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340B Insight provides members and supporters of 340B Health with timely updates and discussions about the 340B drug pricing program. The podcast helps listeners stay current with and learn more about 340B to help them serve their patients and communities and remain compliant. We publish new episodes twice a month, with news reports and in-depth interviews with leading health care practitioners, policy and legal experts, public policymakers, and our expert staff.
Narration [00:00:04]:
Welcome to 340B Insight from 340B Health.
David Glendinning [00:00:12]:
Hello from Washington, D.C. and welcome back to 340B Insight, the premier podcast about the 340B drug pricing program. I'm your host, David Glendenning with 340B Health. Our guest for this episode is Angela Campitelli, the director of the Pharmacy 340B program at Metro Health System in Cleveland. Angela was one of the speakers at a 340B coalition winter conference session that focused on 340B purchasing strategy. We recently spoke to her to discuss how health systems can ensure they are staying compliant with purchasing rules while also ensuring they Access all the 340B savings to which they are entitled. But before we get to that interview, let's do a quick recap of some of the latest news about 340B. 340B Health and two of our member hospitals have appealed a recent federal court decision regarding 340B rebates.
David Glendinning [00:01:17]:
Although that decision halted drugmakers from imposing unilateral 340B rebate schemes, it also stated that the 340B statute does not categorically prohibit 340B rebates. We are asking the appeals court in Washington, D.C. to reconsider that element of the lower court's decision. Our filing also states that if the appeals court were to reject our position, it should support the government's ability to, at a minimum, exercise discretion over approvals of any rebates. Several drugmakers and a drug industry vendor also are appealing the lower court decision and arguing that the government lacks the authority to block their rebate models. The appellate court has agreed to consolidate several of those appeals and expedite its consideration of them. That means a key court decision on rebates could come as early as this fall. 340B Health members can read more analysis of these key developments by visiting the show Notes and now for our feature interview with Angela Campitelli with Metro Health System in Cleveland.
David Glendinning [00:02:31]:
One of Angela's responsibilities as head of the 340B program at MetroHealth is to ensure the system is purchasing 340B drugs correctly. That involves avoiding violations of federal rules, including the GPO and diversion prohibitions, while also seeking to maximize 340B savings for the benefit of the health system and its patients. I spoke with Angela about how 340B hospitals work to strike that correct balance. Here's that conversation. Today I am speaking with Angela Campitelli, who is the director of the Pharmacy 340B program at Metro Health System in Cleveland. Angela thank you for being with us today, and welcome to 340B Insight.
Angela Campitelli [00:03:14]:
Thank you for having me.
David Glendinning [00:03:15]:
David, you spoke about the issue of 340B purchasing strategy at the most recent 340B Coalition winter conference. And that subject is what we're here to speak about today. But first, please tell us a little bit about the MetroHealth system and the patients you serve there.
Angela Campitelli [00:03:34]:
Metro Health was founded in 1837 with a mission to serve the needs and the residents of Cleveland, Ohio. Cleveland was founded in 1836, so we're almost as old as Cleveland. It was called City Hospital then, and it's moved around Cleveland a few times and has grown, but it has always kept its mission for over 200 years. And now it's owned by the county of Cuyahoga and serves Cuyahoga and the surrounding counties. So we serve about 300,000 patients a year and we employ almost 9,000 people. Now. We have four hospitals in the region. We have an level one adult trauma center, and we've had that for 25 years.
Angela Campitelli [00:04:19]:
We have a burn unit that serves adult and pediatrics. We have 12 brick and mortar pharmacies in the communities alongside our health centers to serve patients where they are. And we have one specialty, slash central fill. Some of the ways we use our 340B cost savings is actually to provide all these locations. So not all these locations would be financially sustainable where they're at now based on the reimbursements that we get. So we use 340B to support that so that we can keep open in the places where our patients live. And then we also have sliding fee discounts. So we provide discounts not only for patients for their medical care, but also for their pharmacy care.
Angela Campitelli [00:05:05]:
We provide direct discounts to the patients based on their financial need. And it doesn't. It's not based on the cost of the drug. We also have a call center in our pharmacy, and this call center is amazing. They do prior authorizations, they answer questions and, you know, support refills, and they also apply for drug manufacturer discounts. We also put pharmacists in the clinical spaces and they help with monitoring test results, titrating medications, doing disease state education, and answering questions of the patients. That's just a few of the ways that we use our cost savings.
David Glendinning [00:05:46]:
Well, I had the pleasure of visiting MetroHealth several years ago to meet some of your care providers there and patients who have been helped by your 340B funded programs. I found it to be a very impressive operation. So thank you for all the work you and your team do to make that possible. And one element of what you do is establishing a purchasing strategy for the 340B drugs you buy. Why is it important for an eligible hospital to have such a strategy?
Angela Campitelli [00:06:13]:
Well, several reasons. One is compliance. 340B is highly dependent on compliance. We want to make sure that we only gain 340b discounts on qualified patients. And we also want to make sure that we are good stewards of our company's assets. So we don't want to spend more than we have to, but we don't want to go outside of that compliance. And we can't just willy nilly, you know, have people ordering drugs. We have to have a strategy and education and systems that really support that strategy.
David Glendinning [00:06:49]:
We often speak on this show about the need for strong compliance, making sure the hospital 340B programs follow all the rules and regulations, and one of them is the GPO prohibition. So can you speak a little bit more about that?
Angela Campitelli [00:07:04]:
So we are a dish hospital. That means disproportionate share hospital and disproportionate share hospitals have what is called a GPO prohibition. And this means that if you buy a covered outpatient drug, but you don't buy it on 340B, you cannot buy it on a GPO account. GPO means group purchasing organization. So hospitals get together, they form a group, they negotiate volume pricing, and then we can buy it at a discount that's not 340B, but it's still a discount. So we're not allowed to use that at all on any of our outpatient drugs. So if we buy a drug that's not 340B, we have to pay WAC for it, which is wholesale acquisition cost. That's the cost without any discounts at all.
Angela Campitelli [00:07:53]:
So that's what the GPO prohibition is. And in order to do that, we have a lot of systems and education and auditing in place.
David Glendinning [00:08:02]:
Yeah. And if my cheat sheet is correct, we also have children's and cancer hospitals alongside the dish. Hospitals that are subject to this prohibition.
Angela Campitelli [00:08:12]:
That's correct. Thank you.
David Glendinning [00:08:13]:
So we'll add GPO and WAC now to our running list of acronyms that everybody in 340B and the healthcare world in general need to be aware of. Can you talk us through a little bit more of the specifics about exactly how 340B hospitals purchase drugs, considering that GPO prohibition?
Angela Campitelli [00:08:30]:
Okay, so most of us use what is called a virtual replenishment drug inventory system. And what that allows us to do is we buy all of our first purchase of drugs on wac and then we only replenish that based on how the drug was already been used. This has already been given to a 340B patient. This has already been given to a non 340B inpatient. So it qualifies for GPO. So we know when we're purchasing that this is already half it. We're not just guessing. And then we have what is called the blacklist, that's what we call it.
Angela Campitelli [00:09:11]:
So there are some drugs that are just not 340B eligible. And that could be because the manufacturer does not participate in the 340B program. It could be because it's a vaccine, because vaccines are excluded from the 340B program. Other drugs that are usually not 340B, that is kind of a hospital by hospital decision. So we choose to exclude all of our anesthesia gases, all of our radiology dyes from the 340B program. Those are all on our blacklist. And so we never buy those drugs on 340B. And that allows us to buy them on GPO or WAC.
Angela Campitelli [00:09:55]:
And then we, of course, our 340B drugs are accumulated through our third party administrator, you know, for every time we administer that drug. And then once those accumulations reach full package size, that we can buy them on 340B or GPO.
David Glendinning [00:10:14]:
Starting to see the level of complexity that's involved both on the initial purchasing side and then on the replenishment side. How precisely do hospitals keep track of, of all that? To ensure they're getting all the numbers correct.
Angela Campitelli [00:10:28]:
Very, very precise. So like down to the milliliter, milligram microgram, whatever is given to the patient, it's recorded on what we call the MAR medication administration record. So type it in there. They've got the ndc, the exact amount, usually where on the patient's body it's administered or whatever. But that accumulates by NDC and goes into our software. And so every time an NDC is administered to a patient, it adds up, adds up, adds up. Once it reaches package size, it moves over to another bracket and says you have one package available for purchase so that we can buy based on that.
David Glendinning [00:11:11]:
And I often see hospitals refer to split billing software. Am I assuming correctly that that's the type of software you're using for this?
Narration [00:11:20]:
Yes.
Angela Campitelli [00:11:20]:
So the accumulating and the split billing are all connected. So once we reach package size and we go to buy it, what do we use? We use our Split billing software. So we tell the software, I need Drug A. And the software says, okay, in Drug a, you have six different NDCs with packages available to purchase. And so, you know, we choose which ones we want to buy on either 340B or GPO, depending on which packages are available. And then that split billing software basically splits our order. So we'll have three orders now of 340B, GPO and WAC based on what we've already given our patients. And why do we buy wac? Well, the reason is if we need more than we have accumulated, then we have to buy the extra on WACC.
Angela Campitelli [00:12:10]:
So if we have half a bottle accumulated on 340B and half a bottle accumulated on GPO and we need to buy a bottle, we can't use either. So we have to buy it on wac. So that's why there's sometimes still WAC purchasing going on, even though we've already purchased and given it to a patient. So then that software sends the order off to our primary drug wholesaler, and then we can get the drugs on three different accounts.
David Glendinning [00:12:38]:
Saw that your presentation at the most recent 340B coalition conference compared this to the water cycle, which brought me back to all those. All those charts and pictures that we learned in middle school. Except, you know, instead of precipitation and runoff and evaporation, we had neutral inventory and split billing and replenishment. So. So what could go wrong with this cycle?
Angela Campitelli [00:13:02]:
What can go wrong is if somebody from your system buys a drug outside of this process, if you don't catch it and it just keeps going and it's rampant, it can lead to purchasing drugs on GPO that should have been purchased or on either WAC or 340B. And that violates our GPO prohibition. And one of the more steep consequences of that is losing the 340B program altogether. So if you lost 340B, that disrupts all those great things we're doing that I said at the beginning, you know, with our 340B cost savings, all that stuff ends. So it's very serious, and we take it very seriously. And we are constantly looking to see if, you know, see the mistakes that are made and fix them and make sure people have the education and the access to the systems they need in order to do their jobs.
David Glendinning [00:14:01]:
You mentioned earlier that hospitals are buying some drugs at WACC for neutral inventory, but that they also replenish some of those drugs at WACC as well. So what if the purchasing error involved replenishing something at The WACC price that did not need to be.
Angela Campitelli [00:14:18]:
So, yes, to be on the safe side, sometimes people will just buy drugs on WACC if they're not sure. So we monitor our WACC purchasing as well. And we do this, we use another third party to help us monitor our purchases. And we do this on a weekly basis. And the downfall of this is, you know, we are a county hospital, we have a very, very low margin, and we have to keep our costs down as much as possible just to stay open. And 340B is a huge part of that. So if we spend unnecessary money on wac, we're not doing our job. We have to be as efficient as possible and get the best prices that we can in a compliant manner.
David Glendinning [00:15:06]:
Yeah, I'm glad you mentioned that. Of course, it's important for hospitals to be compliant, but also to do so in a way where they're not walking away from savings, quite frankly, that they could be using to provide more services and treat more patients. I'm curious as to how other hospitals can strike that balance as well as you are doing. You know, how can, how can someone tell that another purchasing strategy breakdown is happening?
Angela Campitelli [00:15:32]:
Well, one way to tell is auditing. Another way to tell is you've got to have people who know what they're doing. So you can't just say, hey, go buy drugs, get the best price you can. That's just not going to work. And a lot of hospitals, it's hard to wrap your head around that there's a price out there at a 340B discount, but we have to buy it on WAC. And it's very tempting sometimes for people in these positions to say, I'm just going to buy a 340B price. Why on earth would I pay whack. But we have to make sure that we don't do that.
Angela Campitelli [00:16:09]:
So we have systems in place so that all drug purchasing or all drug requesting flows through the pharmacy so we can split that order before it goes out the door. We also have audits in place where we look at our accounts and look at all the accounts at once and line them up by NDC number and say, wait, this NDC was only purchased on GPO for the last six months. Why? And then we investigate it. Well, it might be that that drug is blacklisted. So then we just ignore it. It might be the drug is only used in an inpatient setting, never in an outpatient setting. So we have to check this stuff all the time just to make sure that nothing outside the process is happening.
David Glendinning [00:16:55]:
We know some of our listeners are relatively new to the 340B world. They may just be getting started there. What advice do you have for them for other hospitals trying to put a drug purchasing strategy in place?
Angela Campitelli [00:17:08]:
I want you to get your senior leadership on board because it seems like you might be putting some money in an area that there's no return on investment. But the quieter the auditing area is, the bigger the return on your investment. Because with the risk as high as losing the program altogether, spending a couple extra dollars putting resources in place to prevent us from violating that GPO prohibition is key. And at the same time, you know, we're also making sure that we don't violate our diversion and duplicate discount obligations. But that GPL prohibition is a real quiet one that's not often talked about. But it's very important to make sure you're monitoring that all the time.
David Glendinning [00:18:02]:
I want to make sure we acknowledge the elephant in the room lately anyway, when it comes to how hospitals might buy and replenish 340B drugs in the future. And that's the rebate issue that is currently under scrutiny and federal courts. And within hhs, what could the drug maker push toward rebates mean for all this drug purchasing strategy that you've laid out?
Angela Campitelli [00:18:27]:
Well, it would upend it. This is the one that really keeps me up at night because we've, you know, over the last 30 years since 340B has, you know, become an active part of the hospital. In order to change to a rebate model, we would have to change all of our software. And that doesn't happen overnight. You know, as a county hospital, we've got to put out a request for proposal. We have to do a lot of due diligence. We have to first of all know what we're requesting. We don't even know how we would do this yet.
Angela Campitelli [00:19:05]:
And then there are other issues, like each drug manufacturer might have a different time frame. We don't always use the drug on a patient within a certain amount of time from when we buy it. So if we have a 45 or 60 day limit on when we can get a rebate, that might not be feasible for us. Another issue is that in order to submit claims for rebates, we have to sign up with vendors that are either owned or controlled by the dog manufacturers. And as a public hospital, we have to be very wary of the terms and conditions of such sites and they're not always adequate to protect our patients. So we need to make sure we have business associate agreements in place. We need to make sure the data is HIPAA compliant when it comes to how it's being stored or how it's being used, and we're not getting those assurances yet from any of the manufacturers. So there's a few hurdles that still need to, you know, be jumped before we can go down this road.
Angela Campitelli [00:20:16]:
And the biggest fear is that this would make us lose our 340B discount, which really supports our hospital and our patients and helps keep our doors open.
David Glendinning [00:20:27]:
Certainly so much to think about in such high stakes. Angela, this has been a very informative discussion. I've certainly learned a great deal in speaking with you, and I know this will be a very useful perspective for many of our listeners to hear. So I very much appreciate you being with us today. Thank you, David Our thanks again to Angela Campotelli for sharing her strategic advice on 340B purchasing with our listeners and with the attendees of the most recent 340B coalition conference. If you would like to learn more about such operational strategies and have not yet signed up for the 340B Coalition Summer Conference in the D.C. area in late July, please do so now. You can visit 340bsummerconference.org to register now.
David Glendinning [00:21:13]:
We will be back in a few weeks with our next episode. In the meantime, as always, thanks for listening and be well.
Narration [00:21:26]:
Thanks for listening to 340B Insight. Subscribe and rate us on Apple Podcasts, Google Play, Spotify, or wherever you listen to podcasts. For more information, visit our website at 340bpodcast.org. You can also follow us on Twitter @340bhealth and submit a question or idea to the show by emailing us at podcast@340bhealth.org.