Ventura County Medical Center 340b Drug Pricing Program

VCMC was audited by HRSA in 2015. The results of the audit revealed VCMC was in violation of the 340B program in five major areas, including receiving duplicate discounts on 340B program medications. After the HRSA audit, VCMC was required to pay back money to pharmaceutical companies and placed on probation by the OPA. (Ref-01)

There are approximately 500 hospitals in the state of California in the 340B program, 95% of those hospitals are in compliance. (Ref-02)

VCMC implemented a corrective action plan in July 2015. VCMC is using the same in-house personnel to monitor and audit the 340B program after the HRSA audit. (Att-02)

VCMC uses an outside contractor, Verity Solutions, for the billing of 340B drugs. While it was hired in 2012, Verity Solutions was not fully functional until 2015. During this time period, VCMC was also using a GPO for billing. (Att-02) 2 VCMC 340B Program

The simultaneous use of two billing entities resulted in VCMC claiming duplicate discounts. Duplicate discounts occur when companies sell drugs at a discount under the 340B program to VCMC and then VCMC also claims Medicaid rebates on the same drugs. (Ref-01)

VCMC has completed negotiations with 23 pharmaceutical companies. The original amount owed these companies was $2.1 million. As a result of the negotiations, VCMC was able to reduce their repayment to $861,000. VCMC is still in negotiation with two other pharmaceutical companies over a potential repayment of $428,000. (Att-01)

Nineteen pharmaceutical companies forgave the duplicate discounting and are not requiring repayment of $361,000. (Att-01)

There are 53 pharmaceutical companies who have been unresponsive to date. The potential amount owed is $976,000. (Att-01)

VCMC had no controls in place to ensure proper accumulation and to avoid improper diversion of 340B drugs.

With increased Congressional interest, the federal government is likely to scrutinize the 340B program, calling for more audits and justification on how the program money is spent. (Ref-03) Conclusions C-01. The Grand Jury concluded there was not proper oversight of the VCMC 340B program prior to the 2015 HRSA audit. This has resulted in VCMC reimbursing pharmaceutical companies at least $861,000 and potentially as much as $1.6 million. (FA-01, FA-02, FA-03, FA-06, FA-07, FA-08) C-02. The Grand Jury concluded that before the 2015 HRSA audit, there were few controls in place in the 340B program and no checks to see if VCMC was in compliance with HRSA. (FA-01, FA-02) C-03. The Grand Jury concluded that the extensive corrective action plan created for the VCMC 340B program after the 2015 HRSA audit appears to have adequate safeguards to prevent duplicate discounting in the future. (FA-04, FA-05) C-04. The Grand Jury concluded while VCMC conducts its own in-house audits of the 340B program, more critical audits should be conducted by an independent outside party. (FA-03, FA-09) C-05. The Grand Jury concluded the federal government is likely to demand VCMC track its use of 340B money and program savings. (FA-10) Recommendations R-01. The Grand Jury recommends VCMC consider bringing in outside resources with extensive 340B program experience to assist in the supervision of the corrective action plan. (C-01, C-02, C-03) VCMC 340B Program 3 R-02. The Grand Jury recommends VCMC request the Ventura County Auditor- Controller conduct regular compliance audits of the 340B program. (C-03, C-04) R-03. The Grand Jury recommends VCMC continue in-house audits and share all results and recommendations with employees and the public. (C-03, C-04) R-04. The Grand Jury recommends VCMC study the management, personnel, and operational changes necessary to ensure the violation-free operation of the 340B program. (C-01, C-02) R-05. The Grand Jury recommends that VCMC establish a system to track how the money from the 340B program is used, as this is likely to be a subject of future Congressional interest. (C-05) Responses Responses Requested From: Ventura County Health Care Agency, Ventura County Medical Center (C-01, C-02, C-03, C-04, C-05, R-01, R-02, R-03, R-04, R-05) References Ref-01. Health Resources & Services Administration, Program Integrity: FY15 Audit Results. https://www.hrsa.gov/opa/program-integrity/audit- results/fy-15-audit-results.html Accessed April 19, 2018 Ref-02. 340BHealth, 340B Hospitals in California https://www.340bhealth.org/files/CA.pdf Accessed April 19, 2018 Ref-03. Ellen Weaver and Lindsay Boyd. The Hill. June 15, 2016. States tell Congress: stop hospital abuse of federal drug discount program. http://thehill.com/blogs/congress-blog/healthcare/283491-states-tell- congress-stop-hospital-abuse-of-federal-drug Accessed April 19, 2018 Attachments Att-01. Pharmaceutical Company Repayment Att-02. Cover Letter VCMC Corrective Action Plan 4 VCMC 340B Program Glossary TERM DEFINITION DSH Disproportional Share Hospitals FQHC Federally Qualified Health Care GPO Group Purchasing Organization Grand Jury 2017-2018 Ventura County Grand Jury HRSA Health Resources and Service Administration VCMC Ventura County Medical Center VCMC 340B Program 5 Attachment 01 Pharmaceutical Company Repayment 6 VCMC 340B Program Drug manufacturers that confirmed that they do not participate in 340B Drug Pricing Program 5 Drug Manufacturers Amerinet BTG International Cetylite Industries Inc. Gordon Laboratories Nestle Total Amount Owed: $0 No contact information available 5 Drug Manufacturers Claris Lifesciences Inc. $ 838.48 Medimetriks Pharmaceuticals Inc. $ 520.81 Fagron $ 114.75 VI Jon Inc. $ 41.45 22nd Century Nutritional $ 2.51 Potential total amount owed $1,518.00* *VCMC considers these matters closed. Drug manufacturers who participate in the 340B Drug Pricing Program must register with HRSA. No such registration could be identified and a web browser search resulted in no findings. Complete forgiveness granted or no repayment owed 19 Drug Manufacturers Amount Forgiven Theracom $ 318,807.10 Mallinckrodt LLC $ 27,578.30 Jazz Pharmaceuticals $ 6,210.68 Cumberland Pharma Rx $ 2,537.18 Ferndale Laboratories Inc. $ 2,372.98 Wallace Pharmaceuticals $ 1,460.29 GE Healthcare $ 1,033.54 ECI Pharmaceuticals LLC $ 677.33 Halozyme Inc. $ 531.05 Alvogen Inc. CS $ 217.43 County Line $ 188.91 Prestium Pharma Inc. $ 133.56 Rhodes Pharmaceuticals $ 88.06 Edenbridge Pharmaceuticals $ 70.93 Sigmapharm $ 67.90 Plus Pharma Inc. $ 50.93 Molnlycke Healthcare $ 15.67 Sanofi-Pasteur $ 0 Allergan Inc. $ 0 Total Amount Forgiven: $ 361,008.30 VCMC 340B Program 7 Completed Negotiations 23 Drug Manufacturers Original Amount Owed Final Amount Owed Hospira $ 569,088.55 $ 130,893.65 Eli Lilly and Company $ 358,590.23 $ 63,436.65 Sanofi-Aventis US LLC $ 286,294.79 $ 44,596.95 Baxter Healthcare Corp. $ 236,292.42 $ 96,797.79 AstraZeneca $ 212,553.24 $ 212,553.24 Astellas $ 97,577.27 $ 97,577.27 Chiesi $ 58,679.71 $ 28,921.22 Grifols Biologicals Inc. $ 49,766.36 $ 20,040.00 Sagent Pharmaceuticals Inc. $ 45,540.27 $ 45,540.27 Accord Healthcare Inc. $ 25,872.17 $ 25,872.17 Sandoz Inc. $ 22,211.26 $ 22,211.26 W G Critical Care $ 20,560.21 $ 2,100.00 Johnson & Johnson $ 20,309.77 $ 15,232.33 X-Gen Pharmaceuticals Inc. $ 19,900.61 $ 19,900.61 Perrigo Co. $ 15,878.89 $ 6,799.98 Theravance $ 13,719.64 $ 6,850.00 Bayer Healthcare $ 12,357.96 $ 115.11 Nephron Pharmaceuticals Corp. $ 7,068.68 $ 7,068.68 Heritage Pharmaceuticals Inc. $ 6,585.93 $ 3,500.00 Lannett Company Inc. $ 4,971.36 $ 3,000.00 CMP Pharma Inc. $ 3,501.09 $ 1,750.55 Shire Inc. $ 1,277.59 $ 765.74 Leadiant (fka Sigma-Tau) $ 5,939.89 $ 5,939.89 Total Amount $2,094,537.89 $861,463.36 Negotiations in Process 2 Drug Manufacturers Potential Amount Owed Pfizer Inc. $ 339,999.59 GlaxoSmithKline $ 87,854.71 Total Potential Repayment Owed: $ 427,854.30 Drug Manufacturers Unresponsive To Date 53 Drug Manufacturers Potential Amount Owed Akorn $ 125,696.30 CSL Behring $ 112,617.42 Valeant Pharmaceuticals $ 95,236.13 Marathon Pharmaceuticals Inc. $ 75,566.93 American Regent Laboratories $ 75,399.29 West-Ward Pharmaceuticals $ 60,770.02 Teva Pharmaceuticals USA $ 58,997.53 Sun Pharmaceuticals Industries Inc. $ 55,791.04 Par Pharmaceutical $ 49,881.09 Amedra Pharma $ 39,724.95 Novo Nordisk $ 33,188.48 (Unresponsive) UCB Pharma Inc. $ 31,934.19 8 VCMC 340B Program Dr. Reddy’s Laboratories Inc. $ 17,963.54 Pharmaceutical Associates Inc. $ 16,381.87 AuroMedics Pharma LLC $ 15,315.04 Merck $ 14,555.65 Covis $ 11,379.78 Actavis Pharma $ 10,397.95 Braintree Labs. $ 10,344.21(Unresponsive) Warner Chilcott $ 8,866.93 Patriot Pharm $ 7,999.10 B. Braun $ 7,737.87 Taro Pharmaceuticals, USA $ 5,280.89 Amneal Pharmaceuticals $ 4,734.59 Arbor Pharmaceuticals $ 4,111.30 Upsher Smith Labs. $ 3,577.92 (Unresponsive) Gravis Pharma CS $ 3,094.26 Avkare Inc. $ 3,048.75 Safecor Health $ 2,523.63 Acella Pharmaceuticals $ 2,310.96 Exela Pharma Sciences $ 2,240.31 US Worldmeds LLC $ 1,747.20 Octapharma USA SPD $ 1,296.74 CB Fleet Co. Inc. $ 1,238.24 Arzol Chemical Co. $ 965.07 Jacobus Pharmaceuticals Co. $ 774.05 Emergent Biosolutions Inc. $ 756.05 Global Pharm Impax Labs. $ 681.23 Silvergate Pharma Inc. $ 456.19 Teligent $ 337.26 Iroko Pharmaceuticals $ 283.40 Century Pharmaceuticals $ 280.98 Watson Actavis OTC $ 194.24 HUB Pharmaceuticals $ 187.89 Solco Healthcare US $ 131.82 Beach Pharmaceuticals $ 95.22 Focus Health Group $ 71.50 Pharmacarable LLC $ 34.76 Camber Pharma CS $ 24.79 Graham Field Surgical $ 21.05 Boca Pharmaceuticals $ 7.90 Mason Vitamins $ 1.22 BLU Pharmaceuticals $ 0.75 Total Potential Repayment Owed $976,258.47 VCMC 340B Program 9 Attachment 02 Cover Letter VCMC Corrective Action Plan 10 VCMC 340B Program VCMC 340B Program 11 12 VCMC 340B Program VCMC 340B Program 13 14 VCMC 340B Program