Manatt Health Releases 50-State Survey on 340B in State Medicaid Programs

Manatt, Phelps & Phillips, LLP, a multidisciplinary, integrated professional services firm, announced today the release of its Comprehensive 50-State Survey: State Medicaid Programs and 340B. Conducted by Manatt Health, the firm’s healthcare legal and consulting group, the report summarizes laws, regulations and sub-regulatory guidance that govern how Medicaid programs in all 50 states reimburse for both 340B and non-340B drugs, and how Medicaid programs ensure that those drugs are not also subject to a Medicaid rebate.

The 340B program, which requires drug manufacturers to provide outpatient drugs to eligible healthcare organizations at significantly reduced prices, has not been without controversy. Supporters assert that it is vital to helping hospitals and other covered entities care for their uninsured and underinsured patients, while critics assert that it is being abused. Both sides can agree, however, that the program can be very confusing to navigate.

One area of concern relates to the interplay between the 340B program and Medicaid rebates. Manufacturers who participate in the Medicaid program are required to pay rebates to states for drugs dispensed to Medicaid patients. The 340B statute provides that a drug may not be subject to both a 340B discount and a Medicaid rebate. Accordingly, 340B drugs may not be used for Medicaid patients unless the State Medicaid program has a mechanism in place to identify 340B drugs and exclude them from its rebate requests.

Manatt’s first-of-its kind study addresses the following questions:

  • What mechanisms do State Medicaid programs use to identify 340B-purchased drugs so that they can exclude them from their rebate requests to manufacturers?
  • How much do State Medicaid programs reimburse for 340B drugs as compared to non-340B drugs?
  • Do State Medicaid programs set requirements for how much Medicaid managed care organizations (MCOs) may reimburse for 340B drugs and non-340B drugs, and if so, what are those requirements?

“Given the controversy that has surrounded the 340B program over the years and the complex interplay between it and Medicaid, we were committed to bringing much needed clarity to the issues,” said Helen Pfister, partner with Manatt Health and lead author of the report. “We felt this survey was particularly important in order to help 340B stakeholders understand what the legal framework is at the state level when it comes to Medicaid and 340B.”

An infographic to help illustrate the findings can be found here. The full report can be located through a subscription to Insights@Manatt Health, an original content portal that provides subscribers access to a full range of premium analysis and data on breaking industry news and trends; in-depth evaluation of state and federal health policy changes; detailed summaries of Medicaid, Medicare and Marketplace regulatory and sub-regulatory guidance; 50-state surveys on critical industry issues; and cutting-edge insights on an array of important topics critical to life sciences companies.

To compile this report, Manatt reviewed statutory, regulatory and sub-regulatory guidance issued by state Medicaid programs with respect to the 340B program. In certain instances when information was not readily available, Manatt also reached out to state officials for information. Manatt then compiled the results of this research into a chart, one for each state, and provided a copy of that chart to each state for review and revision, as necessary. Of the 50 states, 34 reviewed the charts and either revised or approved them.

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