March 25, 2013—Although associations representing 340B hospitals have told the Office of Pharmacy Affairs (OPA) that many cannot meet an April 7 deadline to comply with a new policy clarification on group purchasing, the federal agency has yet to hear that from individual hospitals, OPA Dir. Cmdr. Krista Pedley said last week.
And “unless we hear from you around what some of the barriers are—which we have not—we will be sticking by the April 7 deadline,” she told hospitals during a March 19 webinar on OPA’s Feb. 7 GPO policy release.[ms-protect-content id=”2799″]
In that document, OPA specifically addressed hospital use of GPOs, including saying explicitly for the first time that disproportionate share (DSH), children’s, and free-standing cancer hospitals that use 340B covered outpatient drugs in departments that treat both inpatients and outpatients cannot initially buy drugs for such units at group purchasing organization (GPO) prices and then replenish those given to 340B-eligible patients with drugs bought at 340B prices. Hospitals commonly use this virtual inventory system in emergency, surgery, radiology and other units where patients’ 340B eligibility is unknown at the time that drugs are administered.
Although the 340B statute prohibits the DSH, children’s, and cancer hospitals from obtaining covered outpatient drugs through a GPO or other group purchasing arrangement, until last month OPA had offered limited guidance on the exclusion’s parameters. The prohibition does not apply to critical access hospitals, sole community hospitals, or rural referral centers or to non-hospital 340B covered entities.
OPA gave the affected hospitals until April 7 to change their replenishment practices. Hospitals that violate the prohibition will be removed from the 340B program, including all of their enrolled outpatient sites and contract pharmacies, OPA said. They might also be required to repay manufacturers. To be considered for reinstatement, they would first have to demonstrate their ability to comply with the requirement.
OPA’s policy release also said hospitals covered by the GPO exclusion cannot purchase drugs unavailable at the 340B price through a GPO, nor use a GPO to purchase outpatient drugs dispensed to individuals who are not patients. These policies took effect immediately.
During the webinar, Cmdr. Pedley said OPA has always seen the GPO prohibition as “an absolute” and has never endorsed the compliance-through-replenishment model. There is nothing new about this policy position, she said, and hospitals should have known about it since at least 2010, when Apexus/340B Prime Vendor Program (Apexus) began addressing it in its 340B University sessions.
Hospital groups have pointed out to OPA that, as recently as November 2012, Apexus had an FAQ on its website stating that most hospitals use virtual inventory management software to initially purchase drugs through GPOs, dispense them to 340B-eligible outpatients, and then replenish the inventory with the same product purchased at 340B pricing.
Speaking earlier during the webinar, Apexus President Chris Hatwig estimated that 75 percent of the hospitals covered by the GPO exclusion “may have some changes to make with their pharmacy operations to be completely compliant with [the Health Resources and Services Administration’s] interpretation of the GPO prohibition.”
HRSA’s position on the GPO exclusion, he said, “has not changed … and has been consistent throughout.”
“However, he continued, “it may not have been clearly stated or as well-known because HRSA had really not seen the operations of entities until they started conducting audits this past year. As the audits were taking place, they realized that hospitals were doing some things differently than the way they interpreted the rules and regulations.”
During the webinar, Cmdr. Pedley said OPA is “under the impression based on some informal feedback … that some hospitals are unable to comply” with the April 7 deadline. During a March 4 meeting, representatives from Safety Net Hospitals for Pharmaceutical Access, the National Association of Public Hospitals and Health Systems, and the Children’s Hospital Association told Cmdr. Pedley that it would be impossible for many of their member hospitals to change their software and their processes that have been used for more than a decade in just 60 days. The American Hospital Association reportedly made similar observations in a meeting with the OPA director two weeks ago.
However, unless OPA hears about barriers to compliance from hospitals themselves, the April deadline will remain firm, Cmdr. Pedley said.
“We recommend that you write to us if you will not be able to hit that deadline so that we can assess the situation and how we will proceed moving forward,” she continued. “This is very serious. … Entities need to ensure compliance with all requirements. They are auditable, we are looking at them when we audit, and we need you all to get quickly into compliance.”
Apexus said it will post the slides and recording of the webinar on its website.
Other highlights from the webinar include:
- Hatwig advised hospitals covered by the GPO exclusion to establish a non-340B, non-GPO wholesale acquisition cost (WAC) drug-purchasing account with their wholesalers. “Establishing an outpatient non-GPO, non-340B account provides a compliant method for obtaining covered outpatient drugs for non-340B-eligible outpatients,” he said. Hospitals can use a WAC account for drugs dispensed or administered to 340B-ineligible outpatients; for drugs provided to Medicaid patients if the hospital carves its 340B drugs out of Medicaid; for drugs provided in clinics that are within the hospital’s four walls but not 340B-eligible; for drugs provided to 340B-ineligible individuals in in-house pharmacies that are open to the public; and for drugs that were lost, stolen, or otherwise cannot be accounted for.
- PVP Senior Director Katheryne Richardson said Apexus plans to issue additional clarification regarding the GPO exclusion and 340B contract pharmacies.[/ms-protect-content]