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“The Proposed 340B Drug Pricing Program Omnibus Guidelines Have Landed

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

It is official: The Health Resources and Services Administration (“HRSA”) has published the long-awaited “Mega Guidance.” The Proposed 340B Drug Pricing Program Omnibus Guidelines (“Guidelines”) were published in the Federal Register on August 28, 2015. Any comments must be submitted on or before October 27, 2015.

The proposed Guidelines aim to “add clarity in the marketplace for all 340B Program stakeholders and strengthen the [U.S. Department of Health and Human Services’] HHS’s ability to administer the 340B Program.” This clarity will likely prove useful to manufacturers in the wake of the June proposed rulemaking, which proposed to authorize the HHS Office of the Inspector General to pursue civil monetary penalties from manufacturers for violation of the 340B Program requirements.

From a covered entity’s perspective, one of the most significant changes the proposed Guidelines make to existing law, guidance, and resources from HRSA and its contracted 340B Prime Vendor, Apexus, is the definition of a patient. Briefly, 340B Program covered entities may only provide covered outpatient drugs to “patients.” As it stands now, an individual is a patient of a 340B covered entity (with the exception of State-operated or funded AIDS drug purchasing assistance programs) only if:

  1. The covered entity has established a relationship with the individual, such that the covered entity maintains records of the individual’s health care; and
  2. The individual receives health care services from a health care professional who is either employed by the covered entity or provides health care under contractual or other arrangements (e.g. referral for consultation) such that responsibility for the care provided remains with the covered entity; and
  3. The individual receives a health care service or range of services from the covered entity which is consistent with the service or range of services for which grant funding or Federally-qualified health center look-alike status has been provided to the entity. Disproportionate share hospitals are exempt from this requirement.

However, the proposed Guidelines appear to significantly restrict who qualifies as an eligible patient. For instance, an element of the eligible patient definition is that the patient must receive care from an eligible provider. Under the current laws, an eligible provider is one “who is either employed by the covered entity or provides health care under contractual or other arrangements (e.g. referral for consultation) such that responsibility for the care provided remains with the covered entity.” Under the proposed Guidelines, an eligible provider is “a covered entity provider who is either employed by the covered entity or who is an independent contractor for the covered entity, such that the covered entity may bill for services on behalf of the provider.”

If this change becomes law, it may have a significant impact on covered entities who already have these referral arrangements in place. This is because the proposed Guidelines, on their face, seem to remove the referral for consultation option, which is a surprise, as it is currently listed as an example of an eligible provider relationship. In fact, materials on HRSA’s approved webpages provide detailed guidance on how to properly execute this referral arrangement.

It is still early, but reactions to the proposed Guidelines are mixed. Stay tuned for future posts on this blog in the coming weeks, which will delve into other aspects of the proposed Guidelines. The Quarles & Brady LLP Health Law Group will also be issuing a client update on this topic.

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