[Federal Register Volume 60, Number 211 (Wednesday, November 1, 1995)]
[Notices]
[Pages 55586-55587]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-27032]



-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES
Public Health Service


Notice Regarding Section 602 of the Veterans Health Care Act of 
1992 Contracted Pharmacy Services

AGENCY: Public Health Service, HHS.

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: Section 602 of Public Law 102-585, the ``Veterans Health Care 
Act of 1992'' (the ``Act''), enacted section 340B of the Public Health 
Service Act (``PHS Act''), ``Limitation on Prices of Drugs Purchased by 
Covered Entities.'' Section 340B provides that a manufacturer who sells 
covered outpatient drugs to eligible (covered) entities must sign a 
pharmaceutical pricing agreement with the Secretary of Health and Human 
Services (HHS) in which the manufacturer agrees to charge a price for 
covered outpatient drugs that will not exceed an amount determined 
under a statutory formula.
    The purpose of this notice is to inform interested parties of the 
following proposed guidelines regarding contracted pharmacy services. 
Public comment is invited.

DATES: The public is invited to submit comments on the proposed 
guidelines by December 1, 1995. After consideration of the comments 
submitted, the Secretary will issue the final guidelines.

FOR FURTHER INFORMATION CONTACT: Marsha Alvarez, R. Ph., Director, Drug 
Pricing Program, Bureau of Primary Health Care, 4350 East-West Highway, 
Bethesda, MD 20814, Phone (301) 594-4353, FAX (301) 594-4982.

SUPPLEMENTARY INFORMATION: The Health Resources and Services 
Administration, Bureau of Primary Health Care, acting through the 
Office of Drug Pricing, has developed contracted pharmacy service 
guidelines to facilitate 

[[Page 55587]]
program implementation. For covered entities that wish to utilize 
contracted pharmacy services to dispense section 340B outpatient drugs, 
the Office of Drug Pricing is proposing a contracted pharmacy service 
agreement between the covered entity and the pharmacy which would 
include the following provisions:
    (a) The covered entity will purchase the drug. A ``ship to-bill 
to'' procedure may be used in which the covered entity purchases the 
drug, the manufacturer bills the covered entity for the drugs that it 
purchased but ships the drugs directly to the contracted pharmacy.
    (b) The contractor will provide all pharmacy services (e.g., 
dispensing, record keeping, drug utilization review, formulary 
maintenance, patient profile, counseling). Each facility which 
purchases its covered outpatient drugs has the option of individually 
contracting for pharmacy services with the pharmacy of its choice. The 
limitation of one pharmacy contractor per facility does not preclude 
the selection of a pharmacy contractor with multiple pharmacy sites, as 
long as only one site is used for the contracted services. [The Office 
of Drug Pricing will be evaluating the feasibility of permitting these 
facilities to contract with more than one site and contractor.]
    (c) If the patient does not elect to use the contracted service, 
the patient may obtain the prescription from the pharmacy provider of 
his/her choice.
    (d) The contractor may provide the covered entity services, other 
than pharmacy, at the option of the covered entity (e.g., home care, 
reimbursement services).
    (e) The contractor and the covered entity will adhere to all 
Federal, State, and local laws and requirements. Additionally, all PHS 
grantees will adhere to all rules and regulations established by the 
grant funding office.
    (f) The contractor will provide the covered entity quarterly 
financial statements, a detailed status report of collections, and a 
summary of receiving and dispensing records.
    (g) The contractor will establish and maintain a tracking system 
suitable to prevent diversion of section 340B discounted drugs to 
individuals who are not patients of the covered entity.
    (h) Both parties agree that they will not resell or transfer a drug 
purchased at section 340B pricing to an individual who is not a patient 
of the covered entity. See section 340B(a)(5)(B). If a contract 
pharmacy is found to have violated this prohibition, the pharmacy will 
pay the entity the amount of the discount in question so that the 
entity can reimburse the manufacturer.
    (i) A covered entity using contracted pharmacy services will not 
use drugs purchased under section 340B to dispense Medicaid 
prescriptions unless the contract pharmacy and the state medicaid 
agency have established an arrangement which will prevent duplicate 
discounts/rebates.
    (j) Both parties understand that they are subject to audits (by the 
PHS and participating manufacturers) of records that directly pertain 
to the entity's compliance with the drug resale or transfer prohibition 
and the prohibition against duplicate Medicaid rebates and PHS 
discounts. See section 340B(a)(5).
    (k) Upon request, a copy of this contracted pharmacy service 
agreement will be provided to a participating manufacturer which sells 
covered outpatient drugs to the covered entity. All confidential 
propriety information may be deleted from the document.
    Covered entities which elect to utilize this contracted pharmacy 
mechanism must submit to the Office of Drug Pricing a certification 
that they have signed an agreement with the contracted pharmacy 
containing the aforementioned provisions.

    Dated: August 18, 1995.
Ciro V. Sumaya,
Administrator, Health Resources and Services Administration.
[FR Doc. 95-27032 Filed 10-31-95; 8:45 am]
BILLING CODE 4160-15-P