December 14, 2020

Recent 340B Contract Pharmacy Troubles and the Necessary Solution

By Alaa “Al” Ziad Haidar, Esq., MPH, Hudson Headwaters Health Network, Queensbury, NY

Introduction

The 340B Drug Pricing Program (340B Program) has served to make drugs more affordable and available to lower-income Americans. Under the 340B Program, which is administered by the U.S. Department of Health and Human Services (HHS) through its agency, the Health Resources and Services Administration (HRSA),1 drug manufacturers are required to sell their covered outpatient drugs at or below the “340B ceiling price.”2 One method of dispensing drugs through the 340B Program which has become more frequent involves covered entities (government-funded facilities providing healthcare to lower-income Americans)3 contracting with pharmacies to dispense drugs purchased through the 340B Program.4 The savings and revenue that covered entities generate from participation in the 340B Program - including by means of contract pharmacy arrangements - largely go towards improving healthcare availability to vulnerable patient populations, increasing healthcare services offered to such populations, and improving outcomes. This underscores how crucial it is for many covered entities to participate in the 340B Program. 

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