340B contract pharmacies.157
The 2010 guidance is clear: a “covered entity that wishes to utilize contract
pharmacy services to dispense section 340B outpatient drugs must have a
written contract in place between itself and a specified pharmacy.”158 In
exchange for being allowed greater reach through multiple pharmacy
arrangements, covered entities have the “responsibility to: ensure against
illegal diversion and duplicate discounts; maintain readily auditable records;
and meet all other 340B Drug Pricing Program requirements.”159 This
requirement represents HRSA’s compromise to allow covered entities to
reach beyond their in-house pharmacies or one outside pharmacy.160 HRSA
provided compliance elements and suggested contract clauses for contract
The proposed MegaGuidance supplements the 2010 guidance.162 The
proposed MegaGuidance would require covered entities, whose contract
pharmacy arrangements are intended to dispense to Medicaid patients, to
submit such written contracts to HHS and the State Medicaid agency or MCO
for approval prior to having the contract listed on the OPA’s website as an
extra measure of protection against the risk of duplicate discounts.163
C. Concerns with Contract Pharmacy Arrangements
In issuing its 2010 guidance, HRSA opened the door for chain pharmacies
(e.g., Walgreens, Walmart) to engage in the business of 340B drug
dispensing. Not surprisingly, the number of participating covered entities
and pharmacy sites skyrocketed.164 HRSA originally resisted contract
pharmacy arrangements because of the increased risk of diversion and other
oversight concerns. Such arrangements also invite skepticism because they
risk sullying the legislative intent of the 340B Program if the benefits –
intended for non-profit safety net providers – are being siphoned off by for-
profit chain pharmacies.165 Fortunately, many concerns about business
arrangements can be addressed through careful contracting and strong
compliance programs. Nevertheless, as with any promising business
opportunities, there will be those who take advantage of the program.
Since 2010, when chain pharmacies were first permitted to participate in
157. Id. at 10277.
159. Id. at 10277.
160. Id. at 10272–73.
161. See id. at 10277–79.
164. MEDICARE PAYMENT ADVISORY COMM’N, REPORT TO THE CONGRESS: OVERVIEW OF
THE 340B DRUG PRICING PROGRAM 10 (2015).