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Considerations When a 340B Covered Entity Is Changing to a New GPO

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Considerations When a 340B Covered Entity Is Changing to a New GPO

CPS has been involved with the 340B Drug Pricing Program since its inception in 1992. We are not only intimately familiar with the core elements of a successful 340B program, but execute learned best practices coming from decades of experience.

One topic that may warrant occasional exploration by a covered entity is how they approach a change to their group purchasing organization (GPO) membership. While this likely will not happen often, it is important to understand the ramifications when it does.

While there is a statutory prohibition against obtaining 340B covered outpatient drugs through a GPO or other group purchasing arrangement for disproportionate share hospitals (DSH), children’s hospitals (PED), and free-standing cancer hospitals (CAN), health systems or hospitals are members of GPOs that may be utilized to purchase drugs for their inpatient
population. Critical access hospitals (CAH), rural referral centers (RRC) and sole community hospitals (SCH) are not subject to the GPO prohibition, but should still be aware of some of the nuances of a GPO switch.

A GPO change will mean changes in NDCs with the utilization of a new bid book. Be aware of mixed-use drugs to determine the potential impact from the newly contracted NDC. Review of the accumulators or a revenue/usage report is a good resource to determine inpatient (GPO) vs. outpatient (340B) utilization and can assist in determining the potential impact to either the GPO or 340B purchases.

For Example: Metoclopramide is used in mixed-use settings. If the larger percentage of use is in the outpatient setting (340B), it may be in the best interest of the covered entity to choose a contracted item that will give the best savings on 340B. If the larger percentage of use is in the inpatient setting (GPO), then choose a contracted item that will give the best savings on GPO.

Interested in reading more? We invite you to download the PDF of this piece where we continue on to explore private label products and split billing software. We hope to be a resource to you as you strive for excellence in 340B program management.

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