September 19, 2023

As 340B Contract Pharmacy Dispute Drags On, Covered Entities Need Alternatives

There is no bigger issue in 340B today than the dispute between drug manufacturers and covered entities over the role and scope of contract pharmacies in expanding the reach of the discount drug program. It’s a challenge that is forcing covered entities to think strategically about how they can offset their losses in other ways.

To date, more than two dozen of the world’s biggest drug companies have restricted access to 340B drugs at contracted retail pharmacies, citing concerns over Medicaid duplicate discounts and the rapid growth in the scale of the program.

Since Eli Lilly announced the first restrictions amid the COVID-19 outbreak in mid-2020, it’s been a pile-on by the drug industry, which has brushed aside a series of enforcement letters from HRSA and protests from safety net providers. The policies have sparked several court battles that have so far delivered mixed results for covered entities — and crucially, no orders directing manufacturers to stop the restrictions.

While the 340B world hopes for a positive resolution from the courts or Congress, the restrictions are taking a huge bite out of covered entities’ program savings and their ability to support critical safety net health services for their communities. While many covered entities initially held out on sharing data with the drug makers, many relented as the policies wore on and more manufacturers followed suit.

They’ve also created plenty of administrative headaches for covered entities.

While the policies vary by company, most require covered entities to hand over pharmacy claims data using the third-party platform 340B ESP in exchange for being allowed to dispense 340B drugs at a single contract pharmacy (assuming they lack an in-house pharmacy of their own). More recently, many manufacturers have made things more complicated, with rules about where these single contract pharmacies can be located (the popular 40-mile radius from the parent site) or how far back they will allow claims to be dated to be reclassified as 340B-eligible (typically 45 days).

There is considerable variation within the manufacturer policies, creating technical challenges for the covered entity. Some of the drug makers have even made submitting claims data voluntary, calling into question their rationale for making it a requirement in the first place.

Add it all up, and it’s a lot for a cash-strapped nonprofit hospital to keep track of and manage —  especially in light of industry-wide staffing shortages and when studies suggest the restrictions are having major financial implications for 340B entities.

RxTrail can help you manage the evolving requirements and keep valuable contract pharmacy savings flowing, including by setting up your pharmacy claims feeds with 340B ESP and managing the platform’s many technical challenges, and working with your TPA to ensure the proper NDCs are excluded from split billing. We can also discuss alternative strategies to make up some of the lost benefit, including:

  • Capturing 340B referrals
  • Developing a more robust retail and specialty pharmacy network
  • Helping set up and launch a wholly owned retail pharmacy to capture more 340B benefit

The contract pharmacy situation presents major challenges for covered entities, but we’re here to help. Contact us to learn more about our services and how we can help. We’d love to learn more about your organization and your needs.

Interested in learning more?

Reach out to us today to start a conversation.

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