Three things to know about 340B contract pharmacies

Large pharmacy chains have found ways to financially benefit from the 340B program with little to no benefit to patients. How? In 2010, a misguided policy change enabled 340B hospitals to contract with an unlimited number of for-profit retail pharmacies without meaningful oversight.

Here are three things to know about 340B contract pharmacies:

1. Not improving access for vulnerable patients. While one might expect to find 340B contract pharmacies located in medically underserved neighborhoods to help vulnerable patients access medicines, that isn’t the case. Studies have found the exponential growth in contract pharmacies from 2011 to 2019 was concentrated in affluent and predominately white communities, and not in areas with high unmet need where expansion could help improve health equity.

2. Dominated by large, publicly traded companies. The majority of 340B contract pharmacy arrangements are with for-profit chain pharmacies. Among the top four retail pharmacy chains (Walmart, CVS, Rite Aid and Walgreens), an incredible 71% of locations held 340B contracts in 2022. Walgreens has previously warned investors that policy changes meant to rein in contract pharmacy abuses would reduce the company's profits. CVS Health has admitted the same.

3. Not addressing affordability challenges. There is no clear evidence that 340B hospitals and their contract pharmacies use 340B profits to help lower costs for patients. Rather, contract pharmacies and hospitals generate profits sometimes by charging vulnerable patients the full non-340B price for their prescriptions. An in-depth analysis of claims for brand medicines distributed at 340B contract pharmacies found the vast majority of patients received “zero or close to zero” discount on the cost of their medicines even though the medicines were purchased through the 340B program at a steep discount.

These for-profit entities and their affiliates have found their way into the 340B program to capture profits that could otherwise have been used to lower drug costs for low-income and vulnerable patients. Congress should put an end to the abuse of this important safety net program and put it back on track for the patients it was meant to assist.