Based on AHLA’s annual Health Law Connections article, this special series brings together thought leaders from across the health law field to discuss the top ten issues of 2023. In the eighth episode, Jane Jerzak, Principal, PYA, speaks with Todd Nova, Attorney, Hall Render Killian Heath & Lyman PC, about key developments related to drug pricing and regulation of the pharmaceutical delivery system. They discuss the effects of recent changes to the 340B program, the impacts of American Hospital Association v. Becerra and the Inflation Reduction Act, and how drug manufacturers and providers are reacting. Sponsored by PYA.
Watch the conversation here.
To learn more about AHLA and the educational resources available to the health law community, visit americanhealthlaw.org.
Based on AHLA’s annual Health Law Connections article, this special series brings together thought leaders from across the health law field to discuss the top ten issues of 2023. In the eighth episode, Jane Jerzak, Principal, PYA, speaks with Todd Nova, Attorney, Hall Render Killian Heath & Lyman PC, about key developments related to drug pricing and regulation of the pharmaceutical delivery system. They discuss the effects of recent changes to the 340B program, the impacts of American Hospital Association v. Becerra and the Inflation Reduction Act, and how drug manufacturers and providers are reacting. Sponsored by PYA.
Watch the conversation here.
To learn more about AHLA and the educational resources available to the health law community, visit americanhealthlaw.org.
A H L A is pleased to present the special series, highlighting the top 10 health law issues of 2023, where we bring together thought leaders from across the health law field to discuss the major trends and developments of the year. Support for A H L A in this series is provided by P Y A, which helps clients find value in the complex challenges related to mergers and acquisitions, clinical integrations, regulatory compliance, business valuations, and fair market value assessments, and tax and assurance. For more information, visit p y a pc.com.
Speaker 2:Hello, everybody. My name is Jane Giza. I'm a principal with p y a Healthcare Advisors. I am joined this staff this morning, actually, uh, by Todd Nova from Hall Render. And today we're going to be discussing drug pricing, the pharmaceutical delivery system. So, welcome Todd. Uh, if you could tell a little bit about yourself and how you got involved in, uh, kind of educating people on pharmaceutical drug and drug pricing.
Speaker 3:Thanks, Jane. Uh, I appreciate it. And, uh, nice to be speaking with you again, with you again. Um, so my name is Todd Nova, partner with Hall Render, and, uh, I ended up in this space, uh, probably like a lot of us did, uh, through a series of twists and turns following my interests. So I started out originally as a systems integration consultant with PricewaterhouseCoopers, uh, which is basically, um, uh, back in the day, the, the, the nacent stages of the web front ends that we were hooking into old mainframes. So did a lot of data analytics, data modeling, database development, and then interfacing with web front ends. Um, loved what I did. Really enjoyed it. The travel, uh, was, was substantial as, as you know, as a consultant yourself. Um, which I enjoyed, uh, but decided to go back to school, uh, to go back to law school in, in, in part, to, to, to be frank, to avoid the travel a little bit. But, uh, so I was very fortunate outta law school, uh, to, or during law school, in fact, to get a clerkship with a, with a health law firm. Um, and that firm gave me the opportunity to focus on safety net provider, uh, reimbursement and pharmacy issues. Um, so cut my teeth, so to speak, in the health law space under some amazing mentors, right? All of us, um, got here because of the help of, of other individuals, and I was very fortunate to learn under some, some wonderful people. Learned a lot about, uh, um, what we call the, the, uh, payment systems arbitrage, the Medicare sort of chess game, making sure that, uh, structural, uh, corporate structure and physical structure for that matter of health, healthcare systems, providers and pharmacies is optimized. Which led me, um, in 2010 when the law changed on three 40 B in particular to some, some folks saying, Hey, who knows, uh, data integration, data flow, uh, safety net provider reimbursement, and pharmacy. And it was an odd confluence of all of those things that led me to where I am today. And so now, effectively, the entirety of my practice focuses on, um, institutional retail specialty, mail order pharmacy optimization, right? Both from a drug delivery, uh, uh, re uh, registration certification, licensure perspective, uh, operations reimbursement and, and drug sourcing. Uh, huge part of that, not surprisingly, is the three 40 B Drug discount program. Uh, but then also establishing, establishing structurally care delivery systems for, again, institutional and retail pharmacies. Because as we all know, with consolidation, vertical consolidation in, in the industry, um, right, traditional retail pharmacies are, are, are providing more care. Traditional providers are, are getting into the retail and mail loader space. And, and larger PBMs, right, themselves are getting into the care delivery space via, via, uh, pharmacies, specialty pharmacies in particular, uh, but then also, um, more more traditional care delivery.
Speaker 2:Wow. Thank you. What a great introduction, and you're the best person here to speak to drug pricing. What new with drug pricing. And before we get into it, and I know you mentioned three 40 B, maybe describe to the audience just briefly, what does three 40 B mean to providers, to beneficiaries? What are some of the requirements?
Speaker 3:Um, so the three 40 B discount program is a, is a statutorily mandated program that says that manufacturers that would like to be eligible for reimbursement for their drugs under Medicare part B as in Bravo and Medicaid, have to sign what's called a pharmaceutical pricing agreement. That pharmaceutical pricing agreement obligates the manufacturers to provide drugs at a discount. That discount is, is based on a statutory formula. Um, uh, it's a significant discount, um, for safety net providers, uh, FQHCs, um, hospitals of various sorts. So disproportionate share hospitals, those are acute care hospitals, nonprofits, uh, with a, a dish percentage over 11.75. I know you in your practice do a lot of, of optimization of those dish percentages. Um, and, and grant funded clinics as well as government hospitals. So again, you know what I was saying earlier, those safety net providers can access those drugs and tho the savings for those drugs are fungible. So those savings can be used in furtherance of the health, uh, the provider's mission, um, because again, they are either government hos, by definition, they're safety net providers that are either government hospitals or nonprofit. So they have an overlay of that regulatory oversight primarily by irs. But in the case of grant funded community health centers also, um, hrsa, uh, which will have grant requirements that, that those entities obviously, um, have to follow. So, um, there are a lot of complexities that get into who is or, or isn't eligible, how those drugs may be sourced, how they can't be sourced can be they be delivered to pharmacies. Um, you, you and I were talking before this podcast. I know we'll talk a little bit about the elephant in the room on the three 40 B program, which is contract pharmacies, the unilateral manufacturer actions to call back those contract pharmacies in the state of the law right now in that, and what is that go, what, you know, let, let's pull out our crystal ball and discern what that's going to mean, uh, for not just the integrated health systems, the FQHCs community health centers that are participating, but also the contract pharmacies, right? So a lot of folks that are listening, um, will, will be working with, uh, for pro, either for-profit health systems that have pharmacies that are partnering with these entities or for-profit, um, retail chain pharmacies that are impacted and, and will be impacted in one way or another by some of those developments. So that's the three 40 B program in a nutshell.
Speaker 2:Excellent. Excellent. And in 2022, uh, there are, there have been a lot of changes and things that are really impacting the three 40 B program. So talk a little bit, Todd, in terms of what's been happening with this three 40 B program that seems to be a great benefit for the safety net providers, as you've described.
Speaker 3:Um, well, the, the program has, has continued to, to function to allow these safety net providers to access drugs. So, right, the safety net providers, um, and, and we primarily in, in, in our practice represent, uh, providers and retail chain pharmacies, when, when the pandemic, um, was in its most acute phase, uh, and, and providers were tasked with caring for those acutely ill patients, um, those resources were used to further extend access to care, right? There were literally, uh, tents set up in parking lots, and that's where people went, uh, when they needed care. So those savings are used to further non-profit missions. Most of those entities, again, by definition, they are safety and net hospitals. So, uh, hospitals that survey disproportionate share of the low income and uninsured, um, grantees that serve, um, uh, vulnerable populations, uh, migrant health centers, um, uh, Ryan White Clinics, um, traditional, uh, federally qualified health centers, um, and also rural, so community hospitals, critical access hospitals, and certain children's hospitals. So, so those funds are used to further access to care in, in those communities. One of the things that we've seen, and folks have probably heard this, there's been a lot in the news, uh, New York Times Wall Street Journal have published articles, um, that in our view, uh, inaccurately characterize, um, the, the implementation of those programs. Um, there are some technical oversights in, in the way the, the program operations were characterized in those articles, which, which we think are, are unfortunate, uh, because it jeopardizes, um, the access to those resources that objectively, uh, support care, right? Again, those are tho they have requirements to use those funds. They are not imposed by the three 40 B program, right? The three 40 B program statute is surprisingly thin. Um, the regulatory oversight of the program has been, um, eroded or the ability of hrsa, opa a, the Office of Pharmacy Affairs to manage the program has been eroded because of a series of manufacturer, uh, lawsuits, uh, questioning the, the authority of the agency to administer the program. Um, or I, I should more accurate, to be more accurate. What I should say is they're questioning the ability of the, the agency to issue regulations, right? That's primarily from a legal perspective, what the manufacturers have, have pushed on, and we, we'll talk in a little bit about the manufacturer's views on contract pharmacies, um, but there's been some uncertainty surrounding the program be because of that. But at the end of the day, one of the things that people tend to forget about the program is that because the qualification standards in the first place for the program, um, they alone or they, they, they independently provide that oversight usually, and primarily via, um, i r s, um, um, private inurement, private benefit limitations. Um, right? You can, you can't, uh, there's no, you, you, you can speak to private environment and with your background better than I can. Um, but there are, there are limitations to what the funds in can be used for and how they can be used, right? Community benefit is tracked. Um, also, the hospital providers are subject to emtala. They have got, they have to treat the patients that come in the door. So they do all of these things that truly benefit the community, and ultimately, that's what the funds are, are used for.
Speaker 2:And what happened, uh, in 2018 where C M S began paying some hospitals less, uh, for the three 40 B drugs, and what's, what's happening with that, uh, lawsuit?
Speaker 3:Yeah. Uh, thanks for, it's a great question. Um, so in, in 2018, in the, uh, O P P S final rule, uh, Medicare said we are going to reduce, um, uh, reimbursement for drugs out for drugs acquired at a three 40 B price from a s p plus 106% to a S p minus 22.5%. Um, the, the, by the way, and I don't think I mentioned it right, but the three 40 B program for those that aren't that familiar with it, is outpatient drugs only. Okay? So, so under the O P P S, they said that three 40 B certain classes, the, the, the largest, uh, uh, three 40 B covered entities. So some of them were, were excluded from it, but the, the major ones were gonna be paid at a S P minus 22.5. Um, that case, um, uh, a h uh, filed the case, and then that ended up going all the way to the Supreme Court, A H A V erra, um, and AHA one, um, on, on the interpretation that, uh, c m s did not, uh, appropriately conduct a survey to justify the basis for its price reduction. So in one view, what they were doing is, um, reducing not in one view, literally what they did was they reduced, uh, uh, three 40 B drug reimbursement and then used that because that, that those changes have to be budget neutral under, under the reimbursement provisions. So that budget neutrality then funded the market basket update for those years, and then that was paid to all, um, all hospitals irrespective of, of three 40 B eligibility. So, uh, the, the Supreme Court said, you can't do that because it was implemented incorrectly. From a pro procedural perspective, they remanded it back to the lower court. Um, so as of today, what covered effective covered entities for this current, um, uh, fiscal year should be, if they're not already, they should be getting paid prospectively back in a s p plus 6%. Um, if you have open claims, we've recommended that covered entities, um, re uh, refile those claims that are, that are still within the refiling window. Um, so if you haven't started that, do it. And also, the other thing that we've seen is different Mac have slightly different guidance. So, um, and, and in the event that's what C M S did, that's what happened. We'll see what happens prospectively, but for the current year, it's back to p plus 1 0 6, and we'll talk, you know, we were talking in, again, Jane, um, in advance of this call, right? The Inflation reduction Act, um, allows the government, for example, to renegotiate drug prices. And that is, that is prospective for the 10 largest spend drugs is is, is the first tranche, so to speak, of, of that implementation. The interesting thing though, is that that's going to impact drug reimbursement, right? So it's gonna be 106%, um, it's gonna be 106% of the, um, maximum. That's right. That was, I was blanking on for a second of the maximum fair price. So they're going to reimburse at 106% of the maximum fair price. For those of you that are involved in negotiating your drug, your wholesale distributor, your drug pricing agreements, make sure you understand how that's going to affect you. A lot of those drug purchase agreements will contemplate cogs cost of good sold. Um, and so that should, um, eventually work its way through, but that cost of good sold, if it's based on an as p price metric, uh, is different than this fair market price concept. So we don't know exactly how that's going to work out. Um, but it's not automatic, and it doesn't mean that the government is going to reduce your purchase price of the drug. It means the government's going to ultimately reimburse less and, and, and push that obligation onto the purchasers in indirectly to, to address it. So it's something that folks are gonna wanna be aware of.
Speaker 2:Do you think that is going to squeeze the margins for providers?
Speaker 3:Um, I, in the short term, yeah, I do, uh, in the long term, I, I think it will, it will begin to get, um, mediated remediated. Um, but for some, for some, uh, providers, it's gonna have an, have an impact, right? They can't because the, the purchase of drugs is a contract issue between the purchaser, right? Whether it's a cell community hospital or a dish hospital or, or a, a physician clinic. Um, they negotiate drug prices typically with a wholesale drug distributor. Um, and, and this is, this is a question of how part B of how Medicare is gonna reimburse for the drugs and what those, what those negotiations are gonna be. In other words, what's, that's what they're gonna negotiate is what that fair price is. Um, and that fair prices is gonna be the basis for reimbursement, and that does have a huge impact, right? Um, on, on drugs. And so they're gonna, it'll be fair market price plus 6% rather than a s p plus 6%. Um, so eventually, and it gets really complicated. We obviously don't have time to talk about it now, um, but though that drug pricing is something of a positive feedback loop, it's very complicated. Uh, it, it'll eventually have an impact. Um, but in the near term, you're gonna wanna start getting on your radar, I think, what the potential impact of that will be, especially on your drug acquisition agreements.
Speaker 2:Thank you. And, you know, in this whole three 40 B, um, uh, I guess it's like a, it's just like a whole regulation in and of itself that ties in Medicare and drug manufacturers and providers and pharmacies. How have drug manufacturers been playing in the sandbox with respect to three 40 B drugs?
Speaker 3:Um, the, they are, uh, vocally opposed to the program. Um, and, and they're, they're, they have their reasons. And, and certainly, um, you know, ultimately the, the, the biggest issue, uh, with the manufacturers has been the use of contract pharmacies in the three 40 B space. So, so for those that are not familiar with what a contract pharmacy arrangement is, a covered entity, um, can provide drugs to its eligible patients, right? So for the, those lawyers that are listening, we define terms capital E eligible, capital P patient, the question becomes, how do you define that? Okay. So, so the interpretation historically has been in, in, in accordance with, with hrsa, O p a guidance, um, that our eligible patients can go to, uh, unrelated third party pharmacies with which the covered entities contract to receive those drugs. Um, the mechanisms for it are complicated. We probably don't have time to talk about it now, but ultimately it's what we call a a a a, uh, retroactive replenishment model. So, so the, the, that, that third party retail pharmacy fronts the drug, um, then the covered entity subsequently identifies through some data matching heuristics, uh, that an eligible patient was, was provided services there, then the covered entity purchases those drugs at a reduced three 40 B cost and replenishes that drug inventory, um, that pharmacy retains a, a dispensing fee. And then, and then remits those amounts that are collected both in the form of a copay, uh, ingredient cost and dispensing fee for copay from the patient ingredient cost and dispensing fee from, uh, from the, from the payer, uh, P B M usually, uh, and then remits that those amounts, they'll hold back the, the dispensing fee and then remit those amounts back to the cover 90. Okay? So that's how it works. So the drug manufacturer said, okay, we shouldn't have to do this, because the big issue is what's called duplicate discounts, right? The term duplicate discount means when you have a it, it is a misnomer, but what it is is when you have a three 40 B discount and a Medicaid rebate, right? Which does mean that the manufacturer when that happens is, is likely underwater, right? Meaning they, they, that is a net loss on on their, uh, when you, when you factor in everything that goes into the cost of a drug district, distribution, delivery, F D A approvals, uh, current good manufacturing practices, uh, you know, F D A audits, um, all this stuff there, there r and d, you know, a lot of stuff obviously goes into making these drugs. They will lose money on that. And, and there was increasing frustration on the part of the manufacturers that they could not identify in those models, um, when a drug was purchased primarily on private M C O plan accounts. So, um, uh, fee for service is really not an issue there. Um, because of, of some of the implementation considerations, the fee for service claims are, are pretty clearly, uh, by law excluded and easier to exclude, because everybody knows every state has one bin, P c n one group basically to identify a fee for service plan MCO plans. In a lot of states we don't even know. There's no, there's no source of truth. Some states do have it, but a lot of states don't. And so what was happening is these manufacturers were saying, look, we can tell based on our, our data, right, capital B, big capital data mm-hmm.<affirmative>, we know that, uh, a lot of these pharmacies are dispensing three 40 B drugs. We know that they're, we are paying a lot of rebates, but we can't do the match. And they were getting increasingly frustrated, and it got to the point where they just said, okay, we're gonna stop doing this. Um, hrsa, O p a sent warning letters to seven manufacturers. Um, the H h s general counsel sent a letter, uh, those actions because they were affirmatively, um, uh, out of compliance with, with directives from hrsa, O P A, they were referred to OIG for investigation. So investigation can include the imposition of civil monetary penalties and also the determination of potentially of, of the pharmaceutical pricing agreement. Um, so, so the manufacturers and number of them and three federal circuits sued, um, saying that that guidance is not enforceable, and it was outside of the regulatory authority of the agency to do that. Um, about two days ago, um, the first material decision came down in, in a case in the third circuit, um, that was Sanofi, V H H S, and the court, uh, the, the, the three judge panel ruled in favor of the drug drug manufacturer in that case, um, and said that there is no obligation of those manufacturers to provide the drug. So, um, we presume that that will be appealed. Uh, the other two circuits that are evaluating the same question haven't ruled. Um, that's not dis dispositive, um, necessarily, uh, but it, it does have an impact because it, it likely effects for, for the time being, the ability of the agency to, to enforce that. Now, as a practical matter, it may have already been happening, uh, because we haven't seen any enforcement, uh, by oig, right? We're not aware, I'm not aware of any investigations, not to say that they're not happening, uh, but we're not aware that that's occurred. The manufacturers have continued to litigate. So right now, um, the role of contract pharmacy is, is, is unclear in the three 40 B program. That's the biggest issue, and it's a big one.
Speaker 2:So talk a little bit more about that, Todd, in terms of the role and relationship of our typical providers, hospitals, health systems, and contract pharmacies, and how do you see that changing in the future? What, what are we anticipating?
Speaker 3:I think as a practical matter, if, if, if it con, if that continues on, its on its current path, um, it, it's gonna con continue some of the consolidation we've seen in the industry already, naturally, right? So we, we, we, we see an increasing focus on population health, uh, bundled payment initiatives and coordinated care, so of their own volition, health systems. And, and the larger pharmacy providers for that matter, have seen better outcomes when they consolidate that care. Uh, so, so when you consolidate pharmacy operations, we're seeing more and more clinical pharmacists, by the way. Uh, some of the health systems we work with employ in one facility, over a hundred pharmacists that are an active part of the care team. And, and Jane, I know you're a nurse by background, and so, um, I'd be curious your thoughts too, um, in, in terms of the role that pharmacists in particular, but perhaps more broadly, uh, nurses and, and, and other, um, adjunctive care providers can play in terms of optimizing, um, those bundled payment initiatives.
Speaker 2:Yes, and I think that's a really good point, uh, that, uh, well, number one, the clinical pharmacy, uh, role is very important in value-based care arrangements in really managing population health. Um, typical folks that have a lot of chronic conditions are managing a lot of different medications. They can't afford them, they don't know how to use them, the side effects and so forth. So really, clinical pharmacists are emerging as a very, uh, key player in the value-based care arrangement along with other care coordinators, RNs, and so forth. But that whole drug element and the affordability of those drugs for those patients is very critical in managing the health of chronically ill patients. So you're absolutely right.
Speaker 3:Yeah. You know, one of the one in, in that regard we've seen it, it's, that's, it's also not just their involvement in the traditional, uh, you know, pre-planning, care coordination meetings that you might have with the broader group, um, but, but sort of quasi, uh, quasi independent. It's, it's not independent because it's, it tends to be a hospital service, but the, the Part D plans are requiring M t M services be provided, and, and that establishes care, uh, responsibility on behalf of the organization allows that information to get into the medical record. And as they care for those patients, you know, they're, they're able to access three 40 B drugs through some different channels, um, because the covered entity is, is, is, is with, you know, if structured properly, uh, clearly responsible for the care provider, right? That's the, uh, right, that's the three 40 standard. One of the things that we've seen though, with respect to reimbursement for drugs is some of these drugs are amazing. They save, they save lives. I talked about the costs involved with developing these drugs. We have to acknowledge they're very, very real. We have to acknowledge that these drugs do some amazing things and, and, and that, um, receiving compensation for that is not inappropriate. There's nothing wrong with, with that by any means. It's obviously has to be structured properly. But one of the challenges that we've seen is the ability of patients to afford those drugs. And we have PBMs, um, that currently are issuing guidance saying, um, let us know if you're aware of any copay waiver programs. And so we're working with a lot of entities right now to address, um, appropriate copay assistance programs, uh, to contemplate the copay waivers. There's one large P B M, um, that in fact issued a fraud alert on that front, and it th that is an issue that's only gonna become more important. The, the Inflation Reduction Act that was passed, um, that addressed the, the ability the government to negotiate those drug prices also, um, expanded access, uh, from a Part D perspective to waive those copays. So it's gone up to 150% of F P L, I think it used to be, uh, 135 ish or a little bit lower. So, so some of those gaps will be addressed because the copays alone, when somebody is struggling with the impacts of inflation, um, with costs of living, it, it, it leads to some really heart-wrenching choices. And so there are mechanisms for these three 40 B covered entities, by the way, to support that, right? That's kind of the, the point we, we need to make sure that patients are able to access these specialty drugs because they're getting more and more expensive. Um, the site of care, as you've seen, I know, um, is moving away from the traditional acute care setting to more home-based, right? So maybe it's a home infusion, maybe it's a self-administered drug, um, right. Telehealth has expanded that. We'll see what happens with some of those waivers when the public health emergency ex, uh, expires on May 11th, I think. Um, but, um, clearly a topic I'm interested in. We are seeing a lot of activity in the space and increasing importance in the role of pharmacists, which is timely as well. Um, pharmacists, by the way, for purposes of Medicare are not providers. They are not in that definition. Mm-hmm.<affirmative>, a lot of states are trying to address it. Um, but they're, their importance and their involvement in in care, um, is, is undeniable. And I think it's giving those individuals a little bit more of an opportunity, um, to, to work in, in settings that, that they're passionate about and that they can really apply their education to.
Speaker 2:Absolutely. And, and they do do love working directly with patients, you know, from the feedback we've heard as well. So that's a very important trend coming on the provider side. Um, what about payer trends? Are there any, uh, things Todd, you'd like to highlight generically regarding drug reimbursement with respect to the payer space?
Speaker 3:Um, yeah, you know, with, with their, we, we talk, we touched on a lot of it. I, I think the biggest issue right now is d i r fees, uh, charged by PBMs. They're, they're somewhat, uh, opaque. There have been, uh, proposals, there have been, uh, congressional proposals on the hill, as we say, right? Congressional proposals, bills that have been floated to address the impact of those D I R fees. They're getting more and more challenging. And so, right, A D I R fee for those that aren't familiar, direct and indirect remuneration fee. So the a s P plays price is calculated at the point of sale, at the retail point of sale. Um, and so if, if, if a d, if a fee is charged on a quarterly or periodic basis on the backend, for example, to address quality metrics, uh, to a, to address documentation compliance, there are a number of different metrics, and you don't achieve those metrics, some of which may be realistic to achieve, some of which may not be, um, they will effectively recoup or claw back some of those amounts. Those are called direct and indirect remuneration fees. Um, we are seeing more and more providers that are struggling to make a margin because of the impact of those and more and more interest in evaluating, um, what that means in, in their contract. So certainly when you're in the contracting process, it's something to be aware of, um, and, and make sure that, uh, you understand what the impact would be, right? Are those metrics achievable? Um, and maybe they are, or, or maybe they're not. But it's gotta go into, um, your calculus of, of discerning whether or not a particular arrangement is ideal. Um, so, uh, whether you structure your, your payer agreements through a P S A L, uh, pharmaceutical services administrative organization, or directly with A P B M, um, it's something to be, to be cognizant of. It, it, it may be a you, you're not gonna have insight into those necessarily with A P S A L, with a pbm, you'll have more clarity in the contract. Um, but those backend fees are, are becoming, um, more and more of an issue. The other big things that, that we're seeing from the institutional side, um, is white bagging as a problem. Um, so white bagging, for those of you that aren't familiar, is when a pharmacy dispenses a drug, gets paid for it, and then ships that drug to an institutional provider to administer the drug to a patient. Brown bagging is when the patient takes the drugs themselves to the facility, and clear bagging is usually when that facility's own pharmacy does basically a subcontracted service, and then it, it becomes reimbursable under the, um, the medical benefit rather than the pharmacy benefit. And so what we're seeing is a lot more and more PBMs and payers, um, in order to reduce costs are contracting with larger pharmacies to white bag that drug to the institution. And we've heard from some of the clinical providers that that can present challenges with respect to, uh, evaluating, ensuring drug integrity, um, operational challenges, um, and not functionally not being reimbursed to, to confirm the integrity of the drug, uh, to make sure that the drug was, was, uh, handled properly, right? It wasn't ex exposed to extreme temperatures. Um, there are all kinds of issues and a lot of states right now are proposing or talking about laws to address it. Um, and there are arguments on, on both sides, um, about whether or not that, um, is something that's a good or a bad thing. So,
Speaker 2:Wow. Lot going on within the drug space. Had, uh, this has been very enlightening for me and I'm sure for the audience as well. So I'd love to thank you again for sharing your great fast knowledge on drug drug reimbursement three 40 B program. Um, so thanks again and thanks audience for listening this morning.
Speaker 3:Thank you, Jane.
Speaker 1:Thank you for listening. If you enjoy this episode, be sure to subscribe to a H L A speaking of health law wherever you get your podcasts. To learn more about a H L A and the educational resources available to the health law community, visit American health law.org.