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Get to Know 340B: Latest on Contract Pharmacy Restrictions

 
Another major drug manufacturer recently imposed contract pharmacy restrictions on health centers, further limiting access to affordable medications for patients. Read on to learn more about the contract pharmacy restrictions and what federal action is needed.
 
The federal 340B drug pricing program allows health centers to purchase outpatient medications at a discount and invest the 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.  
 
What is the latest on contract pharmacy restrictions? 
The U.S. Department of Health and Human Services (HHS) recently issued a response to letter signed by 181 members of the House of Representatives in July, urging HHS to take action against drug manufacturers for their refusal to ship 340B-priced medications to contract pharmacies. In the past, HHS had sent letters to drug manufacturers, warning them they could be subject to civil monetary penalties referring several manufacturers to the Office of Inspector General (OIG). Beyond the authority of HHS, Congressional action is needed to address the use of contract pharmacies more explicitly.  

Since 2020, an increasing number of drug manufacturers have restricted health centers' ability to utilize contract pharmacies, pharmacies that are owned by an entity other than the health center.1 Manufacturers have limited shipments of 340B-priced medications to one contract pharmacy, when most health centers rely on multiple contract pharmacies to expand access to medications for their patients. According to a report from the National Association of Community Health Centers (NACHC), health centers rely on a range of contract pharmacies, from 1 to more than 50.2 Twenty-four percent of health centers rely on 1-4 contract pharmacies, 17% on 5-9, 20% on 10-25, 10% on 25-50, and 14% on 50 or more.3   

Manufacturers imposing restrictions have also made shipment of 340B priced medications to contract pharmacies contingent on health centers turning over certain claims data, raising a host of concerns about how the data could be utilized to further harm health centers.  

Yet another manufacturer's restrictions went into effect on September 1, making it the eighth drug manufacturer to impose contract pharmacy restrictions on health centers. As more medications are subject to restrictions, health centers will find it increasingly difficult to identify alternative medications for their patients. 
 
What can Congress do? 
Congress has sent several letters to the U.S. Department of Health and Human Services since 2020, urging HHS to take action against drug manufacturers.

The July 2022 letter urged HHS to fine drug manufacturers who are refusing to ship 340B-priced drugs to contract pharmacies. The bi-partisan letter was signed by 181 House members, including Representatives Burchett (R-2), Fleischmann (R-3), Rose (R-6), and Cohen (D-9).

Although Congress has sent multiple, bi-partisan letters to HHS, legislation is needed to address contract pharmacy restrictions more comprehensively. Congress has introduced legislation to prevent the practice of discriminatory reimbursement and protect 340B entities but has not introduced legislation specific to contract pharmacy restrictions.  
 
How You Can Help 
Congress must pass legislation to combat harmful practices by drug manufacturers, and ensure health centers can utilize contract pharmacies to provide medications to their patients. Contact your members of Congress today and urge them to support the 340B program.  
 
 
 
[1]  NACHC, 2018. NACHC 340B Manual for Health Centers Second Edition.
[2]  National Association of Community Health Centers. (2022). 340B: A Critical Program for Health Centers. Retrieved from https://www.nachc.org/wp-content/uploads/2022/06/NACHC-340B-Health-Center-Report_-June-2022-.pdf
[3]  Ibid.
 
 
 

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