Get to Know 340B: Contract Pharmacies

Community health centers rely on contract pharmacies to provide medications to patients. Learn more about actions that are jeopardizing the use of contract pharmacies and the steps being taken to protect health centers.
What are contract pharmacies?
Health centers rely on in-house and contract pharmacies to ensure their patients have access to affordable medications. In-house pharmacies are pharmacies owned by the health center and are commonly co-located in the health center.1 Contract pharmacies are pharmacies owned by an organization other than the health center and are typically in a separate location from the health center.2 Many health centers rely on contract pharmacies to provide affordable medications for their patients because of their convenient locations and extended hours.3
How are contract pharmacies threatened?
Beginning in the summer of 2020, several major drug manufacturers began implementing additional restrictions on the use of contract pharmacies. Manufacturers halted shipments of 340B priced medications to contract pharmacies, limited the amount of contract pharmacies health centers could use, or made shipments contingent upon health centers sharing certain data.
How do contract pharmacy restrictions affect health centers? 
Many health centers are reliant on contract pharmacies due to the challenges associated with starting and maintaining in-house pharmacies. Even health centers with in-house pharmacies often additionally rely on contract pharmacies to expand access to medications.4 Without the ability to access contract pharmacies, health centers will be severely limited from utilizing the 340B program to provide affordable medications to patients. 
What is the latest on contract pharmacy restrictions? 
In October of 2020, the National Association of Community Health Centers (NACHC) filed a lawsuit seeking to compel the U.S. Department of Health and Human Services (HHS) to institute an Administrative Dispute Resolution process that would allow health centers to take action against manufacturers in response to restrictions on contract pharmacies. 
Near the end of 2020, HRSA took steps to implement an ADR process, consisting of a six-member board from the Centers for Medicare and Medicaid Services (CMS), the Health Resources and Services Administration (HRSA), and the HHS Office of General Counsel to hear complaints.5 The HRSA Administrator will select three-member panels to review petitions and make determinations.6 
NACHC filed a complaint under the newly established ADR process seeking relief from the contract pharmacy restrictions imposed by three drug manufacturers- Eli Lilly, AstraZeneca, and Sanofi. Due to a recent court decision, claims against Eli Lilly must be separated from the other two drug manufacturers. NACHC refiled the complaints, splitting them to comply with the court decision. Acting HRSA Administration Diana Espinoza will then appoint three members to the ADR panel to review NACHC's complaints. 
[1]  NACHC, 2018. NACHC 340B Manual for Health Centers Second Edition.
[2]  Ibid.
[3]  Ibid.
[4]  Ibid. 
[5]  "340B Administrative Dispute Resolution (ADR)". 2021.Official Web Site Of The U.S. Health Resources & Services Administration.
[6]  Ibid.



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