Pharmaceutical Manufacturers Must Submit 340B Ceiling Prices Starting in the First Quarter of 2019

January 23, 2019By David C. Gibbons & Alan M. Kirschenbaum

Beginning February 15, drug manufacturers will have a new price to report to the Federal government: 340B ceiling price.  Under Section 340B of the Public Health Service Act, a manufacturer of covered outpatient drugs, as a condition of having its drugs be eligible for federal payment under Medicaid and Medicare Part B, to enter into a Pharmaceutical Pricing Agreement with the Department of Health and Human Services (“HHS”). Under the agreement, the manufacturer is obligated to charge no more than a statutorily defined ceiling price (the “340B ceiling price”) to certain types of purchasers (called “Covered Entities”), which include certain types of clinics that receive federal funding and certain types of hospitals.  Since the creation of the 340B program in 1992, drug manufacturers have been required to calculate the 340B ceiling price so that they can charge Covered Entities the appropriate price, but they have not been obligated to report the 340B ceiling price to the government – until now.

In 2010, section 7102 of the Affordable Care Act (“ACA”) amended Section 340B to require HHS to develop a system to verify the accuracy of 340B ceiling prices calculated by manufacturers and charged to eligible Covered Entities.  To implement this requirement, the Health Resources and Services Administration (“HRSA”) Office of Pharmacy Affairs (“OPA”) has developed an electronic system for manufacturers to report their 340B ceiling prices, using HRSA’s Office of Pharmacy Affairs Information System (“OPAIS”).  OPAIS was launched in 2017 as a database of information about Covered Entities, manufacturers, and contract pharmacies participating in the 340B Program, but it has now been expanded for use as a vehicle for manufacturers to report their 340B prices.  This new reporting requirement has been a long time coming.  Subsequent to the enactment of the ACA in 2010, HRSA issued an Information Collection Request (“ICR”) in April 2015 to solicit comments on its plan to develop the electronic data collection system (see our previous blog post here).  Now, over three years after that ICR was issued, OPAIS is open for manufacturer reporting.

In a recent update to manufacturers, HRSA provides some details related to implementation of 340B ceiling price verification.  HRSA will obtain certain relevant data from CMS, including the Medicaid Rebate average manufacturer price (“AMP”) and unit rebate amount (“URA”) for each covered outpatient drug.  HRSA will obtain package size information from First Databank, a widely used publisher of drug pricing information.  From these data, OPAIS will calculate the 340B ceiling price.  Manufactures will submit corresponding data in OPAIS.  For each covered outpatient drug, these data include the National Drug Code number, AMP, URA, Wholesale Acquisition Cost, and the 340B ceiling price, as well as packaging information, product name, and labeler name.  OPA will compare the 340B ceiling prices submitted by manufacturers with those calculated by OPAIS, and any discrepancies will be identified for the manufacturer to resolve.  Adjudicated 340B ceiling prices will then be made available in OPAIS to Covered Entities.  HRSA notes that OPAIS includes security safeguards to protect confidential pricing data from unauthorized re-disclosure.

Manufacturers should note that OPAIS will be available for only approximately two weeks each quarter for manufacturers to upload or enter their data.  The first two-week manufacturer submission period is February 15, 2019 through March 4, 2019.  HRSA states that manufacturers will receive an email when the pricing data upload period is open.