Drug Discount Monitor

States Leveraging Value of 340B in Tough Economy

By Stuart Gordon

May 5, 2009 - A growing number of states with rising budget deficits are trying to make use of 340B discounts to save money for their Medicaid programs. Below you’ll find a snapshot of recent developments in Massachusetts, Arizona, Pennsylvania, Virginia and Maine.

The Monitor found, among other things, that several states are pushing to expand or tweak 340B access in the hemophilia treatment arena.  

MASSACHUSETTS

Mandatory 340B enrollment for qualified entities

Massachusetts lawmakers are considering quite an aggressive approach to accessing 340B prices: requiring all eligible programs, clinics, hospitals and health centers to participate in the federal drug discount program. The only entities not covered by House Bill 2153 would be those that already receive discounts through other programs that yield greater savings to the state than would be achieved through 340B.

In nearby Connecticut, federally qualified health centers participating in the state Medicaid program are required to enroll in 340B and provide pharmacy services to Medicaid beneficiaries at Federal Supply Schedule costs – a price catalogue negotiated by the Department of Veterans Affairs that has below-market prices for pharmaceuticals. 

Massachusetts House Bill 2153 also would require a contract pharmacy to return drugs to the wholesaler that it could not dispense to patients of a 340B-covered entity because its contract with the entity expired, because the pharmacy closed, or because there was a disciplinary action against the pharmacy. A similar bill was introduced a couple of years ago. (See Monitor April 2007.)

Rep. John Scibak, the Democratic sponsor of HB 2153, said the return provision was added to ensure compliance with the 340B law. “We don’t want these drugs redistributed, and we want to make sure there’s no double-dipping,” he said. “It just made sense.”

Other legislation considered by Massachusetts, “Bleeding Disorders Treatment Standards Act,” or House Bill 915, would require insurers in the state to contract with any 340B program affiliated with a federally funded hemophilia treatment center that furnishes clotting factor and satisfies pharmacy standards established under the bill. 

ARIZONA

The Arizona Health Care Cost Containment System (AHCCCS), the state’s Medicaid program, published a Request for Information last month, asking 340B providers to propose ways to offer prescriptions of biological drugs through a sole source contract. Under the proposal floated by the state, AHCCCS would pay any contracting provider or providers at actual acquisition cost for drug products, plus a separate fee to cover the costs of dispensing, care management, and associated supplies.

The state already has sole source contract with Phoenix Children’s Hospital Hemophilia Outpatient Enterprises to serve as a specialty pharmacy for the 100-some Arizona Medicaid patients who suffer from bleeding disorders. Other providers can serve those patients, but must accept the 340B reimbursement levels paid to the hospital and agree to provide the same care management.

With annual state Medicaid drug expenditures for biologicals at $80 million, AHCCCS hopes the information request will identify cost savings that would help offset a $19-million funding cut in the state’s fiscal 2009 budget. It’s part of an ongoing effort to trim costs within AHCCCS, according to Pharmacy Director Suzanne Berman. AHCCCS implemented a 5-percent rate reduction for physician-administered drugs in February and state budget analysts project that AHCCCS providers will likely see additional cuts of at least as much in fiscal 2010. The state is considering slashing reimbursements by up to 20 percent.

Berman said the state is willing to entertain any care coordination proposal brought to the table, and that AHCCCS would consider letting the sole source contractor provide patients with drugs beyond biologicals. She expects a formal Request for Proposals to be issued this summer.

PENNSYLVANIA

Lawmakers want to give hemophilia patients choice

In legislation pending in the Pennsylvania House and Senate, insurance carriers would be required to cover blood clotting factor obtained from a 340B program or from a similar program associated with a state-recognized hemophilia program.

Under Pennsylvania House Bill 620 and Senate Bill 668, a health insurer would be required to provide a choice of at least three full-service home-care pharmacies. But a patient with a bleeding disorder could obtain blood clotting factor and infusion equipment from any other participating pharmacy, or from a 340B program affiliated with the patient’s state-recognized hemophilia program.

According to Joe Pugliese, president of the National Hemophilia Alliance, the legislative effort was led by Ann Rogers of the Delaware Valley Chapter of the National Hemophilia Foundation. “Ann is a tireless advocate for people with hemophilia in Pennsylvania and across the country,” Pugliese said. “The Hemophilia Alliance applauds all efforts to maintain patients’ access to care, particularly access to the comprehensive care model.”

VIRGINIA

Efficiencies through statewide pharmacy system

Virginia officials are continuing to review responses to a 2008 information request from vendors that are willing to help the state achieve operational efficiencies in state-managed pharmacies and supply chain operations. The efficiencies would help reduce prescription drug prices and achieve formulary compliance under a statewide consolidation of pharmaceutical benefits. In its “Commonwealth Rx Initiative” information request, the state noted that it was “particularly interested in maximizing 340B pricing across all state agencies.” 

The consolidated program would affect departments such as corrections, juvenile justice, human resource management, mental health, and health and medical assistance services. Respondents also had to describe how the state could benefit from applying an independent state e-prescribing initiative to the proposed pharmacy services consolidation effort.

MAINE

State may use 340B in prisons

The Maine Corrections Pharmacy Focus Group told state lawmakers in January that the state’s prison system could save money by using 340B drugs for inmates. But “complexities involved with partnering with 340B entities” must be explored before the state determines whether such an approach would be cost-effective, the group added.

The Maine legislature set up the focus group in 2008 to explore 340B use in correctional facilities in order to stretch state funds. Indeed, the group’s January report noted that incarcerated patients experience a high rate of infectious diseases and addictions that require treatment with the most expensive drugs, and that 340B therefore could offer a solution. So could the expansion of state group purchasing contracts and greater state use of specialty pharmacies, it said.

But it also suggested that geographic location, 340B-covered entity exposure to legal liability, the willingness of covered entities to partner, and the state’s ability to match up the right covered entities with a correctional facility’s prescription drug needs all posed challenges to the effective use of 340B drugs in prisons. (For more background on the Maine legislative effort, see Monitor March 2007.)

During the 2009 legislative interim, the focus group hopes to enlist Jeffrey Lewis of the Heinz Family Philanthropies to provide pro bono consulting services on how best to implement a 340B partnership program. The focus group’s report can be found here.