340B Legal, Compliance Concerns Top of Mind for 2023
Our most recent quarterly 340B Insider webinar featured the insights of Jason Reddish, a partner at the law firm Feldesman Tucker Leifer Fidell and an expert on 340B legal and compliance issues. Cloudmed 340B insiders Don Holladay and Melissa Opraseuth joined Reddish to discuss key legal and compliance concerns faced by covered entities of the 340B drug pricing program.
Contract pharmacy litigation drives 340B uncertainty and risk
Three appeals courts have been hearing oral arguments regarding the permissibility of manufacturers imposing restrictions on discounts through contract pharmacies, and their rulings will have a profound impact on the future of the 340B program. A central question in the dispute is whether HRSA actually has the authority to compel compliance with its contract pharmacy guidance. The webinar began with Reddish offering his insights into the current state of litigation and what covered entities can expect next.
Reddish did note that the courts may not be the final arbiter of these disputes. There is the possibility that Congress could offer some legislative relief and clarity, or that HRSA could revise its contract pharmacy guidance to mollify manufacturers and alleviate some of the concerns the courts could raise.
Patient definition still presenting 340B opportunity and risk
As providers look for ways to optimize 340B program savings, they often look at revisiting their patient definition policy language. We asked Reddish about his recent experiences with expanding patient definition and the legal implications of straying too far from conventional wisdom.
“We know that some covered entities have gotten more aggressive with their interpretation of the patient definition. Part of that stems from HRSA being in a looser enforcement position than before. And one approach to the statute would be to say, everybody we’ve ever treated at any point is our patient, and they are eligible for free TB drugs.”
“I personally wouldn’t be comfortable going too far out on a limb until we get a ruling on the Genesis case. If that court determines that the patient definition guidance is a valid interpretation, and HRSA feels like they have full authority to go out and enforce that in audits, you could be on the hook for some substantial repayment if you’ve gone really outside the bounds of the current definition environment.”
340B referral capture offers best lever for added savings
Many covered entities are successfully expanding their 340B discount savings through referral prescription capture. However, many are foregoing program expansion due to fears about the consequences of non-compliance, which include refunding discounts and possible program exclusion. We asked Reddish what the most current legal consensus tells us about the state of referral capture and what concerns it raises for providers.
“For referral prescriptions a lot of entities relied on guidance from the Safety Net Hospital for Pharmaceutical Access Group, which is now 340B Health. They indicated that you could qualify a prescription for a patient – if it was related to care that you provided – if the patient then got outside care related to that in-clinic care. There have been variations over the years, but the one thing that they’ve come back to time after time is the referral loop – do you have a referral out that you can document, and do you have something coming back from that outside provider that shows that you maintain responsibility for the episode of care?”
“So realistically, moving forward we’re going to still have this requirement for documentation. The requirement for auditable records is in the statute. That’s not going to change. And you’re going to have to be able to show records that indicate that you are responsible for this prescription that was filled with 340B drugs. And I think the referral capture approach of having a documented referral and some feedback loop, some information coming back, some indication that you are still keeping tabs on that outside care is probably going to be the standard that we have moving forward. It’s certainly the one I would bet on.”
Other topics discussed in this 340 Insider webinar included:
- The likelihood of a legislative resolution and the competing interests asserting influence on Congress
- The impact of the Inflation Reduction Act’s new ‘maximum fair price’ drug class on 340B program operations
- The push by manufacturers for claim sharing and the reasons for provider reluctance
- Opportunities for expanding 340 savings through clinical pharmacy and telemedicine
To hear the full discussion, access the 340B Insider session on-demand.