Get to Know 340B: The Latest on Contract Pharmacy Restrictions

Drug manufacturers continue to implement new restrictions on contract pharmacies that interfere with the ability of health centers to provide medications to their patients.Read on to learn more about how these actions harm health center patients:
Health centers purchase outpatient medications at a discount through the federal 340B drug pricing program and invest all savings into patient care.  Savings from the 340B program ensure health centers can provide affordable medications and comprehensive services to all patients, regardless of their ability to pay.  
Why are contract pharmacies so important to health centers? 
Community health centers provide a comprehensive array of services including pharmacy services, through in-house and contract pharmacies. A portion of health centers, 56% nationally, own and operate in-house pharmacies.1 Not all health centers operate in-house pharmacies and those that do also tend to rely on contract pharmacies. Eighty-six percent of health centers contract with independent or chain pharmacies in their communities, which often provide patients with convenient hours and locations to obtain their medications.2 
What is the latest on manufacturer restrictions on contract pharmacies? 
Last week, another drug manufacturer announced it would restrict the shipment of 340B-priced medications to contract pharmacies for health centers, compounding on a concerning trend that began in 2020. Eight manufacturers now restrict the shipment of 340B-priced medications to contract pharmacies for health centers. 

Under these policies, manufacturers typically allow a health center that does not operate an in-house pharmacy to ship 340B-priced medications to a single contract pharmacy. These restrictions severely limit access to medications because most health centers rely on multiple contract pharmacies, ranging from 1 contract pharmacy to more than 50.3 Twenty-four percent of health centers rely on 1-4 contract pharmacies, while 20% rely on 10-25, and 14% use 50 or more to deliver medications to patients.4 

Manufacturers often also present health centers with the option to provide claims data to them in exchange for having no restrictions placed on the use of their contract pharmacies. If health centers provide data to manufacturers, there are several concerns about how the information will be used by other parties. Providing the data could lead to an expansion in ‘pick-pocketing' practices by third parties like Pharmacy Benefit Managers (PBMs) that allow them to retain the savings intended for health centers. There are also concerns about what other parties could access to the data and implications in the event of a data breach. Responding to the data requests would also impose a significant administrative burden on health center staff, as health centers contend with workforce shortages.  
What is the impact on health centers and their patients? 
Contract pharmacy restrictions hinder the capacity of health center to provide comprehensive services and affordable medications to their patients. Many different drugs have been affected due to actions by manufacturers including drugs for diabetes, asthma, Hepatitis C, among others. Health centers have already been making tough choices when it comes to switching patients from one medication to another in response to previously announced restrictions from other manufacturers. 
What can you do to protect 340B? 
 Although Congress has repeatedly sent letters to the U.S. Department of Health and Human Services (HHS) expressing concern over these developments, federal legislation is needed to combat these practices, but no bill has yet been introduced. We must continue to educate policymakers at the state and federal level about the importance of the 340B program to health centers and their patients and urge them to take legislative action to protect the program. 
[1]  National Association of Community Health Centers. (2022). 340B: A Critical Program for Health Centers. Retrieved from 
[2]  Ibid.
[3]  Ibid.
[4]  Ibid.



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