On October 2, 2024, CMS published final guidance on the implementation of the Medicare Part D price caps for the 2026 and 2027 calendar years under the Inflation Reduction Act (IRA), including the requirement that covered entities receive the lower of the maximum fair price (MFP) or 340B price.

RWC-340B has submitted several comment letters to CMS on implementation of the IRA as it relates to 340B.  Most recently, RWC-340B submitted joint comments with other 340B covered entity stakeholders to address issues related to the IRA.  RWC-340B is pleased that many of its concerns are addressed in the CMS final guidance.

CMS incorporated many of the suggestions made by the 340B covered entity community on implementation of the IRA.

 The provisions of the final guidance that are significant for covered entities are:

• CMS confirmed that 340B covered entities must receive the lower of the 340B price or the MFP, and that the MFP must be made available to the purchaser within 14 days of receiving the claim date from the CMS Medicare Transaction Facilitator (MTF – a new type of entity).
• CMS confirmed that it will not require 340B covered entities to add a 340B claim modifier at the point of sale, but covered entities may do so voluntarily.
• The agency rejected calls for a clearinghouse model, in which covered entities send 340B claims data to a third party, but stated that it would monitor the approach and explore the feasibility of incorporating 340B transactional data from 340B third party administrators (TPAs) in the future.
• Drug manufacturers have the choice to provide access to the MFP prospectively or retrospectively or through a combination of the two.
• Manufacturers are authorized to withhold MFP if there is a “reasonable belief” that a drug is 340B-eligible.  A “reasonable belief” must be supported by “documented evidence that the 340B ceiling price is lower than the MFP and that the claim for the selected drug is 340B eligible.”  CMS clarifies that an NPI alone is not proof that a claim was 340B-eligible, which is helpful because many covered entities dispense both 340B and non-340B drugs under one NPI.
• Covered entities may notify HRSA if they believe that they have not received the 340B ceiling price, consistent with current practices.
• CMS intends to monitor manufacturer compliance through targeted audits.
• CMS clarified that CMS and the MTF will not assume responsibility for deduplicating discounts between the 340B ceiling price and MFP and rejected implementing a clearinghouse model to do so.
• CMS is requiring two new data elements to be provided to the MTF: “Prescriber ID” and “Prescriber ID Qualifier modifier”.
• CMS is allowing manufacturers to use a credit/debit ledger system if the manufacturer determines that it incorrectly paid an MFP refund on a 340B claim to reconcile the duplicated discounts.

CMS, drug manufacturers, and covered entities are trying to navigate a difficult challenge.  If the MFP is higher than the 340B ceiling price, the manufacturer does not need to provide the MFP, but must provide drugs at the 340B ceiling price.  If 340B pricing is offered solely on a prospective basis (that is, no rebate model is permitted), covered entities will receive the 340B ceiling price and manufacturers will have fulfilled their obligations.  If a covered entity does not voluntarily use point-of-sale modifiers to identify a claim as a 340B claim, and the claim is not otherwise identified as 340B for the manufacturer within 14 days, the manufacturer will pay the covered entity the difference between the non-340B price and the MFP.  The covered entity will not be entitled to that credit, since it already received better-than-MFP pricing.  If the claim is identified as 340B after the 14-day window or after the MFP credit has been paid to the purchaser, CMS has proposed using a credit/debit ledger system to track the credits owed back to the manufacturer (the entire credit, in this case), which can be applied against future MFP payments owed to the covered entity.

If the MFP is lower than the 340B ceiling price, the manufacturer must provide the MFP within 14 days of receiving claims data from the MTF.  If a covered entity does not voluntarily use point-of-sale modifiers to identify a claim as a 340B claim, and the claim is not otherwise identified as 340B for the manufacturer within 14 days, the manufacturer will pay the covered entity the difference between the non-340B price and the MFP.  If the claim is identified as 340B after the 14-day window or after the MFP credit has been paid to the purchaser, CMS has proposed using a credit/debit ledger system to track the credits owed back to the manufacturer (the difference between the non-340B price and the 340B price, in this case), which can be applied against future MFP payments owed to the covered entity.

In most scenarios, the manufacturer will have overpaid the MFP credit to the purchaser unless the drug is identified as a 340B drug during the 14-day MFP credit payment window.  Manufacturers will be further incentivized to find ways to identify 340B drugs as quickly as possible (and to be sure they are identifying all 340B claims) to receive credit back for these overpayments.  Manufacturers will likely continue to pursue ways to require covered entities to share dispensing data (for both entity-owned and contract pharmacies) to avoid missed credits.

Powers will continue to monitor developments with implementation of the IRA.