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340B Contract pharmacy growth by pharmacy ownership: 2009-2022
Claire McGlave1, John P Bruno2, Elizabeth Watts1
1Division of Health Policy and Management, University of Minnesota, Minneapolis, MN 55455, United States.
Health Affairs Scholar
|May 17, 2024
Summary
The 340B drug pricing program significantly involves large retail pharmacy chains, with 71% participating as contract pharmacies. These chains manage more contracts and serve patients farther away, highlighting their key role in dispensing discounted outpatient drugs.
Area of Science:
- Health Economics
- Pharmacy Practice
- Public Health Policy
Background:
- The 340B drug pricing program enables eligible healthcare organizations to purchase outpatient drugs at reduced prices.
- Contract pharmacies are essential partners for covered entities in dispensing these discounted medications.
- Understanding pharmacy participation patterns is crucial for program integrity and patient access.
Purpose of the Study:
- To analyze contract pharmacy participation in the 340B program based on pharmacy ownership types.
- To compare contract prevalence, number of contracts, service distances, and provider affiliations across different pharmacy categories.
Main Methods:
- Categorization of pharmacies into four ownership groups: top 4 chains, grocery chains, small chains, and institutional independent pharmacies.
- Analysis of 340B contract pharmacy data for the year 2022.
- Comparison of participation rates, median contract numbers, median farthest contract distance, and proportion of contracts with safety-net providers.
Main Results:
- In 2022, 71% of top 4 chain pharmacies, 41% of institutional pharmacies, 38% of grocery pharmacies, and 22% of independent pharmacies were contract pharmacies.
- Top 4 chains and grocery pharmacies had a median of 2 contracts, while others had 1.
- Top 4 chains (19 miles) and small chains (18 miles) had the largest median distances to covered entities; independent and institutional pharmacies had the smallest (10 miles).
- Top 4 chains had a higher proportion of contracts with core safety-net providers (75%) compared to institutional pharmacies (61%).
Conclusions:
- Large retail pharmacy chains are heavily involved in the 340B program as contract pharmacies.
- Pharmacy ownership significantly influences participation levels, contract volume, and geographic reach within the 340B program.
- The findings suggest a concentrated role of major chains in serving safety-net providers and dispensing 340B drugs over extended distances.
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