Last week, the Health Resources and Services Administration (HRSA), part of HHS, released proposed new guidance for covered entities enrolled in the 340B Drug Pricing Program, as well as drug manufacturers required to make their drugs available to covered entities.  The guidance covers, among other things, off-site outpatient clinic eligibility, patient eligibility requirements, and contract pharmacy requirements.  Comments on the proposed guidance are due by October 27, 2015. 

In the proposed guidance, HRSA addresses the requirements for enrolling off-site outpatient facilities and clinics (i.e., child sites) that are located at a different physical address from the parent hospital.  The proposed guidance provides that these facilities will be listed on the public 340B database and will be able to purchase and use 340B drugs if the parent hospital’s cost report demonstrates that (1) the facility is listed on a cost report line that is reimbursable under Medicare, and (2) the services provided at the facility have associated outpatient Medicare costs and charges.  HRSA has requested comments on different methods for demonstrating facility eligibility.

HRSA has also proposed a clarified definition of a “patient” of a covered entity who is eligible to receive drugs purchased at 340B prices.  Under the 340B program, covered entities are prohibited from reselling or transferring 340B drugs to individuals who are not patients of the covered entity.  Under the proposed guidance, an individual would be considered a patient of a covered entity if the individual:

1. Receives healthcare services at a facility that is registered under the 340B program and listed on the public 340B database;
2. Receives healthcare services from a covered entity provider who is either employed by or is an independent contractor for the covered entity, such that the covered entity may bill for services on behalf of the provider;
3. Receives a drug that is ordered or prescribed by the covered entity provider in the course of providing such healthcare services;
4. Receives healthcare services consistent with the range of services designated in the federal grant, project, or contract, if applicable, that qualifies the healthcare provider to participate in the 340B program;
5. Receives the drug pursuant to an outpatient healthcare service; and
6. Has patient records that are accessible by the covered entity and demonstrate that the covered entity is responsible for the patient’s care.

These requirements would exclude patients from 340B status if their care was provided by an organization merely affiliated with a covered entity, where the covered entity itself does not bill for services furnished by the affiliated organization.  It also excludes patients who receive care from providers who only have privileges at a covered entity.  This proposed definition would also prevent discharge medications from ever qualifying for 340B pricing.

The proposed guidance also addresses arrangements with contract pharmacies.  Covered entities will be required to include an attestation that their contract pharmacy arrangements comply with 340B program requirements in their registration.  HRSA has also proposed a presumption regarding contract pharmacies.  If a contract pharmacy is listed on the public 340B database, HRSA will presume the contract pharmacy is not dispensing 340B drugs to Medicaid fee-for-service (FFS) or Medicaid Managed Care Organization (MCO) patients in order to avoid duplicating discounts associated with those programs.  Covered entities can overcome this presumption by providing HRSA with a written agreement between the contract pharmacy and the state Medicaid or MCO explaining the system used to prevent duplicate discounts.  HRSA must approve this arrangement and indicate on the public 340B database that the contract pharmacy dispenses 340B drugs to Medicaid FFS and MCO patients.

Other areas in the proposed guidance include provisions addressing re-enrollment and the types of information a covered entity could submit to demonstrate compliance with 340B program requirements following termination of 340B eligibility.  The guidance also clarifies the scope of the group purchasing organization (GPO) prohibition and proposes an exception to the GPO prohibition to prevent disruptions to patient care. 

While not a formal rulemaking, HRSA has requested comments before the proposed guidance is finalized.  Comments are due by October 27, 2015.

Reporters, Adam Robison, Houston, +1 713 276 7306, arobison@kslaw.com, and Paige Fillingame, Houston, +1 713 615 7632, pfillingame@kslaw.com.