340B Price Integrity and Contract Loads: Blog by Amar Sharma
One of the most overlooked aspects of the 340B program is 340B price integrity and parity across purchasing accounts. Wholesalers are generally expected to load the correct 340B price and apply accurate, up to date PHS quarterly pricing across all procurement accounts, NDCs, and classes of trade available to the covered entity. While this seems like a straightforward process, a considerable number of pricing discrepancies occur on a regular basis. And while wholesalers do acknowledge and automatically apply credit and rebills in cases where PHS pricing was not loaded promptly, or across all 340B purchasing accounts, we often see issues go unaddressed, resulting in lost or inaccurate savings for the covered entity. There are a few different elements at play here, which I’ve categorized and outlined below as some steps you can take to maintain pricing integrity.
1. Line of Business
Wholesalers do not grant access to their entire portfolio for all covered entity accounts. Access is dependent on how the account (regardless of the class of trade) is classified in the wholesaler’s database. Wholesalers sometimes refer to it as “Line of Business” or “LOB.” If a specialty pharmacy’s LOB is classified as retail, then the wholesaler wouldn’t load any specialty products under that account, which means you’d need to manually request access to each specialty product; depending on the wholesaler, your request might even get denied. If you do not dig deeper into those issues, then you might assume you’re not eligible for those products and subsequently lose out on potential savings your covered entity should have access to.
2. Price Integrity
If you do have access to the product (i.e., the drug shows up on the wholesaler’s online catalog and has a price listed for it), then the next step is to verify 340B price integrity. Wholesalers are dependent on the suppliers (AKA manufacturers) to send them the eligibility before the end of the quarter so they can continue to offer 340B pricing to their customers. I’ve often seen suppliers lag in their communication to the wholesalers and consequently, there are a significant number of NDCs that lose 340B pricing at the beginning of the quarter. There is something called the “Contract Name” that may give you an indication of whether the 340B contract is loaded for that NDC or not. If the Contract Name has PHS or 340B in its description, that may indicate that 340B contract is loaded, although we have seen rare instances where the PHS contract was loaded but the price was still incorrect. If you identify that PHS/340B contracts are not loaded or the Contract Name is blank, then do not automatically assume that wholesalers will rectify the problem and issue credit/rebills in a timely manner. We have seen numerous instances where covered entities discovered they were invoiced at the wrong price months after the fact.
This lag in communication could have another unintended consequence: depending on when you upload 340B prices in your EMR for your in-house pharmacies and mixed-use locations, Medicaid may be overcharged (340B prices typically get reset to WAC when wholesalers don’t get communication back from the suppliers). If your wholesaler credits and rebills all the purchases made on the incorrect price (WAC) after the fact, then you’ve inadvertently overcharged Medicaid at WAC despite buying the drug at 340B (assuming 340B AAC billing is required by Medicaid in your state).
3. Price Parity
Once you’ve verified that the drug is loaded on your 340B account with the correct Contract Name, then it seems safe to assume that you wouldn’t have to do the same exercise for the same NDC for all your 340B accounts (e.g., if the wholesaler loaded the drug and the PHS contract under account A then they would also load the same drug and the same contract under account B). Unfortunately, wholesalers can be inconsistent with price loads for the same NDC across accounts for the same CE. Therefore, it is important to create a tool or a monitoring mechanism to compare prices quarterly for the same NDC across accounts. This also holds true for GPO and WAC prices as well since the same issue could occur for different classes of trade (e.g. Apexus PVP price loaded for NDC A under one WAC account, but no contract loaded for NDC A under a different WAC account for the same CE).
Like many other aspects in the highly regulated healthcare arena, measures to monitor drug pricing and the accuracy thereof should be an essential duty for a covered entity’s 340B management team. By engaging diligent processes to ensure 340B, GPO, and WAC pricing is updated accurately across the enterprise, we have uncovered considerable opportunities for savings recovery and contractual price integrity. In addition to cost cycle accuracy and optimization, covered entities should always be mindful of factors, or downstream impact, to areas such as price transparency requirements, drug competition, reimbursement, and 340B billing compliance. At minimum, in line with a covered entity’s 340B oversight, leveraging a united approach between the 340B management team, internal pharmacy business managers, reimbursement, GPOs, and wholesalers will help ensure price integrity and provide greater insight into market factors shaping the drug industry and price trends that will influence your covered entity’s care and business objectives.