Resources

Client Alerts, News Articles, Blog Posts, & Multimedia

Everything you need to know about BMD and the industry.

S.B. 263 Protects 340B Covered Entities from Predatory Practices in Ohio

Client Alert

Just before the end of calendar year 2020 and at the end of its two-year legislative session, the Ohio General Assembly passed Senate Bill 263, which prohibits insurance companies and pharmacy benefit managers (“PBMs”) from imposing on 340B Covered Entities discriminatory pricing and other contract terms. This is a win for safety net providers and the people they serve, as 340B savings are crucial to their ability to provide high quality, affordable programs and services to patients.

What is the 340B program?

The 340B program provides discounts on outpatient prescription and over-the-counter drugs to certain safety net health providers, called Covered Entities (“CEs”). The program's intent is to stretch scarce federal resources by allowing CEs to increase patient services with the savings realized from participation in the 340B program. Federally Qualified Health Centers (“FQHCs”), FQHC Look-Alikes, Ryan White Clinics, and Disproportionate Share Hospitals are CEs. CEs typically save 18-50% on outpatient drug costs through participation in the program. CEs use 340B savings to provide needed services – such as behavioral health, dental, case management and enhanced pharmacy management – to the most underserved Ohioans such as those who literally cannot afford to pay for health care services.

How does the 340B program work?

Section 340B(a)(1) of the Public Health Service Act requires that the U.S. Secretary of Health and Human Services enter into a pharmaceutical pricing agreement (“PPA”) with each manufacturer of covered outpatient drugs. Through the PPA manufacturers agree to charge a price for covered outpatient drugs that will not exceed an amount determined under the statute. This is known as the 340B ceiling price. The PPA “shall require that the manufacturer offer each covered entity covered outpatient drugs for purchase at or below the applicable ceiling price if such drug is made available to any other purchaser at any price.”[1] 

What does this mean in the context of SB 263?

SB 263 stops a practice negatively affecting 340B Covered Entities – insurance companies and PBMs diverting funding intended to care for underserved patients and communities to increase their profit margins. This happens when insurance companies and PBMs target 340B providers with discriminatory contracts – contracts that absorb all or part of the savings earned by 340B providers. They do this by reducing reimbursement and/or adding fees not applicable to non-340B providers, and then forcing CEs to either sign the contract or not be able serve patients in their network. Despite insurance companies and PBMs being aware that CEs depend on 340B savings to serve every patient who walks in its doors, regardless of ability to pay, they continue to offer discriminatory contracts to CEs. This practice isn’t just theoretical. One real-life example of a Payor/CE contract includes language that explicitly reimburses the CE more than 30 times less for a 340B brand name drug than for a retail brand name drug. In this same real-life example, not only does the Payor reimburse the CE significantly less for 340B drugs, it entirely wipes out the 340B savings intended for the Covered Entity, as provided in federal law.

The passage of SB 263 will help to end the predatory contracting practices of PBMs and insurance companies and was vital for CEs that rely on 340B savings. For questions about the 340B program or SB 263 please reach out to healthcare attorney Daphne Kackloudis at dlkackloudis@bmdllc.com.

For an update on federal actions being taken to reduce predatory practices of PBMs, see BMD Healthcare and Hospital Law Member Jeana Singleton's article HHS Issues Opinion Regarding Illegal Attempts by Drug Manufacturers to Deny 340B Discounts under Contract Pharmacy Arrangements.

[1] https://www.hrsa.gov/opa/manufacturers/index.html


Telehealth Flexibility Updates: HIPAA, DEA, and CMS

The Covid-19 Public Health Emergency (PHE) officially ended on May 11, 2023. But what does that mean for telehealth, a field that expanded exponentially during the PHE? Fortunately, many of the flexibilities will remain intact, at least temporarily. This client alert presents a brief overview of the timelines that providers need to follow, but for a more comprehensive review of telehealth flexibilities and when they will end

WEBINAR SERIES RECAP | Ending the Public Health Emergency + Post-Pandemic Check-Up

Some may take the position that the rest of the country already returned to a new “normal” following the COVID-19 pandemic.  But healthcare providers continue to implement COVID protocols and navigate the ever-changing healthcare regulations at both the federal and state levels.  It is important for healthcare providers to take time for a “Healthcare Check-Up” with the start of 2023 and the ending of the Public Health Emergency (“PHE”).

Sharp Rise in False Claims Act Cases - Navigating the FCA Waters

Recently, on April 18, 2023, the United States Supreme Court heard arguments regarding the FCA’s scienter, or mental state, requirement. To prove violation of the FCA, the statute requires that a defendant “knowingly” file false claims for payment. The term “knowingly” is defined within the statute to mean a person that acts with actual knowledge, deliberate ignorance, or reckless disregard. Circuit courts are split on how to interpret and apply the knowledge element of the FCA, and based on the Supreme Court’s decision, there will be a large impact on healthcare defendants and their businesses as well as anyone who contracts with, or receives money from, a federal program. A broader interpretation of the FCA would unnecessarily target and stifle healthcare, and other businesses, for simple errors in daily operations. This goes against the intended application of the FCA, which was to prevent fraudulent activity.

Areas of Opportunity in Columbus: Highlights from the Columbus Opportunity Summit

On April 27, 2023 Columbus Business First held its annual Columbus Opportunity Summit, bringing together business and economic development leaders to provide an update on how Central Ohio is preparing for expected growth in the coming years, an issue heightened by the arrival of Intel at its 1,000 acre site in Licking County, just outside of Columbus. The site will be home to two new chip factories with room to grow to a total of eight factories and is a $20 Billion investment.

BREAKING: Biden Administration Has Officially Ended the Two Remaining COVID Vaccine Mandates

As of May 1, 2023, the Biden Administration has officially ended the two remaining COVID vaccine mandates: (1) the Federal Contractor Mandate, and (2) the CMS Healthcare Provider Vaccine Mandate.