Compliance is Futile Without Transparency: 340B, MDRP, MFP Overlap Lead to Iceberg Ahead

Today’s guest post comes from Angie Franks, CEO at Kalderos

Angie describes the compliance challenges that stakeholders face in managing the complex interactions of the 340B Drug Pricing Program, the Medicaid Drug Rebate Program, and IRA’s Maximum Fair Price and inflation rebate provisions. She explains how clean, comprehensive claims data can resolve these issues.

To learn more, register for Kaldreros’ March 4 free webinar: Taking Action Amidst 340B Uncertainty With Truzo.

Read on for Angie’s insights.

Compliance is Futile Without Transparency: 340B, MDRP, MFP Overlap Lead to Iceberg Ahead
By Angie Franks, CEO, Kalderos

It’s not news that legislation and regulation of the 340B drug discount program haven't kept pace with its growth. And it’s not just 340B that must be managed by stakeholders. Federal programs like the Medicaid Drug Rebate Program (MDRP) and the upcoming IRA’s Maximum Fair Price overlap with the 340B program in ways that are not easy to navigate. Compliance requirements, lack of data transparency, and variability in discount effectuation contribute to noncompliance and rising costs.

These complexities create nearly insurmountable barriers for stakeholders to manage compliance. While many seek clarity around drug discount programs, manufacturers and covered entities can increase transparency, ensure compliance, and reduce friction in the meantime.

SNOWBALLING FROM MDRP TO MFP

The 340B program’s insufficient guidance and oversight often leads to financial inefficiencies, unintentional discount duplication, and other non-compliance, particularly when coupled with the MDRP guidance and, soon, the new IRA maximum fair price (MFP) and inflation rebate provisions. The differences in how the various programs operate and overlap make it near impossible to ensure compliance. When you layer on differences in how programs are run, it becomes a snowball effect that manifests in several ways that increasingly undermine program integrity:

1. Lack of Data Transparency Leads to Cross Program Duplication. When a commercial payer or Medicaid plan requests a discount from a manufacturer, it is typically for the units of a specific dispense. In contrast, for the current 340B model, discounts are applied upon product purchase on the package level. Without access to the data that ties the Covered Entity (CE) purchase to a dispense utilization, manufacturers struggle to stack 340B discounts against MDRP and Commercial discount requests to identify duplicates. Ultimately, all parties pay the price in the form of costly conversations as manufacturers try to reconcile apples and oranges.


2. The Amplification Effect of Contract Pharmacies. Even when a manufacturer is able to leverage tools like Good Faith Inquiries to identify cross-program duplication, the expanded use of contract pharmacies exacerbates the operational challenge. When a Commercial or Medicaid discount request comes to the manufacturer, it ties back to the dispensing pharmacy. Given that contract pharmacies may contract with multiple covered entities, it is difficult with the available data to determine whether 340B product was utilized for a dispense and to understand which associated CE accumulated for that dispense. This leads to even more hidden duplication.


3. The MFP Iceberg. MFP magnifies all of the challenges that exist today but now with increased discount dollars, increased discount recipients, and shortened timelines for payment. Manufacturers are expected to pay hundreds of thousands of dispensing entities within 14 days of receiving data, plus identify duplicates and respond to disputes at an unprecedented scale. And while the sheer volume of the MFP program exponentially increases the volume of cross-program duplicates, particularly with 340B, CMS offers no aid in the solution. Manufacturers face a challenging situation on a short timeline, they must monitor the changing regulatory landscape and simultaneously solve for multiple possible futures to meet statutory requirements.

Many manufacturers see a direct discount model as the path forward to enable duplicate identification and cross-program discount reconciliation. Unfortunately, even as the 340B regulatory landscape is still in flux, stakeholders can no longer afford to be stagnant in the interim. Leveraging advanced technology offers a more data-driven path to start your 340B transformation now.

WHAT CAN BE DONE NOW?

In uncertain times, the key is to lean into optionality. Clean, comprehensive claims data provides options for maintaining program integrity, no matter the model. Requiring Covered Entities to submit claims data for all 340B dispenses not only facilitates faster cross-program discount reconciliation but also reduces operational overhead for all stakeholders.

With that said, a unified ledger is only as good as the data it stores, so a methodical stepwise approach is warranted:

1. Require Covered Entity claims level detail for all dispenses
   
   
2. Leverage technology to evaluate quality and validity of submitted claims
   
   
3. Employ robust analytics to monitor compliance at scale
   
   
4. Streamline stakeholder engagement to address cross-program concerns
   
   
5. Be prepared for a seamless transition to a direct discount model by establishing a centralized data ledger with a clean pipeline for claims submission

This doesn’t have to be an all-or-nothing process right away. Starting to collect data now will make it a smoother transition to the direct discount model and de-risk the launch of MFP while unlocking value in the meantime.

To hear from industry experts on current litigation, ways that manufacturers and CEs can manage 340B exposure in this uncertain environment, and Truzo’s new Discount Monitoring solution, register for our webinar: Taking action amidst 340B uncertainty with Truzo, which is taking place on March 4th, 2025.

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