Reporting and Reinstatement: 340B for Contract Pharmacies

By: Heather Easterling

Read time: 6 minutes

In the wake of burdensome reporting requirements by a growing number of drug makers, covered entities and contract pharmacies are trying to navigate the not-so-simple return to 340B pricing.

New rules, new challenges: 340B pricing and contract pharmacies

In recent years, 340B Drug Pricing Program participation has been a moving target, often seeming to shift every few days. Starting in 2020, some manufacturers implemented policies that limited access to 340B pricing for contract pharmacies. By August 2022, 18 drug makers had announced restrictions on the ability of 340B providers to access discounted pricing for drugs dispensed to contract pharmacies. Most offer exemptions or a process to reinstate 340B pricing — and the currency of contract pharmacy reinstatement is claims data.

Obstacles and objections to claims reporting

As straightforward as the data-sharing requirement seems, it involves a complicated process using a third party — and notice of 340B pricing restoration can be slow to reach distributors, covered entities, and pharmacies. Covered entities continue to pay full price for medications dispensed through their contract pharmacies in the meantime.

The complexity seems at times to be deliberate, without transparency into how the process works:

• Covered entity decides to report claims data
• Information goes not to the manufacturer, but to a third-party platform that screens for 340B eligibility and pricing
• The third-party platform filters claims according to each manufacturer’s specific 340B requirements
• After confirming claims data, manufacturers contact distributors to reload 340B pricing levels for the covered entity at individual contract pharmacies
• Each manufacturer contacts the distributors through a weekly excel file identifying the pharmacy DEA and 340B ID for which restoration should occur. This is a single file going to all distributors.
• The distributor then has to sift through these data to identify their accounts for which restoration should occur. The process is manual and does not occur via the automated method standard for all other contract loads.
• Covered entities are responsible for verifying with each distributor that 340B pricing has been restored for each contract pharmacy

The process is slow, cumbersome and manual, leaving contract pharmacies basically out of the loop until the covered entity lets them know that discounted pricing has been approved, verified and reloaded. In addition to logistical concerns, pharmacy leaders may have philosophical objections about providing information they contend is not required by law.

As a distributor, McKesson is often in the position of simply not having data from the manufacturer in order to restore 340B pricing for contract pharmacies. We work with affected customers to improve efficiency but are stuck in the same convoluted system as providers.

Making the least painful choice

Disjointed claims reporting leaves covered entities that want 340B pricing reinstatement with two options, neither of which is optimal:

“See you in court.”
Simply refuse to participate in a flawed reporting process and wait for the government’s lawsuits against manufacturers to reach decision. It certainly will not provide the timely pricing relief needed.

“Just do it.”
Gather the required claims information and endure the clunky process. This, too, takes time and money. Yet the financial impact of bypassing significant discounts could prove too costly, especially since the manufacturers of frequently dispensed, high-priced specialty drugs have adopted reporting requirements.

What contract pharmacies want

The 340B Drug Pricing Program provides price relief to health systems and, as a result, allows them to provide care to patients and the community. Covered entities may not be averse to providing the information needed to authenticate their eligibility for contract pricing — but the lack of transparency in the eligibility process has caused skepticism about the motivation behind the program. Making delivery of the requested information more direct will demonstrate the program’s patient-oriented intent and benefits.

McKesson is committed to developing solutions that increase transparency and diminish complexity. We are working on solutions to automate 340B contract pharmacy reporting, building on our experience in providing efficient delivery of pharmaceuticals to health systems across the country. This process remains new and is developing. We expect that as the process matures, efficiency in the procedures will occur. Multiple channel partners including TPAs have a role to play are engaged with McKesson.

To learn more about 340B consulting options for contract pharmacies, contact McKesson.