September 92016340B 2016 Manufacturer Summit - Alinea's 6 Key Takeaways: The Manufacturers Viewpoint

- By Shrujal Patel, Managing Partner

Bridging the Divide: This year's 340B Manufacturer Summit, hosted by CBI Net, provided an excellent forum for drug manufacturers to engage dialogue on the 340B program challenges they are facing. While we often focus on 340B program implementation challenges and program shortcomings from the provider viewpoint, the 340B Manufacturer Summit served to address manufacturer concerns from both a legal and operational standpoint as they look to implement methodologies to effectively sustain 340B integrity.

During the two-day event, Alinea identified several key takeaways from the conference that should be closely monitored by 340B covered entities, policy experts, and related stakeholders moving forward. Alinea's general impressions from the 340B Manufacturer Summit is that there continues to be a large divide between the provider community and manufacturers. While this is in part due to the obvious financial impact 340B has on manufacturers, other factors such as regulatory "grey area" interpretation and operationalizing program changes to adhere to requirements such as the AMP Final Rule and 340B ADR (Administrative Dispute Resolution) process, support the general consensus among manufacturers that regulatory oversight of the program continues to be loose, creating additional burden on them to ensure compliance.

6 Key Takeaways:

  1. Manufacturer's handling of the Orphan Drugs Ruling is inconsistent:

    Manufacturers differ in their opinion and approach on orphan drugs. Some manufacturers have stated that they follow the most contemporary guidance whether it be from HRSA or the courts to determine if they will extend 340B pricing to entities that are required to abide by the orphan drug exclusion. Others state that they are still willing to provide 340B pricing to those entities regardless of legal challenges to the interpretation because they believe that patients will be adversely affected if that price is not available to institutions that shoulder the cost for the most indigent patients. The bottom line is that there has been no guidance or mechanism to give manufacturers or providers the ability to "choose" how orphan drugs are treated as part of the 340B program.

  2. Manufacturers question CE's willingness to work with manufacturers to determine 340B Compliance as it relates to 340B diversion and repayment:

    Manufacturer inquiries, whether predicated by "cause" or as a "good faith effort", are often rebuffed by covered entities. Manufacturers are receiving several repayments of de minimis amounts with no detail or background as to the context of the repayments. When presented with inquiry, manufacturers feel that they are being "stone-walled" and that they are being asked to take repayments at face value. This poses a challenge relative to which payments are accepted or rejected.

  3. Manufacturers do not have large internal teams handling 340B:

    Compiled with the fact that the ratio of manufacturers to CE's is 600:17,000, 340B requests are burdensome to Manufacturers which contributes to why issues are often not resolved in a timely manner (relative to the CE perspective).

  4. Manufacturers have limited access to data (contrary to what CE's think):

    Manufacturers can track what was bought at GPO and 340B but do not see any WAC purchasing. The data sets are not detailed. There is zero insight as to what should and should not be 340B.

  5. Legal firms question whether the mega-guidance (Omnibus) will be any more enforceable than the orphan drug interpretation:

    Without rule-making authority, Manufacturer legal representatives believe HRSA/OPA could be challenged in court in most instances (by either CE's or manufacturers).

  6. Reclassification of pricing for covered entities (credit and rebills) are not as simple as Covered Entities think:

    Manufacturers have a legal obligation to report ASP, AMP, Best Price etc. on a quarterly basis. Any reclassification that occur outside a quarter often requires recalculating past metrics and re-submitting pricing to the Federal Government. Re-stating these metrics have cyclical effects on ceiling price and other metrics that creates significant administrative burden to the manufacturer.