December 17, 2010 09:00 ET

Pharmaceutical Manufacturers Brace for 340B Integrity Provision Under Health Care Reform

iMANY Identifies Need for More Cost-Effective Reimbursement Options

PHILADELPHIA, PA--(Marketwire - December 17, 2010) - iMANY, the leading provider of contract performance solutions, is leading an industry workgroup addressing the operational impact of the 340B Integrity provision now mandated under health care reform. Based on preliminary findings of the workgroup, manufacturers have been examining business processes and technology options to support the implementation of this substantial compliance requirement. There are, however, administrative challenges that potentially could make compliance more costly and generate additional overhead not only for manufacturers, but also for covered entities participating in the 340B Drug Pricing Program.

Under section 7102 of the Patient Protection and Affordable Care Act of March 2010, pharmaceutical manufacturers must retroactively refund or true-up overcharges to all 340B-covered entities receiving discounted pricing, including routine instances of retroactive adjustments. Retroactive adjustments are a common practice in the pharmaceutical industry, as many manufacturers recalculate the Medicaid Best Price 12 to 18 months after period close, to reflect time-lagged rebates and price concessions. The new provision introduces significant civil monetary penalties on pharmaceutical manufacturers for non-compliance.

The industry workgroup recently launched by iMANY in November 2010 identified several operational and financial challenges, including many open questions on the necessary data and technology to process 340B refunds in a timely manner. The workgroup included 45 participants from more than 20 major pharmaceutical manufacturers to begin to define standards and best practices for managing 340B sales and reimbursements.

Among the key concerns that iMANY captured from the discussion were:

  • Capacity to Handle Volume of Refund Transactions -- Some manufacturers estimate that thousands of refunds per quarter will be generated by their regular recalculation of Medicaid Best Price, which has a downstream impact on the 340B ceiling price.
  • Frequency of Refund Processing -- Participants in the workgroup assessed the pros and cons of processing refunds quarterly or annually, and determined that quarterly processing poses significant operational overhead not only for the manufacturers, but also for the 340B-covered entities who are receiving the refunds.
  • Role of Drug Wholesalers in Refund Process -- Participants discussed options for processing refunds as credits through wholesalers, given that most wholesalers do not preserve historical data and that significant processing fees may be imposed.
  • Availability of 340B-Covered Entity Data -- Participants evaluated options for processing of checks or electronic funds transfer directly to 340B-covered entities and the data requirements, such as taxpayer identifiers and banking details. If this additional data is made available to manufacturers, the refund process will be more efficient and streamlined.

As a technology provider to the pharmaceutical industry, iMANY has been proactively examining multiple options for compliance. The workgroup is the first in a series of ongoing industry efforts by iMANY to create awareness of the potential challenges and operational implications of health care reform across the pharmaceutical industry.

According to Jennifer Norton, Senior Director of Life Sciences Strategy and Solutions at iMANY, "We continue to see pharmaceutical manufacturers moving quickly to adjust their business practices and data requirements to comply with health care reform. With every organization trying to do more with fewer resources, it's critical to focus on what makes the most sense for all industry stakeholders." She added, "iMANY supports a more cost-effective and holistic view for the industry and is committed to providing our customers with solutions to support the 340B mandate."

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About iMANY

iMANY, the leader in contract performance, helps organizations improve the way they manage complex commercial and government contracting and compliance strategies. The iMANY ContractSphere technology platform is the industry's only integrated solution for optimizing revenue across the entire contract lifecycle. Hundreds of organizations across 21 industries worldwide, including the top 10 life sciences companies, depend on iMANY for actionable intelligence to drive more profitable business relationships. For more information, please visit

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