patients a sliding fee scale discount on services.217 Further, under Section
330, community health centers are prohibited from offering discounts to third
parties.218 This requirement is triggered in the fee structure of contracts with
pharmacies and third party benefits managers.219 Both of these Section 330
requirements are discussed in greater detail under the reimbursement and
(iv) Obligations of the Pharmacy Section
Obligations of the pharmacy include the very purpose for the agreement,
which is the dispensing of 340B drugs to eligible patients. To accomplish
this, pharmacies need to provide 340B drug inventory maintenance services
to track 340B drug dispensing and replenishment.220 Commonly, pharmacies
will use virtual inventories to manage their supply.221 It is highly
recommended that covered entities meet with pharmacy staff to receive a
demonstration of how that pharmacy runs its inventory and accounts for its
medications.222 Pharmacies should represent in the contract their agreement
to maintain a tracking system capable of: tracking 340B drugs received from
the wholesaler; preventing the diversion of 340B drugs to non-eligible
individuals; and verifying that such diversion has not occurred.223
(v) Reimbursement and Billing Section
Payment terms are always instrumental to an arrangement. For 340B
contract pharmacy agreements, the covered entity may pay pharmacies a
dispensing fee and third party benefit managers an administrative fee.
Typically, these fees are flat fees, but there is a trend towards percentage-
based fees. Percentage-based fees are generally disfavored by covered
entities. As a practical matter, it is hard to justify a pharmacy earning more
money for dispensing an expensive drug rather than a cheaper drug given the
filling of the prescription entails an equal amount of skill and labor.
Moreover, passing on 340B drug discounts to a pharmacy or vendor is
arguably prohibited by: ( 1) the 340B Program; ( 2) the Internal Revenue
Code; and ( 3) Section 330 of the Public Health Service Act that governs
217. 42 U.S. C. § 254(b)(k)( 3) (2010) (detailing the requirements for a successful Section
330 health center).
218. See id.
219. See id.
220. Notice Regarding 340B Drug Pricing Program, supra note 206, at 10275 (“Inventory
and record segregation is one of the many methods that can be used to ensure compliance with
the program guidelines.”).