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Issue Brief: COVID-19 Response and the 340B Program

Issue Brief

April 1, 2020

HRSA Loosens, But Does Not Entirely Remove, the GPO Prohibition

Effective immediately, the Health Resources Services Administration (HRSA) Office of Pharmacy Affairs (OPA) has loosened the 340B group purchasing organization (GPO) prohibition for the duration of the COVID-19 public health emergency. Under normal circumstances, 340B hospitals are completely prohibited from purchasing drugs through a group purchasing organization, with very limited exceptions. The new policy should provide 340B hospitals with greater flexibility in sourcing drugs during the public health emergency, but it is not a wholesale removal of the GPO prohibition.

New Purchasing Flexibility, But Strings Are Attached

340B hospitals that purchase through a GPO must document that they made a good faith effort to purchase the drug at Wholesale Acquisition Cost (WAC). If it isn’t available at WAC, the hospital can then use a GPO, but it must keep a record of the transaction. OPA expects that hospitals will have policies and procedures in place to address the use of GPOs, even during the public health emergency. Further, hospitals should clearly document inability to obtain a drug at WAC and retain records of purchases, because HRSA will have the authority to audit GPO purchasing practices when the COVID-19 crisis subsides. However, HRSA will not require hospitals to contact manufacturers or report purchases from GPOs through the Apexus form during the public health emergency.

340B Advocacy Continues – DSH Adjustments

ASHP is seeking additional flexibilities to assist covered entities during COVID-19 response. Specifically, we are requesting that CMS cease disproportionate share hospital (DSH) percentage adjustments for 340B hospitals for the duration of the declared public health emergency. Because hospitals are making changes to care delivery, including increasing the number of inpatient beds and shifting non-COVID-19 patients to outpatient setting, the crisis may temporarily change payor mix and reduce DSH percentage, potentially threatening 340B eligibility. Reducing DSH percentage based on time-limited COVID-19 emergency measures would unfairly penalize hospitals by threatening access to the 340B program when hospitals can least afford it.

ASHP will continue to advocate aggressively to safeguard the 340B program and to seek program flexibility during COVID-19 response. If you have 340B-related questions or concerns, please email Jillanne Schulte Wall at [email protected].