Association between 340B contract pharmacy growth and payer-specific drug coverage

Area of Science:

• Health Economics
• Pharmaceutical Policy
• Healthcare Market Analysis

Background:

• The 340B Drug Pricing Program allows eligible healthcare organizations to buy outpatient drugs at reduced prices.
• Covered entities utilize these savings to offer discounted drugs to patients or generate subsidies.
• Contract pharmacies play a significant role in distributing 340B drugs, accounting for a substantial portion of sales.

Purpose of the Study:

• To analyze the market characteristics and geographic distribution of contract pharmacies used by 340B covered entities.
• To investigate trends in contract pharmacy growth over the past decade.
• To understand the correlation between contract pharmacy location and payer mix.

Main Methods:

• Linking contract pharmacy location data with Managed Market Surveyor data.
• Describing the markets where 340B covered entities establish contract pharmacies.
• Analyzing trends in contract pharmacy prevalence from 2010 to 2021.

Main Results:

• The mean share of pharmacies dispensing 340B drugs in a county rose from 1.5% in 2010 to 43.7% in 2021.
• Contract pharmacy growth showed a positive correlation with Medicare and Medicaid coverage.
• The association with Medicaid coverage was strongest in states permitting 340B drug dispensing to Medicaid patients via contract pharmacies.

Conclusions:

• Covered entities, particularly hospitals, strategically locate contract pharmacies in markets that maximize 340B program subsidies.
• The expansion of contract pharmacies is significantly influenced by the presence of government-sponsored insurance programs.
• State policies regarding Medicaid patient access to 340B drugs through contract pharmacies impact pharmacy distribution patterns.