Apexus 340B Prime Vendor Program The Hemophilia Alliance Conference

John Barnes, C.P.M. Director, National Contracts 340B Prime Vendor Program Apexus Inc. Irving, Texas

Tuesday, September 14, 2010 Marriott Waterfront, Baltimore

340B Program Administration • The 340B Program Team: – HRSA’s Office of Pharmacy Affairs – Pharmacy Services Support Center (PSSC/PharmTA) – 340B PVP Prime Vendor Program (Apexus Inc.)

340B Program Benefits • The 340B Drug Program average savings of 25-50% on outpatient drug purchases for 340B covered entities on >20,000 NDC’s • The 340B Prime Vendor offers additional savings of 16% on over 3,500 NDC’s • Savings may be used to: — Reduce price of pharmaceuticals for patients — Expand services offered to patients — Provide services to more patient

Affordable Care Act

– AMP Definition & Reporting • Defines AMP as the price paid to the manufacturer by wholesalers for drugs distributed to retail community pharmacies. • AMP definition changes Oct. 1, 2010

– AMP will be based on sales, either directly or through “wholesalers,” to “retail community pharmacies” (“RCPs”) • RCPs generally are traditional “walk-in” pharmacies that are “licensed as pharmacies”

• Revises the definition of AMP to exclude bona fide service fees as well as sales and discounts to any entity that does not conduct business as a wholesaler or a retail community pharmacy • Limits public posting to weighted average monthly AMPs

Affordable Care Act

– AMP Definition & Reporting • For single source (“S”) and innovator multiple source (“I”) drugs: – Minimum “basic rebate” percentage increased from 15.1% to 23.1% of AMP • For clotting factor with separate furnishing fee and drugs approved exclusively for pediatric indications, percentage increased to 17.1% of AMP – This change does not alter the role that Best Price plays in calculating the “basic rebate”

• For noninnovator multiple source (“N”) drugs: – “Basic rebate” percentage increasing from 11% to 13% of AMP

• Effective date: Rebate periods beginning after December 31, 2009

340B Ceiling Price • The maximum price manufacturers can charge covered entities. • The 340B price is calculated using the Medicaid rebate formula • Covered entities are free to negotiate discounts that are lower than the ceiling price • Calculations are based upon the principles in the Federal Register – 60 Fed. Reg. 51488 (Oct. 2, 1995) – ftp://ftp.hrsa.gov/bphc/pdf/opa/FR10021995.htm

340B Medicaid Rebate Price Formula

Average Manufacturer Price (AMP) or (AMP – BP) Minus Unit Rebate Amount (Medicaid Rebate) equals the 340B Ceiling Price

Price Definitions • AMP (Average Manufacturer's Price) = average price paid to manufacturers by wholesalers for drugs distributed to the retail class of trade. • BP (Best Price) = the lowest price available to any wholesaler, retailer, provider, HMO, nonprofit entity, or the government. –Excluded prices to IHS, VA, DoD, PHS, 340B, FSS, State Assistance Programs, Inpatient, Nominal, certain endorsed discount card programs, Part D, etc…

Generic Drug Calculation

• Noninnovator Multiple Source (generic) and Over-The-Counter Drugs • Rebate percentage = 13 percent (was 11%) – 340B ceiling price = current AMP minus 13 percent – Example: AMP = $1 Discount of 13% = $0.13 340B price = $0.87

Single Source and Innovator Multiple Source Drugs Basic Discount 1. Multiply Current AMP x 17.1 percent OR 2. Subtract BP from Current AMP (AMP – BP) (The government will use the larger basic discount)

Example:

AMP = $1 1. AMP * 17.1% discount: = $.829

Best Price = $0.80 2. BP discount = $1 minus $0.80 = $0.20 Govt. takes the best discount - $0.20 Do I get an additional discount?

FORMULA: Average Manufacturer Price (AMP) Or AMP minus Best Price (BP) Minus Unit Rebate Amount (Medicaid Rebate)

Additional Discount Scenario Based on baseline AMP, current AMP, baseline CPI-U and current CPI-U

Formula: AMPcurrent – (CPIUcurrent/CPIUbaseline) * AMPbaseline $2 $2 $1 $1 • Current AMP = $2 $2 – ($2/$1) * $1 = $0 no additional discount • Current AMP = $3 $3 – ($2/$1) * $1 = $1 additional discount • Current AMP = $1 $1 – ($2/$1) * $1 = negative $1 – no additional discount Additional Discount – inflation adjustment 1. Divide the baseline AMP by the baseline CPI-U. 2. Multiply the quotient in step 1 by the current CPI-U to get the AMP-I. 3. Subtract AMP-I from the current quarter AMP. 4. If the amount is zero or a negative number, the additional discount amount is zero. 5. If the amount is greater than zero, add to the basic discount amount to get the total discount amount.

Pricing Information Distribution • Manufacturers report to CMS (and OPA) • OPA receives pricing data (AMP and URA) from CMS under an IAA. OPA also purchases Package Size data from FDB • OPA then uses this data to calculate 340B Ceiling Price • Entities receive pricing from Wholesalers/PV – Verification/Reconciliation of prices is done by OPA/Pricing

Estimated Prices For Selected Public Purchasers, as Percent AWP von Oehsen; Pharmaceutical Discounts Under Federal Law: State Program Opportunities

0%

20%

40%

60%

80%

100% 100.0%

AWP 80.0%

AMP 67.9%

Medicaid (Min.)

60.5%

Medicaid Net

51.7%

FSS

Private Sector Pricing

340B

49.0%

FCP

47.9%

VA Contract

34.6%

Stephen Schondelmeyer, PRIME Institute, University of Minnesota (2001)

New Integrity Provisions • Covered entities to have access to verified list of 340B ceiling prices via OPA website (OPA/PVP) • OPA to develop system to determine accurate pricing by auditing sales transactions and ensuring corrective action (OPA/PVP) • Covered entities required to update contact information annually (OPA/PSSC) • OPA to develop guidance on billing Medicaid (OPA/PSSC)

• OPA granted additional authorities to fine CE’s for intentional violations (OPA) • OPA to develop procedure for manufactures to return overcharges to entities (OPA/PVP)

Summary of Criteria for Hospitals Covered Entity Type

Non DSH % profit/ Gvt.Cont

GPO Exclusio n

Orpha n Drug Rule

Critical Access Hospitals (CAH)

Yes

No

No

Yes

Rural Referral Centers (RRC)

Yes

≥ 8%

No

Yes

Sole Community Hospitals (SCH)

Yes

≥ 8%

No

Yes

Free Standing Cancer Hosp. (CAN)

Yes

> 11.75%

Yes

Yes

Children's Hospitals (PED)

Yes

> 11.75%

Yes

Yes

Disproportionate Share Hospitals (DSH)

Yes

> 11.75%

Yes

No

Apexus – Strategic Initiatives Mission: Apexus leverages its unique purchasing power and expertise to deliver value which helps eligible health care and public service organizations to access unmatched savings and optimize performance Strategic Initiatives 2010: 1.Increase Value to PVP Participants 2.Increase Participant Loyalty 3.Meet the Evolving Needs of HRSA 4.Continuously Improve Wholesaler, Supplier, and Partnering Organization Relationships

Apexus 340B Organizational Chart Chris Hatwig Vice President Deborah Robertson Administrative Assistant

Mary Ellen England Director Marketing and Education

John Barnes Director Contract Services

Bruce Boelter Director Operations

Beverly Daniel Coordinator/ Marketing & Membership Svcs

Patrick Roemer Portfolio Executive

John Korte Portfolio Executive

Annie Banh Account Manager 340B Program Specialist

Shveta Shura Portfolio Assistant

Mark Kirsch Analyst

Va’Knesha Walton Analyst

Summary of 2009 Accomplishments • Re-awarded HRSA’s Prime Vendor Agreement • 23% increase in participants • Overall customer satisfaction improved to 85% • Over $30 million in participant savings • Lost savings/recovery = $1.3 million • $3 million shareback in 2009; $4.5 million announced for 2010 (Over 1700 entities) • Sub-ceiling priced pharmaceuticals covering 204 AHFS Therapeutic Classes (61%) • Improved technical assistance via new tutorial and webinar offerings • New on-line enrollment

PVP Enrollment: 10,343 (68%) HRSA Total: 15,211

PVP Portfolio/Contracting • Over 3500 covered drugs at sub-ceiling pricing • One or two products within therapeutic drug class • Best market pricing for non-covered drugs, vaccines, supplies and services • Two to three year agreements • No rebates; but performance based contracting is permitted • Participant advisory councils: – Hospitals – Community Health Centers – Title X Family Planning Clinics – Hemophilia Treatment Centers

Other Outpatient Rx Products and Services • Vaccines – Hep A, Hep B, Flu (multiple sources) • Split billing solutions • Patient assistance program Software • Auditing and overcharge recovery services • Prescription vials/labels/printer cartridges • Diabetic supplies – meters, strips and syringes • Outpatient Rx technology and automation – ScriptPro, Automed, Innovation, VoiceTech, others • Contract pharmacy solutions – SunRx • Spend optimization/revenue recovery – Esi Inc. • Apothecary supplies • Reverse distribution (pharmacy returns)

Apexus PVP HTC Advisory Council • Thought leaders in the hemophilia industry • Provides guidance on contracting strategies for products and services used at hemophilia centers – Timothy Brent, Cascade Hemophilia Consortium, Chairperson – Tamara Vogel, Oregon Health Science University HTC, CoChairperson – Mark Plencer, Roger Maris Cancer Center – Ralph Woods, Therapeutic Products Bloodcenter of Wiconsin – Robert Fox, Mary M. Gooley HTC – Chris Roberson, Indiana Hemophilia & Thrombosis Center – Curtus McEntire, Intermountainn Healthcare

Hemophilia Alliance/Apexus PVP Partnership • Work together to ensure that covered entities serving the hemophilia community have access to the best possible products and pricing through specialized contract expertise and supplier relationships

– Hemophilia Alliance • Unique expertise within the blood factor market • Established supplier relationships

– Apexus 340B PVP • Contract negotiation and administration within the 340B market place. • Ability to leverage all 340B entity purchase volume to secure sub-340B pricing • Manufacturer price protections

CSL Behring Sub-340B Performance Q1 2010 Total

Q2 2010 Total

If bought at 340B/PHS

$15,743,470

$19,705,558

PVP Purchase Totals

$15,240,904

$19,012,366

$502,566

$693,192

3%

4%

Savings Savings Percentage

Q1 & Q2 Savings Annualized 2% Cash Discount

$ $

2,391,518 2,439,348

PVP Savings by Entity Type

Informational Tools & Resources • Pharmacy Flash Newsletter – Contract highlights/supplier profiles – Government & policy news – Industry news – Clinical corner – high impact drug briefs – Drug shortage/product recall • ISMP Medication Safety Alert! • Educational programs for all Stakeholders – On-demand tutorials – Monthly educational training webinars to subgroups – National presentations

340B Tutorial at www.340bpvp.com

Login to PVP Secure Site

Login to PVP Secure Site, Cont’d

Login to PVP Secure Site, Cont’d

Optimize 340B Savings Drug price forecasts and other budgeting tools – Best Buy by Therapeutic Class Report

– Best Buy by Chemical Compound

– Best Buy for Over-theCounter Medication

Feedback Leading to New Reports and Service Offerings • New reports on secure website (Q4, 2010) – Savings opportunity reports – Quarterly Overcharge of PVP Pricing Recovery Report by participant

• Expanded PVP portfolio on non-340B drugs • Expanded PVP generics portfolio for DSH – modeling generic source programs offered by each wholesaler (GPO exclusion fix for DSH)

• Reviewing solutions for Medicaid Carve-out

340B Related Information Resources • Affordable Care Act http://www.healthreform.gov

• Medicaid Exclusion http://www.hrsa.gov/opa/medicaidexclusion.htm

• Children’s/Free Standing Cancer Hospitals http://www.hrsa.gov/opa/children.htm

• Orphan Drug listing http://www.accessdata.fda.gov/scripts/opdlisting/oopd

• Contract Pharmacy http://www.hrsa.gov/opa/contractpharmacy.htm

Contact Information Office of Pharmacy Affairs Phone: 301-594-4353 or 1-800-628-6297 Email: [email protected] Web: www.hrsa.gov/opa

HRSA Pharmacy Services Support Center (APhA) Phone: 1-800-628-6297 Email: [email protected] Web: http://pssc.aphanet.org

Prime Vendor Program (Apexus) Phone: 1-888-340-2787 Email: [email protected] Web: http://www.340bpvp.com