340B Operations Experience: A Key Consideration Missing from the Debate
When I started in 1999 at the Office of Inspector General for HHS, I was assigned a study about a very little known topic: the 340B Drug Discount Program. Fresh out of college, I had a lot to learn about how to work, let alone a small program that no one else in the office seemed to know anything about. I flew to Maryland to interview OPA Directors, collected data from several ADAP programs and helped write a report on how ADAPs could save more money if they instead got access to the Federal Ceiling Price. That was the trend at the time and it still is! Let’s compare various discounts and recommend everyone has access to the cheapest. What was missing from this analysis and conclusions? Any understanding of the complexity of operations.
Because even a baseline grasp on 340B was (and still is) a steep curve, I was designated as the office expert and continued to work on 340B and the Medicaid Drug Rebate Program for the next 7 years. Not to run through my entire resume in a blog post, I then was a 340B policy contractor at APhA, providing several years of technical support to entities and writing briefs for OPA. Despite the years under my belt, it wasn’t until 2013 when I started working directly with covered entities on compliance reviews/audits where I realized just how much I was overlooking. Jumping into the deep end of hospital operations was eye-opening. Here are some more specific thoughts:
340B Procurement is wildly complicated, as is inventory management. HRSA’s rules don’t always fit with what makes sense. Hospitals with the GPO prohibition purchase from direct vendors who are recalcitrant about establishing accounts for virtual management. Large academic medical centers can have 500+ accounts they are managing.
I have rarely met a policy expert who understands replenishment and accumulators and I get it! It is extremely detailed; however, if you are working day to day with 340B, you understand where data originates, how IT codes extracts, and what the outputs mean.
Staff are on high alert for HRSA audits, which typically take 6+ weeks of all hands, and constant inquiries from drug manufacturers- either directly or via a third party. 340B staff need to be experts in Finance, Billing, Medical Staffing, Contracting, Pharmacy and literally anything that touches their program.
Hospital billing is an area that is always oversimplified and it is the most difficult. The effort to ensure accurate placement of modifiers on administered and retail drugs and adherence to payer contracts is intense. Layer in vague guidance from several States on Medicaid billing and you have a very labyrinthian situation.
Now that I have spent the last 12 years up to my eyeballs in 340B transactional data, UB04s and P&Ps, I read LinkedIn posts and PhRMA sponsored content that exudes the same problem I had in my early days as a policy analyst: no consideration of how challenging 340B is to manage. Not claiming to know it all and am not naive to the purpose of such posts, but I do wish there was more curiosity and a desire to problem solve rather than smear.
In conclusion, and as a funny aside, when I reread the OIG report from 2000, I found this sentence to be quite relevant to today’s discussion on the rebate model, “It is generally believed that participation in the 340B direct purchasing option is currently the best option for ADAPs to maximize savings on pharmaceutical purchases.” As the debate continues on moving to a rebate model, the most important thing for policymakers AND parties on both sides of the program to consider is the impact on operations. If we really are investing in reform and not just program elimination, we should be creating more opportunities for education and perspective sharing instead of unproductive mudslinging.