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“The Message Is Clear from OPA Director Pedley”

To Be or Not To 340B By Alyce C. Katayama

Covered entities should be constantly preparing for audit. That was the message, loud and clear, from Office of Pharmacy Affairs Director, Cmdr. Krista Pedly, who spoke by webcast at the recent Winter Conference of the 340B Coalition in San Francisco. That preparation, she said, should include making use of the compliance tools available through Apexus (the contractor for HRSA’s Prime Vendor Program), doing self audits, and attending 340B University (the educational programs periodically offered by Apexus).

The Prime Vendor Program provides OPA with information on purchases and sales and acts as an early warning system for possible non-compliance in that area. OPA is working on having a secure website ready in 2015 where ceiling price information can be accessed.

HRSA has conducted 277 on-site audits since 2012, which included examining 3290 outpatient facilities and 8500 contract pharmacy locations. All audits done in FY12 have been finalized, but only 18 of the 99 audits done in FY14 have been finalized. This means that a lot of covered entities remain in the dark about how best to achieve compliance.

Summer 2015, perhaps June, is the target date for issuance of the “mega guidance”, which will address, among other topics, covered entity recertification, audits, and prevention of duplicate discounts, including in the context of Title XIX managed care.

All stakeholders will have an opportunity to comment on this guidance. Several notices of proposed rulemaking can also be expected this year. These will deal with civil money penalties, the calculation of ceiling prices and administrative dispute resolution.OPA is now fully staffed at 25. Staff have focused on improving IT infrastructure including that relating to covered entity registration. OPA can now tap into information from Title XVIII cost reports and other federal IT systems. It works closely with the CDC and the Office of Population Affairs to obtain information on their grantees. It is also working to enhance the Title XIX exclusion file.

At the conference, Pedley announced that OPA had just posted on its website a list of the 13 (out of 27) manufacturers which are not complying with OPA’s guidance on providing 340B prices for orphan drugs when used for non-orphan indications. OPA did this so that state Title XIX agencies would be aware of the rebate opportunity presented. What enforcement action, if any, OPA might take remains uncertain. Pending litigation precluded Cmdr. Pedley from responding to a question on this topic.

One one point which has been the subject of recent contention, namely the use of “340B savings,” Pedley made it clear that she believes that covered entities should get to benefit from such savings, but she admitted that matter is outside of OPA’s jurisdiction.

Stay tuned for future blog posts with more updates and perspectives from the 340B Coalition’s Winter Conference.