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“Breaking Down the Proposed Omnibus Guidance – Covered Entity Eligibility, Registration & Termination”

To Be or Not to 340B By Alyce C. Katayama and Elizabeth R. Gebarski

As promised, the blog will be taking an in-depth look at discrete topics included in the proposed 340B Drug Pricing Program Omnibus Guidance (“Guidance”), which was published August 28, 2015. The proposed Guidance touches on almost every aspect of the 340B Program, including covered entity (“CE”) eligibility; the patient definition; Group Purchasing Organization prohibitions; contract pharmacies; duplicate discounts; and CE audits. It also includes enhanced program integrity requirements for CEs, contract pharmacies, and pharmaceutical manufacturers participating in the 340B Program. Today’s blog will take a look at CE eligibility, registration, and termination.

Let’s start with the basics. Only CEs are eligible to participate in the 340B Program. These CEs are both non-hospital (e.g., STD clinic) and hospital (e.g., children’s hospital) entities. The proposed Guidance delineates the eligibility elements that have been established by the law, existing regulations, and past guidance. Once an eligible CE registers in the 340B Program, it is listed on the public 340B database. The registration conditions, deadlines, and procedures remain the same as outlined in previous guidance. As is the current practice, CEs must immediately notify the Health Resources and Services Administration (“HRSA”) regarding any changes in eligibility and CEs will still be required to annually recertify with HRSA.

Program integrity is a key focus of the proposed Guidance, as will be discussed in more detail in blogs to come. As part of the annual registration process, CEs are required to certify the accuracy of their database information and their compliance with 340B Program’s statutory requirements. By certifying compliance, a CE attests that it: (1) employs effective business practices to ensure and monitor ongoing compliance, including self audits where appropriate; (2) maintains accurate 340B database information; and, (3) notifies HRSA if it is no longer eligible for the Program or has violated any Program requirement.

Where this proposed Guidance deviates is in regard to re-enrollment in the 340B Program after a CE has lost eligibility. Upon a loss of eligibility, the CE must immediately stop purchasing and using 340B drugs at the terminated site(s), which includes child sites tied to the “parent” CE’s enrollment (as will be discussed in more detail in blogs to come). HRSA requests that the CE provide the reason for the loss of eligibility, the effective date for the loss of eligibility, and the date of the last 340B drug purchase for a terminated CE, child site, or contract pharmacy. For example, a disproportionate share (DSH) hospital-CE loses 340B Program eligibility immediately upon filing a Medicare cost report that demonstrates the hospital does not meet the hospital’s disproportionate share adjustment percentage, which is an element of eligibility for DSH hospitals. The day on which that cost report was filed is the day on which the hospital’s participation in the 340B Program is terminated.

The proposed Guidance plans to allow a CE that has lost eligibility to re-enroll in the 340B Program during the next regular enrollment period after it has satisfactorily demonstrated to HRSA that it will comply with all statutory requirements moving forward and has completed, or is in the process of offering repayment to affected manufacturers, as necessary. HRSA specifically is seeking comments on what type of information a CE would submit to HRSA to demonstrate compliance to re-enroll in the 340B Program.

If you want to be heard on this issue, you need to submit comments to HRSA on or before October 27, 2015 – make sure to include the Regulatory Information Number, 0906–AB08. The To Be or Not to 340B Blog will continue to break down other sections of the proposed Guidance in upcoming posts. Stay tuned for more details!

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