Subscribe
Share
Share
Embed
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.
Speaker 1 (00:04):
Welcome to 340B Insight from 340B Health.
David Glendinning (00:13):
Hello from Washington DC and welcome back to 340B Insight, the podcast about the 340B drug pricing program. I'm your host, David Glendinning with 340B Health. Our guest today is Jake Olson with Froedtert Memorial Lutheran Hospital in Milwaukee. Jake spoke on a panel about centralized distribution models at the most recent 340B Coalition summer conference. We wanted to learn more from him about the considerations that 340B Health systems need to take into account when operationalizing such a distribution model. Before we get to that interview, I will remind those of you who missed our most recent episode that we had our president and CEO Maureen Testone on the show to give her latest 340B status update. It is an episode that is chock-full at the latest developments on Capitol Hill, in the state houses, and in the courts. So be sure to listen if you have not already so you are up-to-date. And now for our feature interview.
(01:15):
I am here with Jake Olson, the 340B program manager at Froedtert Memorial Lutheran Hospital based in Milwaukee. Jake is here with us at the 340B Coalition Summer Conference to talk about central distribution models for 340B hospitals and health systems. So Jake, thank you very much for being here. Welcome to 340B Insight.
Jake Olson (01:35):
Yeah, thank you very much for the opportunity.
David Glendinning (01:38):
Please start by telling us a little bit about Froedtert Health and the patients it serves.
Jake Olson (01:43):
Yeah, so Froedtert Health is located in southeast Wisconsin, and we are primarily in the Milwaukee market. We have six different hospital systems, but only one of them is a 340B eligible location, but that's our flagship hospital located in Central Milwaukee, and it's got 700 beds. We had about a million outpatient visits in 2022. When we say it's only a single dish hospital, it's one really big one. And then we also do have 10 child sites that are located around the community for our infusion and cancer centers.
David Glendinning (02:22):
And we are here to talk about central distribution. Can you explain for the layman out there what central distribution models are?
Jake Olson (02:29):
Yeah, centralized distribution models are to help your organization streamline several processes that may not need to occur in those smaller outlying areas, and you can centralize things. And there's some advantages to that. So when you standardize a formulary, if you can warehouse and buy in bulk one product, you can optimize the inventory for the systems, which can help mitigate drug shortages by ensuring that you have enough for your entire system and you don't have to worry about small accounts having to order small numbers, and you can also help to maximize contract compliance. So instead of having all of your buyers out in those locations trying to figure out which thing they need to order today, you can centralize all that purchasing. The other thing you can do is to help decrease costs because you are reducing inventory expenses. You don't have to have a full bottle located in all the different external areas.
(03:20):
So you can centralize that and just give them a few tablets here and there to meet their patient needs for those small amount of times. And you can also help reduce overhead operating costs by not having to have a buyer or pre-packager in all those different locations. You can just centralize that. The other thing to do with streamlining the resources is when you reduce the workload for these kind of smaller tasks, then that frees up the pharmacists and the technicians in those locations so that they can focus on other areas and they don't have to worry about repackaging tablets at the end of the day or compounding. And then the other thing is you help kind of ensure compliance with your state board of pharmacy. You don't have to set up, again, all these different areas and all these different locations, so you can make sure your state board of pharmacy is good, your joint commission, DQSA standards, DEA, FDA, GPO proposition, all the different types of systems that you need to have in place when you have them all together.
David Glendinning (04:16):
Well, thank you for running through the concept. I suspect the details can be quite complex and can vary by health system.
Jake Olson (04:23):
Ah, it's easy.
David Glendinning (04:27):
So given that, what does central distribution look like for Froedtert Health?
Jake Olson (04:33):
Yeah, so for Froedtert Health we have a hundred thousand square foot facility located in one of our northern suburbs that's centrally located to all of our different hospitals and clinics in the area. And they have our supply chain pharmacy logistics and our IT support function. So if you kind of separate that out, we have 60,000 square feet that helps for our distribution for supplies. We have our own internal courier system running to all these different sites to do that. We have a compounding suite. It does both our acute and bulk sterile compounding in one of our locations. We also have a central pharmacy distribution warehouse. That is kind of what we're here talking about today.
(05:20):
We also have wholly owned contract pharmacies. And I've been trying to come up with a good acronym for that, but we actually have three of them located in our same centralized distribution warehouse where we have a specialty pharmacy, we have a mail order pharmacy, and then we have a home infusion compounding pharmacy. And the fun part is if you're keeping count, there's technically four licensed pharmacies located under that same roof. Not a single one of them is owned by the covered entity and none of them are part of the 340B program. So it gets very, very confusing very quickly and inventory management has to be on point to make sure that we're not causing any problems with that.
(05:59):
So what we decided to do is segregate that inventory and not have to worry about the challenges of diversion or GPO prohibition or some of those other things. So any inventory from our 340B specific areas is segregated out and stored in one location, and then when they want that product back, then we just ship them their own inventory back. So that's a lot of what our centralized distribution warehouse encompasses. It's kind of a big old building that we can do all these different services that you don't want to have them sitting and taking up space in your central hospital pharmacy area.
David Glendinning (06:37):
Well, that sounds like a very impressive operation. Why did Froedtert Health make the decision to implement this type of model?
Jake Olson (06:45):
The reason they started that was to help out those smaller community hospitals and the physician's clinics to get those smaller tasks and services done for them so that they didn't have to spend the time and effort to do it locally. And of course, once we started doing it and they started saying, "Wait a minute, you guys can package all these different things and you can do all these cool services out there? Well, we want that too." That's why we ended up having to segregate that inventory and keep us on our toes because it's evolved into these other areas.
David Glendinning (07:20):
And I'm picking up on a theme of efficiency gains here. Are there any other potential benefits to central distribution that Froedtert Health has realized and that other systems can potentially realize?
Jake Olson (07:32):
Yeah, I think one of the best things about our centralized services model that we have is actually contract management. We have a pharmacy contracts guy that sits right next to me, and there's probably not a day that goes by that he doesn't walk over to me and show me some contract and say, "Okay, how do we deal with this? What should we do? X, Y, Z manufacturer wants us to sign a deal for the entire health system to give us this drug." So we immediately go, "Okay, we have to have two contracts. We have to have one for our 340B hospital. We have to another one for everyone else." That kind of thing doesn't happen if you have 10 different people trying to sign 10 different contracts or if that guy's not sitting in our area and have access to those questions and concerns so we can make sure that we stay right on top of compliance.
(08:23):
The other thing is that direct manufacturer relationships, so that same guy who's signing those contracts is also the one who will reach out to X, Y, Z manufacturer, have them come in, sit down and explain to them why either we need access to X, Y, Z drug or we need to have this service. We have one central person who's figuring all that out for the whole system. There's lots of value added to that piece. And then it also allows us to have lots of meetings on certain subjects that... Instead of me having to travel to all these sites to explain why they can't borrow, why the GPO clean hospital can't borrow medicines from the 340B space, they're actually sitting right there next to us.
David Glendinning (09:06):
I know that not every health system out there employs this type of model. What considerations should health systems account for when considering a move in this direction?
Jake Olson (09:18):
Yeah, I mean, this is definitely not the solution for everyone. We don't have to cross any state lines, which is one really nice thing. So yes, we have enough of a volume that requires us to kind of centralize those distributions, but yet we also don't have the complexities of some of the other colleagues that are here at the conference and that I'm giving a presentation on in just a few minutes. If you're going to set it up, you just really have to do an evaluation of what services are you actually going to provide, what can you pull out of those smaller locations that don't have the space or the people to do it? It's definitely going to be a lot of math involved of what's the startup cost going to be for this? We had to rent a hundred thousand square foot building and try to find that, and then you have to customize it and build it out for how you want to do it.
(10:06):
It's going to take some time. So thinking through how long is this lead time and this going to take me to get going, dealing with the DEA, the licensing, the compliance pieces and getting that all together is a challenge and needs to be really completely thought through. Just make sure you have enough space to expand into because we've already completely outgrown this ISC five years after it. We're already trying to find other places to stick some of the services that we've done or trying to grow at actually a second floor and even move some of those things to other locations because it's already outgrown.
David Glendinning (10:42):
So I know you touched a little bit about the 340B factor earlier. Can you go into a little bit more detail about how you operationalize the 340B piece of that to stay compliant?
Jake Olson (10:54):
So one of the things that you need to ensure that you have capabilities of is good technology vendor capabilities and partners that are going to align and make sure that you can accomplish those. So we have several vendors that help us accomplish this. So obviously you need your electronic medical record vendor to help you ensure that you can see and distinguish between the different locations and the different usage. You need to make sure that your third party administrators has the capabilities of ensuring that you're tracking all the accumulations and the inventory movement around there. Obviously, your wholesaler has to be a partner in this and they need to be aware and help you set that up. You need to make sure that you have the capabilities of purchasing volumes that can be potentially shared amongst your system and not violate your wholesaler contracts.
(11:42):
So you also need to make sure that you can clearly figure out your invoice management. The new DSCSA management and requirements is another piece that's got to be figured out through there. We have several compounding robots that we utilize to help make some of our sterile compounds, but then we also have tablet repackaging machines, we have carousels, we have some of those other pieces. So all this stuff has to integrate and I'm not done yet. So pharmacy repackaging unit-dose equipment, medication cabinets, courier systems and delivery tracking. I think that's 12 things that I talked about there. And they all have to align and be together and on the same page so that you can efficiently and rapidly take care of these customers. Obviously, if a patient shows up at one of our clinic locations, they're going to need a dose of medication and it has to be there. You can't show up to a clinic and say, "Oh, I'm sorry. That one has to come from our central distribution place and they don't do deliveries until Tuesday.”
David Glendinning (12:41):
Well, it sounds like a lot of complexity there, a lot of moving parts, all ending with patient care, which we love to see. Let's stick with the compliance topic for just a little bit. I know you had mentioned DSCSA before. Besides 340B regulations, what other regulations come into play here?
Jake Olson (12:59):
Yeah, so there's federal regulations for the DEA. So if you're going to have any controlled substance in any way, shape, or form, you're going to need to make sure that you have that clearly figured out and transferring around. If you're going to be doing any compounding, you need to be aware of the FDA rules on compounding. Or if you're doing any sterile stuff, you need to look at those new 797 rules and are you able to comply with the new 797 rules if you centralize those, right?
(13:28):
You have joint commission standards, so they sometimes will come and review onsite inspections of those, and so you need to make sure that you have that. Our specialty and mail order pharmacies have to deal with URAC accreditation and ensure that those standards are being met. Your state board of pharmacy really kind of rules what you can distribute when, where, and how and why, and then all the bordering states or wherever you're going to be sending these medications into as well, you also need to review their state boards of pharmacy requirements. Lots of folks to... Again, technology and laws, and make them all seamless and align perfectly.
David Glendinning (14:08):
Well. We've covered a lot about central distribution and I'd like to ask what advice do you have for a system with 340B entities that might be considering central distribution for themselves?
Jake Olson (14:20):
Well, there is an easy answer that fits everyone, so you just have to find it. And obviously, that is sarcasm. There is not one answer that you will find anywhere. This is something that is going to take a lot of time and effort of looking through all the requirements. You're going to have to work with your legal counsel, you're going to have to work with consultants. I'd highly recommend going around and seeing how various other organizations deal with that. I think the key thing is what are we trying to accomplish with this setup and what are the drawbacks? And it really has to be an individualized answer for every organization. There is not going to be one size that's going to fit all. There's not going to be one solution that's going to cover everything. It's really looking at what the options are available out there to you and then deciding what fits my organization best and what can we do legally and compliantly, especially from that 340B world, which is what I... I always bring everything back to 340B.
David Glendinning (15:22):
Well, Jake, this has been quite the eye-opening look at an area of pharmacy and an area of 340B that I was not familiar with before. So thank you for the great primer, and I very much appreciate you being here.
Jake Olson (15:35):
Yeah, thanks again. Really appreciate the opportunity.
David Glendinning (15:38):
Our thanks again to Jake Olson for running us through all the ins and outs of centralized distribution. We are excited to hear more about how Froedtert Health and other member hospitals are converting such distribution efficiencies into improved patient access and quality of care. What operations and compliance topics have you not heard us cover yet on the show? We always welcome your episode ideas and feedback. You can email us at podcast@340Bhealth.org. We will be back in a few weeks with our next episode. In the meantime, as always, thanks for listening and be well.
Speaker 1 (16:20):
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 at 340B Health and submit a question or idea to the show by emailing us at podcast@340Bhealth.org.