Thursday, March 03, 2016

Challenges for Managed Care from 340B Contract Pharmacies

The Journal of Managed Care & Specialty Pharmacy (JMCP) has just published my peer-reviewed commentary Challenges for Managed Care from 340B Contract Pharmacies. (Free download.)

As I highlighted last week, the 340B Drug Pricing Program continues its astounding growth. My JMCP commentary explains how the corresponding growth of 340B contract pharmacies raises troubling issues for third-party payers, pharmacy benefit managers, and other managed care participants.

I highlight four crucial ways in which 340B contract pharmacies are disrupting third-party payers’ strategies—whether or not payers realize what’s going on around them. To mitigate these challenges, I argue that managed care should become much more involved in discussions about how the 340B program should be reformed and modernized. Caveat payor!

Read on for the full abstract. Feel free to post comments below.


The federal 340B Drug Pricing Program has expanded rapidly, with important yet still unmeasured impact on both managed care practice and policies. Notably, providers increasingly rely on external, contract pharmacies to extend 340B pricing to a broad set of patients. In 2014, 1 in 4 U.S. retail, mail, and specialty pharmacy locations acted as contract pharmacies for 340B-covered entities.

This commentary discusses crucial ways in which 340B growth is affecting managed care pharmacy through formulary rebates, profits from managed care paid prescriptions, disruption of retail pharmacy networks, and reduced generic dispensing rates. Managed care should become more engaged in the discussion on how the 340B program should evolve and offer policy proposals to mitigate the challenges being encountered. There is also an urgent need for objective, transparent research on the 340B program’s costs, benefits, and implications for managed care pharmacy and practice.

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