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Prescription drug benefit financing relies on manufacturer rebates to reduce plan costs, but that funding source may be under increasing pressure. The federal 340B drug discount program, which requires drug manufacturers to extend discounts to specified “covered entity” purchasers, has long carried the potential for manufacturers providing both a 340B discount and another form of discount or rebate on the same prescription (duplicative discounts). Several new Inflation Reduction Act (IRA) drug pricing programs, which are currently being implemented, have created a new impetus for drug manufacturers to identify and prevent duplicative discounts, particularly by reducing the plan rebates that they would otherwise provide.
Drug manufacturers provide 340B discounts on drug purchases by covered entities serving medically underserved populations, and those drugs are commonly dispensed through retail “contract pharmacies.” Although many manufacturer rebate contracts exclude claims for prescriptions on which a 340B discount has been provided from eligibility for rebates, there is no commonly accepted way to identify such 340B claims. For example, in some cases claims for drugs dispensed by registered covered entities, based on those entities’ provider numbers, are considered 340B claims, but this approach may be overinclusive by including prescriptions not dispensed to 340B patients and underinclusive by not capturing prescriptions dispensed through contract pharmacies billing under their own provider numbers. Further, few PBMs require pharmacies to identify 340B claims through information submitted through the National Council for Prescription Drug Programs (NCPDP) claims processing standard. Moreover, emerging state laws (including in Arkansas, Louisiana and West Virginia) may actually prohibit PBMs from imposing such requirements. As a result, whether particular drug claims are ineligible for rebates as 340B claims is a common topic of disputes under manufacturer-PBM rebate contracts.
The IRA created four new federal drug price regulation programs in the context of Medicare: (i) Part D manufacturer discounts; (ii) Part B inflation rebates; (iii) Part D inflation rebates; and (iv) “maximum fair prices” negotiated for “selected drugs” under Parts B and D. In each of the latter three programs, Congress directed the U.S. Secretary of Health and Human Services (HHS) to develop mechanisms to avoid duplicate discounts under the 340B program and the new program, and HHS has specified three completely different mechanisms to do so for those programs.
- Duplicative discounts for 340B drugs are a longstanding concern for manufacturers, but there has been no generally accepted mechanism to identify such claims
- The IRA’s drug pricing reforms create new scenarios for duplicative discounts
- Drug makers are devising new ways to identify and dispute drug claims subject to duplicative discounts, in both government and commercial contexts
- MCOs should monitor the regulatory processes associated with the implementation of IRA drug pricing reforms and consider contractual changes to address the evolving industry regulatory landscape