New Pennsylvania Rule Puts 340B Savings at Risk

On December 22, 2022 the Pennsylvania Department of Human Services (“Pennsylvania DHS”) issued a Medical Assistance Bulletin that will put 340B savings at risk in Pennsylvania. This bulletin intends to prohibit 340B Program covered entities and contract pharmacies from dispensing 340B medication to Pennsylvania Medicaid patients regardless of whether the patient is enrolled in fee-for-service or managed Medicaid.  Pennsylvania DHS’s bulletin states that it is effective as of January 1, 2023, a mere 10 days after it was initially announced.  As a result, Pennsylvania-based covered entities and contract pharmacies could see detrimental decreases in availability of 340B program discounts, which could impact their health care operations.

As background, federal law expressly allows 340B Program participating covered entities and contract pharmacies to dispense 340B-eligible drugs to Medicaid patients.  Historically, however, 340B covered entities and contract pharmacies have not dispensed 340B drugs to Medicaid fee-for-service patients due to low reimbursement rates and challenges working with the state on claims management processes.  Comparatively, covered entities and contract pharmacies have consistently dispensed 340B-eligible drugs to Medicaid managed care beneficiaries in accordance with federal law.

Federal law provides that 340B covered entities and contract pharmacies may dispense 340B-eligible medication to patients where such drugs are dispensed through Medicaid managed care programs.[1]  In these instances, state Medicaid agencies are also prohibited from seeking lucrative drug manufacturer rebates on the same drugs.[2]  However, Pennsylvania DHS’s new bulletin would instead allow Pennsylvania to seek increased drug rebates while simultaneously prohibiting covered entities from realizing the essential financial savings the 340B Program provides them. 

If you are part of a covered entity or contract pharmacy that participates in the 340B Program in Pennsylvania, please contact Bryan Murray or one of your Dinsmore healthcare lawyers to learn more about DHS’s bulletin and the various ways in which you can protect your 340B participation.