAPs pay premiums, copayments, and deductibles on health insurance that they may buy for ADAP clients.[ms-protect-content id=”2799″]
The announcement came in an undated open letter[1] by HRSA Administrator Mary K. Wakefield posted on the HRSA HIV/AIDS Bureau website on Jan. 31. It casts a shadow over HRSA guidance that ADAPs have relied upon for nine years to claim full 340B rebates on partial pay claims. Unlike other 340B providers, ADAPs can forgo 340B discounts on drug purchases in favor of participating in a rebate model. Under that option, a pharmacy network under contract with an ADAP can buy drugs for the program at retail prices above 340B levels and then the ADAP can apply to manufacturers for a rebate for the difference between the average manufacturer price (AMP) and the 340B price.
Since 1999, Ryan White Program legislation has authorized ADAPs to use part of their ADAP funds to purchase or continue health insurance policies for clients that include HIV drug treatments and access to comprehensive pharmacy services. If the insurance policy can be deemed cost-effective, ADAPs can use their funds to cover any costs associated with the insurance policy, including co-payments, deductibles, and premiums.
In April 2005, the HIV/AIDS Bureau issued a letter, which it described as program guidance, to ADAPs stating that grantees can claim full 340B rebates on such partial insurance claims under one of the following situations: (1) the ADAP grantee must pay the deductible for the patient’s medication under the insurance policy, whether or not the program also pays the health insurance premium; or (2) the ADAP grantee must pay the co-pay for the patient’s medication under the insurance policy, whether or not the program also pays the health insurance premium.
“In both of the stated circumstances, there is a direct relationship between the ADAP payment and the patient’s medication,” the letter stated. “Drugs that are fully reimbursed by insurance plans, where only the insurance premiums have been funded by ADAPs, are not eligible for the rebate. Therefore, payment of the insurance premium alone does not entitle an ADAP to claim a rebate under the 340B drug pricing program.”
The HIV/AIDS Bureau issued the letter after several ADAPs using the rebate model asked whether they could submit claims for full 340B rebates on partial claims.
Drug manufacturers’ legal representatives have voiced procedural and substantive objections to the policy. For example, they have noted that the guidance was issued by the HIV/AIDS Bureau rather than by the Office of Pharmacy Affairs (OPA) and that it did not go through the notice and comment process before implementation.
Drugmakers’ attorneys also question whether the policy can be squared with the language of the 340B statute and the 340B Pharmaceutical Pricing Agreement. “Those two legal authorities clearly frame the manufacturer’s discount responsibility in relation to discounted prices on purchase transactions,” noted Alice Valder Curran, a partner in the Hogan Lovells law firm who represents numerous pharmaceutical manufacturers, in an emailed response to questions. “That means HRSA will have to be able to explain whether and how an insurance cost-sharing payment can even qualify for consideration as a purchase in the first instance.”
“Even assuming HRSA can overcome that hurdle,” she continued, “the manufacturer’s legal obligation is to charge no more than the ceiling price, and where the cost-sharing expenditure does not exceed the ceiling price, it is not clear how HRSA can require a rebate to be paid.”
HRSA Administrator Wakefield said in her letter on the HIV/AIDS Bureau website that, in response to inquiries, the agency “reviewed its policies regarding rebates to AIDS Drug Assistance Programs (ADAPs) under the 340B Drug Pricing Program.”
“As a result of this review, HRSA plans to propose a rule that will address the extent to which ADAPs can collect rebates from manufacturers when the ADAPs purchase insurance and/or pay premiums, copayments, and deductibles for ADAP patients,” the letter continued. “The rule will be subject to public notice and comment prior to implementation. In the meantime, HRSA urges manufacturers to continue their current ADAP rebate operations in order to maintain stability in the ADAP program.”
The letter does not specify if the regulation will come from OPA or the HIV/AIDS Bureau. OPA has said it intends to issue a proposed comprehensive 340B regulation for notice and comment in June.
The National Alliance of State and Territorial AIDS Directors (NASTAD), the organization that represents ADAPs, said “we look forward to providing meaningful input into the development of this policy in order to help maintain stability for ADAPs moving forward.”[/ms-protect-content]
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