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340B Insight Podcast

Episode Twenty-Eight: Addressing Payer-Mandated White Bagging of Drugs

June 7, 2021

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This week, we are joined by Kyle Robb, a state policy and advocacy associate for the American Society of Health-System Pharmacists (ASHP). Kyle discusses the rise in payer-mandated white bagging, why hospital pharmacists are concerned about the trend, and how health providers and patients are affected by this model. Before the interview, our news update covers the critical step the Health Resources & Services Administration (HRSA) recently took to enforce the law on drug companies that have refused discounts to 340B covered entities when drugs are dispensed at contract pharmacies. (Transcript)

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Show Notes

  • The Differences Between White Bagging, Brown Bagging, and Clear Bagging Kyle explains that clinician-administered drugs typically are distributed under the “buy-and-bill” model, where the provider purchases the drugs, administers them to the patient, and bills the health insurance plan. Under the white-bagging model, the drug is purchased through a specialty pharmacy affiliated with the insurance  plan, shipped via common carrier to the hospital or clinic location, and reimbursed via the pharmacy benefit, not the medical benefit. Brown-bagged drugs are purchased through the affiliated pharmacy and reimbursed under the pharmacy benefit as well, but those are mailed directly to the patient, who must bring the drugs to their clinic appointments. Clear bagging describes a situation in which the drug is purchased and distributed by a pharmacy under common ownership with the administering facility. 
  • The Harm That Payer-Mandated White Bagging Can Cause White bagging adds external entities into the patient care process, creating more complexity in patient care coordination. Kyle explains that when facilities receive white-bagged drugs, they have no access to the drug pedigree information or to the same security protocols they have when receiving drugs from their wholesale partners. White bagging also can disrupt the administering facility’s ability to make “just-in-time” treatment decisions, can delay hospital discharges, and can cause unnecessary hospital admissions if a patient cannot receive their drug in time. Drug shortages, delivery delays, and mishandled shipments also can result in serious patient safety concerns.
  • White Bagging’s Impact On 340B Discounts and Covered Entities 340B covered entities do not receive 340B discounts on white-bagged drugs, as the drug is purchased through plan-affiliated pharmacies and not through the administering facilities’ wholesale partners. Kyle explains that in addition to these lost savings, hospitals can incur additional costs, as they must store, segregate, and prepare the drugs for specified patients prior to administration without additional reimbursement. White bagging consumes additional hospital resources and can lead to more medication waste.
  • Payers’ Rationales for White-Bagging Mandates Payers believe white bagging saves them money. However, ASHP argues that the money is not saved but rather shifted to the providers. Payers can reduce their net drug costs by capturing more reimbursements through vertically integrated, plan-owned specialty pharmacies and pharmacy benefit managers (PBMs).
  • How ASHP Is Addressing Payer-Mandated White Bagging ASHP’s position is that white bagging never should be forced on facilities and always should be a choice for the provider and patient to use in limited circumstances when patient safety can be ensured. Kyle shares that his association is advocating against the payer-mandated white bagging model at both the federal and state levels. It is urging the Food & Drug Administration (FDA) to require that administering facilities have access to drug pedigree information on white-bagged drugs. ASHP also is engaging with state legislatures and state boards of pharmacy on settling legal questions about which entity is responsible for white-bagged drugs that are mishandled. ASHP is working with states to pass patient-choice protections to prohibit insurance companies from forcing white bagging and is advocating to ban the unsafe practice of brown bagging.

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  1. 340B Health statement on HRSA May 17 letters to drug companies

  2. 340B Health member update on contract pharmacy court cases

  3. ASHP statement on payer-mandated white bagging