340B Spotlight: Rapid growth of contract pharmacies

Last week we covered the basics around contract pharmacies in the 340B program. Today we’re taking a closer look at contract pharmacies as a relatively new source of growth in the program.

Contract pharmacies allow hospitals and other 340B entities to capture 340B discounts for prescriptions filled at for-profit, retail pharmacies. While these contract pharmacy arrangements were originally allowed only for entities without an in-house pharmacy, beginning in 2010 HRSA allowed an unlimited number of contract pharmacies for all 340B entities. This policy change was made without any requirement that patients benefit from the 340B discounts at the pharmacy. In fact, recent evidence from government investigators suggests that often hospitals and retail pharmacies split the profits from the 340B discounts, without patients seeing any benefits.

Despite the lack of any guaranteed benefit for patients, the number of 340B contract pharmacy arrangements has increased dramatically since 2010, even as the number of patients without prescription medicine coverage has declined.

The location of these contract pharmacies is also a cause for concern. According to a study from The Alliance for Integrity and Reform (AIR340B), a coalition of patient and provider organizations and biopharmaceutical innovators of which PhRMA is a member, the majority of contract pharmacies are located in wealthier neighborhoods, which calls into question whether they are truly  helping needy patients.

Now is the time to ensure that the 340B program is helping underserved patients access medicines, not padding the bottom line of large hospitals and for-profit pharmacies.  Check out our new chart pack and AIR340B’s white paper for more information.