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April 1, 2021

The Future of 340B: An Alinea Expert’s Perspective

An Interview with Keith Chop

The past year has been one unlike any other. As facilities are navigating new territories, it’s important to stay on top of all statuses and requirements. We sat down with Keith Chop, co-founder of Alinea Group and Managing Partner at our Indianapolis office. Keith is passionate about consulting, and he shares some of his insight below about what the next year might look like.

  • The year 2020 was one for the ages!  From a 340B standpoint, what are the key developments that will shape the remainder of 2021? 

Covered entities are facing all kinds of different challenges, and all signs are pointing to continued headwinds as 340B providers look to offset the losses and challenges presented by COVID 19, as well as various pharmaceutical industry developments which will impact savings and revenues generated through the 340B program. By my account, there is an appetite to optimize 340B program savings as providers see diminished revenues related to pharma’s denial of 340B pricing for drugs that are shipped to contract pharmacies (see background article here). Coupled with contract pharmacy denials, providers will also feel the impact of current and proposed reimbursement reductions from State Medicaid, CMS, PBM’s, and Payors alike. Along with this, there continues to be an increase in manufacturer inquiries and issues with the availability of 340B medications.  As the remainder of 2021 unfolds, we are hopeful that the new administration with HHS Secretary Becerra at the helm will keep some of these developments at bay.  We anticipate a significant battle over the next 12 to 18 months, as increased scrutiny of the program from various groups protecting their interests is met with opposition by 340B providers.  We are also keeping a watchful eye as HRSA attempts to gain back 340B footing as a governing authority.

  • With the incoming administration and focus on drug pricing and price transparency in the healthcare setting, what type of guidance are you providing hospitals regarding the management of their 340B program and pharmacy business in general?

Alinea’s guidance to our clients and covered entities are to continue to focus on meeting 340B compliance requirements first and foremost. Stay up-to-date with changes as they happen. 340B Health and 340B Report provide excellent content on the state of the 340B program with up-to-date developments.  It’s critical to understand and follow the most current interpretation of the federal 340B statutes and state requirements; and include your general counsel, consultants, and 340B interdepartmental management team on regular program news and updates that may shape your entity’s future decision-making.  Covered entities should place an emphasis on the development of the appropriate level of internal and external 340B resources. This will provide program oversight as well as insights and education to ensure that covered entities are prepared to address HRSA, state, and manufacturer audits and the evolving landscape of the 340B Program.

  • Are there any specific areas of focus, potential areas for opportunity, that 340B-covered entities should be exploring.  Any current “hot topics” or trends that you are seeing with your current clients?

All covered entities should continue to think ahead and prepare for the future. Explore program optimization opportunities in mixed-use settings and provider-based settings that may benefit existing 340B programs and complement the mission of the hospital or provider.  What does your path to growth look like? Consider expanding areas such as contract pharmacy and specialty pharmacy as long as the necessary resources are in place to support those activities.  With the pressures from outside entities and the access to 340B pricing from various manufacturers, covered entities should continue to see ways to protect 340B savings and revenues.

  • With all the scrutiny around the 340B program, where do you see the program five or ten years from now?  Do you think the program will still be around in 5 or 10 years?

The complexity of the 340B program operations has increased exponentially as a result of various requirements and compliance considerations.  The 340B program will likely continue to face increased scrutiny as manufacturers, CMS, and other parties try to protect revenue streams or try to realize benefits from covered entities existing 340B program opportunities.  There are many more players in the 340B space with each passing year.  The 340B Program continues to be a source of savings and revenue for program participants, which ultimately helps to extend and provide services to patients of those covered entities.  

I believe the program will continue to help providers for years to come, however, the requirements to operate a program and meet compliance will continue to present new operational challenges for future years. As always, I recommend working with professionals who can help you stay ahead of the curve.

If you’d like support in navigating the 340B program and regulatory compliance, our team is ready to help. Give us a call at 1-866-535-7972, Ext. 701 or fill out our contact form to get more information!