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This week, we are joined by Steven Miller, vice president of pharmacy services at 340B Health. April 1 was the third anniversary of the federal 340B ceiling price website’s launch. Steve discusses how this database has become an invaluable tool for 340B drug pricing transparency.
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 David Glendinning with 340B Health. Our guest today is Steven Miller, the Vice President of Pharmacy Services for 340B Health. We have Steve on today because we just celebrated the third anniversary of the launch of the federal 340B ceiling price website. This site has become an invaluable tool for covered entities and federal officials to ensure that drug companies are charging the correct amounts for 340B-eligible drug purchases. And we wanted to give Steve an opportunity to go over the successes of the site and explain how hospitals can use it. But before we go to that interview, let's take a minute to cover some of the latest news about 340B.
David Glendinning (01:09):
The Health Resources and Services Administration has referred the drug company, Boehringer Ingelheim, to the Health and Human Services Office of Inspector General for the drug maker's continued refusal to offer 340B pricing on drugs dispensed at community pharmacies. BI is the seventh company that HRSA has referred to the OIG. If the inspector general determines that the drug maker is knowingly and intentionally overcharging 340B hospitals, federal law authorizes civil monetary penalties on the company of more than $5,000 per claim. Read more about this development in the show notes.
David Glendinning (01:45):
340B Health has released our annual survey of our member hospitals and health systems, detailing how they use their program's savings. Bottom line from the 2021 results, in a year marked by enormous challenges from both COVID-19 and drug company restrictions on drug discounts, all 340B hospitals surveyed continued using their savings to fund expanded access to vital services and support for patients in need. These efforts include providing free and low-cost drugs, offering uncompensated care, and providing services that led to improved patient health outcomes. Please see the show notes for the full report.
David Glendinning (02:34):
And now for our feature interview with Steven Miller, as we marked the anniversary of the April 1st, 2019 launch of the 340B ceiling price website, Myles Goldman sat down with Steve to discuss what has happened in the world of drug pricing transparency since then. Here's that conversation.
Myles Goldman (02:53):
Thank you, David. I'm joined by a voice who is becoming familiar on the podcast, 340B Health, Steve Miller. Steve, this is your third time joining us, welcome back to 340B Insight.
Steven Miller (03:04):
Thank you, Myles. That's a pleasure to be back and to talk about this really important topic today.
Myles Goldman (03:11):
Well, we're going to be talking about really one of the most important developments in the 340B program in recent years, the 340B ceiling price website. To start us off, can you provide us with an overview of what the purpose of the website is and its history?
Steven Miller (03:27):
Absolutely. I think that's a great idea, Myles, especially for our listeners who perhaps were not working in 340B way long ago in 2010, when the Affordable Care Act was enacted. And the Affordable Care Act required that the Health and Human Services secretary develop and implement a 340B ceiling price website, along with civil monetary penalties, when manufacturers knowingly and intentionally overcharged covered entities. The administrative and HRSA both delayed the implementation of this important rule many times over the following eight years. And I believe that the lawsuit that 340B Health initiated in 2018 with other healthcare associations helped propel the ceiling price database into existence. The final rule was implemented as of January 1, 2019, and the database was implemented on April 1, 2019.
Myles Goldman (04:29):
Looking forward to now really diving into what this website's accomplishments have been and how it all works, who from a 340B-covered entity can access the ceiling price website, and what information can they obtain?
Steven Miller (04:44):
The authorizing official and the primary contact that the hospital has assigned to each child site, and the Office of Pharmacy Affairs Information System are the only individuals who are authorized to access the ceiling price website. They can see the unit ceiling price for each NDC, the package size, the case pack size, the package adjusted price, which is a price that HRSA calculates, and any pricing flags have been assigned. For example, a new pricing flag was assigned last summer for manufacturers who estimate a new drug price because the drug hasn't been on the market long enough for average manufacturer's price to be calculated. So they take the unit rebate amount and subtract it from the wholesale acquisition cost for that NDC, and they assign that flag so the covered entity would know that's an estimated price as opposed to a validated 340B price.
Myles Goldman (05:41):
I want to learn more about the process of how the information ends up on the ceiling price website. What types of information are drug manufacturers required to submit to HRSA, and how often are they required to do so?
Steven Miller (05:56):
So, the Affordable Care Act, again, implemented a description of how this should work. And so, it requires quarterly data, pricing data, to be submitted by each of the manufacturers who are participating in the 340B program to submit that to HRSA. There's a long list of data elements, but the important ones are really pricing-related and packaging-related, so the average manufacturer price from the manufacturer, the unit rebate amount, the ceiling price that the manufacturer calculates based on that unit rebate amount and average manufacturer's price, the package size, the case pack size, and they report these for each NDC. So if a product has five different packages or NDCs, there would be five sets of data for that one drug. HRSA then takes all this information and they reconcile it against the information that CMS has. And they also reconcile the packaging size information with First Databank. So after they merge all that data together and see whether there are any discrepancies or not, they post a calculated 340B ceiling price in the 340B ceiling price website. And this then is that source of truth, it's a validated and confirmed maximum price that any covered entity would need to pay for a covered outpatient drug that's in the 340B drug discount program.
Myles Goldman (07:19):
What is the timeframe of the data process?
Steven Miller (07:22):
That's a great question, Myles, because it's kind of complicated, and it is a long process over three quarters actually. So, the manufacturers submit data from the prior quarter. So if we just put it in a timeframe perspective, and we're talking about the fourth quarter of 2021, so ending December 31st, they take their average manufacturer price from that time period and they provide that information that we just talked about. They submit it to HRSA in the middle of February, HRSA does their work in recalculating and reconciling the information and getting any questions answered by the manufacturer, and they calculate the ceiling price that will be posted for the next quarter, which in our case just started on April 1.
Myles Goldman (08:10):
We appreciate you breaking down that timeline for us. Have covered entities found the website helpful and easy to use? Have you heard any concerns?
Steven Miller (08:22):
Covered entities tell me often how important this website is today because it provides them the source of truth for 340B pricing. They can discover errors and overcharges that were previously unknown. Back when I worked in the hospital, there was no ceiling price source of truth for 340B pricing, and we often just had to guess as to whether a change was accurate or not, or we needed to investigate or just kind of wait it out and see what happens. So, that's been a really important change for covered entities. However, the complaint, if you will, is that access is limited because the authorizing official is an executive, and the hospital or the covered entity, the primary contact is usually the one who might be in the ceiling price database, but there's only one per child site. HRSA also prohibits the exporting of any pricing data from the website, so, that also limits its functionality for functions in Excel because it is a giant spreadsheet like the LOOKUP, you can't use that in the database. However, on a positive side, users can copy their list into the database and then use a match to find the pricing that they're looking for, those specific products rather than the whole list of products that are in the system.
Myles Goldman (09:44):
So, how often should 340B professionals be going in and doing the kinds of analysis you were just mentioning?
Steven Miller (09:53):
Well, every time they think there's a problem, or a discrepancy, a suspicious price on their invoicing, they should go in and check, but then routinely, they should check the prices quarterly about two weeks after the beginning of the quarter so they can see trends or shifts, because of using the filters and sorting they're only looking at the products that their interested in, or if they're looking at a group of products that are priced similarly, they can see those shifts if they go in because the prices only change once a quarter.
Myles Goldman (10:26):
How does detecting those trends help a 340B professional?
Steven Miller (10:30):
So, they can see whether penalties are being applied as the 340B pricing is subject to the inflationary penalties. So when manufacturers raise their prices greater than the rate of inflation, then the ceiling price or the unit rebate amount is lowered, and so, they can see opportunities, perhaps they want to change manufacturers of a particular product because another manufacturer's product is now less expensive than that 340B price.
Myles Goldman (10:59):
Let's say that the authorized official from a 340B hospital is on the ceiling price website, and they believe based on the information that their hospital has been overcharged for a drug, what happens?
Steven Miller (11:13):
So they would want to have someone check with the wholesaler to make sure that the pricing files are accurate. And oftentimes there are honest mistakes or errors in loading pricing files, lots of things can go wrong when you're loading big data sets into systems and catalogs. And also during the first couple of weeks of each quarter, there can be some shifting as late pricing files are received from manufacturers who didn't get them in on time or other things that can cause the pricing to be out of sync with what the 340B price should be.
Steven Miller (11:50):
So you want to give it a little bit of time to work out at the beginning of the quarter, so you don't want to get too excited if you see errors or discrepancies in that time period. Once you have kind of settled that the wholesaler's saying the price is right, but you think it should be something different because of what you're seeing in the ceiling price database, then you kind of have to go to the manufacturer and ask them to investigate and confirm that the price you're being charged is accurate. If you're unable to resolve that in good faith with them, that's when you report the overcharge to HRSA. And this is a really important step. So, anytime you're unable to resolve that error or overcharge, you need to complete and submit an overcharge report, and you can do this in any number of different ways, but anyway, they need to be submitted to HRSA, and HRSA will investigate each one of those with the manufacturers.
Myles Goldman (12:36):
I want to segue now into really talking about what the impact of the ceiling price website has been and all of what we've been talking about in the big picture. How has the website affected 340B pricing transparency?
Steven Miller (12:51):
Oh, it's key. And so, having that visibility never before available before April 1st, 2019, it has just been so important to be able to hold the manufacturers accountable. The number of recalculations and offers for refunds that have been posted on HRSA's publicly available website since implementation has really drawn this picture for us. Before 2019 there were only a handful of overcharge notices or refund offers on HRSA's website, and then in 2020, there were 16, there were 17 last year in 2021, and we've already seen seven in the first two months of 2022. So I think it's just critically important that we have access as covered entities to those statutory ceiling prices.
Myles Goldman (13:45):
It is not stated in overcharge notices posted on HRSA's website the amount of money that has been overcharged, but do we have a broad sense of how much hospitals and covered entities have been overcharged?
Steven Miller (13:59):
We don't really know, it's kind of a black hole at the moment, but I think the increasing number of publicly posted notices kind of gives us a clue that this is really big. A government report nearly 20 years ago found millions of dollars for a very small number of drugs that were being overcharged to covered entities. And the reason was found that because the manufacturers for those specific drugs were not calculating the average manufacturer's price correctly. Recently, I've heard a pretty reliable source that the value of these refunds is ranging, it is a big range, but each year it's ranging from 20 million to $50 million, regardless whether it's 20 million or 50 million or even less than 20 million, that's a really significant number in my view. And that I think the ceiling price had a big role in identifying those and bringing this to light.
Myles Goldman (14:58):
Obviously, if hospitals are losing millions in 340B savings, that means less being able to stretch resources to provide more care, and all the important work that the 340B program is doing. Has HRSA in its audits of drug manufacturers been finding occurrences of overcharging as well?
Steven Miller (15:16):
Indeed, they have, Myles. It's really interesting to look at their website because the manufacturer audits are posted there as well. And since they didn't start auditing manufacturers until 2015, and they only did a couple in the early years, since then they've done 31 total manufacturer audits, and that includes all of fiscal year 2021, 11 of those 31 or 35% reveal findings for overcharging covered entities for 340B drugs. In fiscal year 2019, and fiscal year 2021 audits, four of the five audited manufacturers were cited for overcharging entities.
Myles Goldman (15:56):
So overall, what is the ceiling price website's legacy so far?
Steven Miller (16:01):
Myles, the most important legacy of the ceiling price website, in my view, it is the source of truth for 340B drug pricing, the source of truth we didn't have before and now we do, and I think we're seeing the evidence of its value to the covered entities. It's also the foundation though, of holding manufacturers accountable through the submission of overcharge reports to HRSA. These are important, whether you're unable to resolve a discrepancy that you're finding on your invoicing and unable to work in good faith with the manufacturer, or when you have an instance that the manufacturer's refusing to offer a 340B price at all for any condition or any reason. I can point to two examples recently where overcharge reports submitted to HRSA resulted in the reversal of a manufacturer's policy of not offering a 340B price or charging more than they should, and that resulted in refunds to those covered entities that had bought those drugs at a higher price. So, the overcharge reports really do make a difference, and I strongly encourage you to submit them.
Myles Goldman (17:08):
Well, Steve, thank you for taking time to explain the ceiling price website, and it's impact on the 340B program, and of course, to help us celebrate its anniversary.
Steven Miller (17:18):
Yes, it's great to say happy anniversary to such a positive thing for 340B.
David Glendinning (17:23):
Our thanks again to Steven Miller for coming back on the show to discuss 340B drug pricing transparency and the federal ceiling price website. You'll notice that Steve mentioned how drug companies hosted seven overcharge notices on the HRSA website in the first couple of months of 2022. Well, as of this recording, that number has shot up to 12 overcharge notices and counting, well on track to shatter the previous record of 17 such notices for all of 2021. We are heartened to see that the manufacturer drug price reporting process is working as intended. As always, please be sure to check out the show notes for additional information about our topic and the latest 340B news, including our annual member survey report for 2021. If you have suggestions about topics we should cover on future episodes, please email that feedback to podcast@340bhealth.org. We will be back in a couple of weeks. As always, thanks for listening and be well.
Speaker 1 (18:27):
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.