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Notice to Covered Entities: Manufacturer Seeking 340B Claims Data

To Be or Not to 340B Blog Brenda M. Maloney Shafer, Richard B. Davis

While we addressed recent wins for 340B covered entities concerning manufacturer transparency in a previous article, Merck Sharpe & Dohme Corp. ("Merck" or "Manufacturer") now appears to seek its own access to 340B covered entity data in a different fashion.

Specifically, over the past few weeks, Merck has sent letters to numerous 340B covered entities substantially in the form below seeking access to all contract pharmacy claims data for its products. The Manufacturer letter requests that the covered entity "share 340B Program contract pharmacy claims data for [its] products" so the Manufacturer may "use this data to match against rebate claims it receives to ensure it isn't paying duplicate Medicaid discounts and duplicate discounts on Medicare Part D and commercial utilization through [its] contracts with commercial payers[.]" This would involve the 340B covered entity uploading the requested data every two weeks via a dedicated portal.

Though Merck "seeks to work collaboratively with 340B covered entities through this initiative," if the covered entities do not cooperate with this initiative, Merck may "take further action to address 340B Program integrity, which may include seeking 340B Program claims information in a manner that may be less collaborative, and substantially more burdensome for covered entities."

Notably, this Manufacturer letter does not cite to any specific law, regulation, or guidance which would require the covered entities to provide this data under the 340B Program. The 340B Program already contains well-established guidelines for manufacturers to conduct audits of covered entities. Among other requirements, these guidelines provide that "(1) audits are to be performed only when there is a reasonable cause to believe that there has been a violation of section 340B(a)(5) (A) or (B)[diversion and duplicate discounts]; (2) audits are to be conducted with the least possible disruption to the operations of the covered entity with only one audit being permitted during the same time period; and (3) the scope of the audits must be sufficient to evaluate the covered entity’s compliance with the aforementioned statutory prohibitions."[1]

Absent such circumstances, or an otherwise direct awareness of a violation by a 340B covered entity, it is unclear on what authority (if any) this letter relies. Additionally, while the letter claims the data uploads "should not significantly burden any 340B Program covered entity operations," covered entities have anecdotally reported that this would in fact require material FTE commitments.

Given this uncertainty, and the potential burden on covered entities, we recommend that covered entities proceed cautiously and work closely with their legal counsel to formulate a tailored response depending on their circumstances.

If you have any questions about the Notice or how it will affect your 340B program, please contact your Quarles & Brady attorney or: