Reactions mixed to proposed 340B changes

February 19, 2007

Early reaction to changes in the 340B drug program proposed by the Health Resources and Services Administration (HRSA) is mixed. Proposals to expand patient access through greater use of contract pharmacies get a generally favorable response. Proposed changes that would tighten definitions of eligible patients have raised questions.

"The current definition of patient has some significant gray areas," said William von Oehsen, president of Safety Net Hospitals for Pharmaceutical Access (SNHPA), a 340B interest group. "The HRSA proposal would result in a huge financial hit for safety net institutions." SNHPA was formerly known as PHPC, the Public Hospital Pharmacy Coalition. It changed its name earlier this year to more accurately reflect its current membership, which von Oehsen said is a combination of public and private nonprofit safety net institutions.

ASHP is still studying HRSA's two proposed guidelines. Both were published in the Federal Register on Jan. 12 and are available at: http:// http://www.gpoaccess.gov/fr/index.html.

Section 340B refers to a 1992 provision of the Public Health Service Act that encouraged drug manufacturers to provide reduced-rate Rx drugs to a selection of safety net institutions called "covered entities." Section 340B also made it illegal for covered entities to sell drugs to those who were not "patients" of the covered entity, but Congress neglected to define patient.

In 1996, HRSA established a three-part test to determine who qualified as a 340B patient. The tests generally required an existing relationship between the covered entity and the patient.

The proposed guideline also has three tests:

1. The covered entity must have responsibility for outpatient care services, including ownership, control, and storage of healthcare records.

2. Prescriptions under 340B must be written by a provider who is employed by, or under contract to, the covered entity.

3. Care provided must be part of a range of services for which grant funding or federally qualified health center look-alike status has been provided, be provided by a disproportionate share hospital (DSH), or be provided by a facility within a DSH.

The proposed guideline also offers examples of individuals who would not qualify as patients, based on questions HRSA received or questionable situations the agency has uncovered.

Individuals whose only connection with the covered entity is the provision of drugs for self-administration or use in the home setting are specifically exempted from the definition of patient. So are most individuals covered by case management contracts or loose affiliation networks, facilities that designate themselves as eligible, employees of covered entities, and non-Indian patients served by Indian Health Service facilities.

Von Oehsen said the new rules would shift the burden of determining 340B eligibility onto the pharmacist filling the script. "You have to look at these guidelines from the perspective of the pharmacist behind the counter. With waiting lines of an hour or longer, the pharmacist has to check the patient's status, the prescriber's status, and the faciity's status. This is using a sledgehammer to swat a fly," he said.

Or maybe not. A community pharmacist who wished to remain anonymous said he sees no significant problems with the proposed patient definition. "[HRSA] is just tightening loopholes in the definition. It is just what we have needed to clear up abuses and potential abuses of the 340B program."

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