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HRSA Issues Proposed Omnibus Guidance on 340B Program Requirements

The Department of Health and Human Services (HHS), through the Health Resources and Services Administration (HRSA), has issued long-awaited proposed guidance on the 340B Program, which allows eligible safety net health care providers to access lower-priced medicines.
The proposed guidance, once finalized, is intended to help covered entities, such as certain hospitals and specialized clinics, and drug manufacturers comply with Section 340B of the Public Health Service Act.
According to HRSA, which is responsible for administering Section 340B, 11,530 registered covered entities and 644 drug manufacturers were participating in the program as of January 1.
The proposed guidance was published in the August 28 Federal Register (80 Fed. Reg. 52300). Comments on the guidance are due October 27.
HRSA previously withdrew the so-called “mega-reg” on 340B requirements after a federal district court invalidated a final rule (78 Fed. Reg. 44106) that narrowed the exclusion of orphan drugs from the 340B Program on a finding that HHS lacked statutory authority to issue it. Pharmaceutical Res. & Mfrs. of Am. v. United States Dep't of Health and Human Servs., No. 13-1501 (D.D.C. May 23, 2014).
At the time, HRSA indicated that it planned instead to publish omnibus guidance on the340B Program in 2015.
The proposed guidance discusses the types of entities eligible to participate in the 340B Program, including non-hospitals and off-site outpatient facilities and clinics.
In particular, HSRA is seeking comments on alternatives to demonstrating the eligibility of an off-site outpatient facility or clinic, which are not located at the same physical address as the parent hospital covered entity.
Under the proposed guidance, off-site outpatient facilities and clinics would be listed on the public 340B database and be permitted to purchase and use 340B drugs for eligible patients if the covered entity hospital demonstrates that each of the facilities or clinics is listed on a line of the cost report reimbursable under Medicare and the services provided at each of the facilities or clinics have associated outpatient Medicare costs and charges.
The proposed guidance also addresses registration and termination of participating covered entities, annual recertification, and the group purchasing prohibition for certain covered entities.
The proposed guidance includes a lengthy section on “individuals eligible to receive 340B drugs.” Specifically, the HRSA proposes to clarify the definition of “patient,” which was last addressed in 1996 guidance, for purposes of the 340B Program.
“The sale or transfer of 340B drugs to an individual not meeting the criteria in this section of the proposed guidance is considered diversion,” HRSA said.
“The development of this proposed guidance is meant to address the diverse set of 340B covered entities, and was informed by 340B Program audits, through which HHS has learned more about how the definition of patient is applied in different health care settings.”
Under the proposed guidance, an individual would be considered a patient of a covered entity, on a prescription-by-prescription or order-by-order basis, if the individual meets all of the following conditions:
  1. The individual receives a health care service at a facility or clinic site which is registered for the 340B Program and listed on the public 340B database.
  2. The individual receives a health care service provided by 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.
  3. An individual receives a drug that is ordered or prescribed by the covered entity provider as a result of the service described in (2).
  4. The individual’s health care is consistent with the scope of the federal grant, project, designation, or contract.
  5. The individual’s drug is ordered or prescribed pursuant to a health care service that is classified as outpatient.
  6. The individual’s patient records are accessible to the covered entity and demonstrate that the covered entity is responsible for care.
Among the other topics addressed in the proposed guidance are the prohibition on duplicate discounts, maintenance of auditable records, and contract pharmacy arrangements.
In a statement, the American Hospital Association’s Ashley Thompson, Acting Senior Executive, Policy, said the group is reviewing the guidance and plans to seek feedback from 340B-member hospitals.
“We want to make certain that the new requirements do not overburden hospitals and strike a balance between hospitals and pharmaceutical companies for enduring program integrity,” the statement said.
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