How Will the 340B Program’s Growth Affect Community Pharmacies?

By Kevin Schweers

Since its creation in 1992, the 340B discount prescription drug program has continued to expand and provisions in the new health care reform law, as well as a “tax extenders” bill pending in Congress, will grow the 340B program’s reach further still. What does it mean for independent community pharmacies?

Is 340B expansion a threat as lax or ambiguous eligibility guidelines allegedly permit well-insured patients to purchase their medication outside of community pharmacies and at taxpayer-subsidized prices that should be reserved for the uninsured and truly indigent? Or are 340B programs a new opportunity for community pharmacies to contract with qualified entities to serve additional patients and to receive a reasonable dispensing fee? Or both?

To help independent community pharmacists navigate these waters, NCPA recently hosted a teleconference for 100+ local pharmacists with two leading experts. Paul Shank, the Consultant Coordinator for the U.S. Health Resources and Services Administration’s Pharmacy Services Support Center (PSSC), and David Schwed, President of Woodruff’s Drugs in Bridgeton, N.J., spent an hour sharing their views and answering questions.  The discussion was part of NCPA’s Member Forum series – pharmacist-to-pharmacist discussions that allow NCPA members to learn first-hand about major topics like accreditation for Medicare’s Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) program, immunizations, new technology, etc.

Among the issues Messrs. Schwed and Shank covered on the 340B call:

  • Contracting with a disproportionate share hospital (DSH), rural hospital, federal health center or other qualified 340B entity can and must be a win-win for the 340B program and the pharmacy before the pharmacy signs that contract.
  • The “one pharmacy per site” rule has been changed, allowing covered entities to contract with more than one local pharmacy.
  • There are 14 different types of 340B entities and that list is expanding.
  • Some independent pharmacies may need outside administrative help, but beware of pharmacy benefit manager-type structures that seek to get between the 340B entity and the pharmacy and can be gamed by the middleman. Third-party contracts in this area must be carefully reviewed, ideally with the help of a health care attorney and/or a pharmacy services administration organization, or PSAO.
  • 340B partnerships can be about more than the dispensing fee. Some pharmacies work with the physicians and others to provide comprehensive services and get involved with patient safety initiatives.


These experts also addressed other key 340B questions such as:

  • A 340B entity in my area has contracted with another pharmacy in the area. What can I do?
  • Do current pharmacy software programs support 340B transactions?
  • When can someone with commercial health insurance also use the 340B program?
  • How can my pharmacy receive technical advice from HRSA’s Pharmacy Services Support Center?
  • Can pharmacists be reimbursed for medication therapy management (MTM) services under a 340B arrangement?
  • Why have 340B programs migrated to a replenishment inventory model? Is a separate inventory model practical?

To hear a replay of the conference call and view the presentation, NCPA members can go to, log into the Members Only section and click on the Member Forum link. Previous Member Forum discussions are available for download there as well. Or for more, contact NCPA’s Bill Popomaronis or Lisa Fowler. And, on the regulatory side, clarifying the 340B program’s eligibility requirements continues to be a priority for NCPA and something we’re working on with Congress and HRSA, the agency that oversees the program.

5 Responses to “How Will the 340B Program’s Growth Affect Community Pharmacies?”

  1. 1 AReliableSource July 29, 2010 at 12:12 pm

    Thanks for the concise update on the looming expansion of the 340B program which while designed to lower actual acquisition costs for a wide variety of health care providers that service the indigent and under-served populations is now primed for utilization by anyone who is a “patient” of the affected entities. Assuming the 340B entities do not pass through savings to those with insurance, there should be no competitive advantage for them vis a vis independent pharmacies, however, it is also quite likley the lower actual acquisition actual costs associated with 340B drug purchases through wholesalers which are charged back to drug manufacturers for rebates to net the acquisition cost back down to the Medicaid Net/340B price will operate to subsidize in-house or 340B contract pharmacies and relatively disadvantage non-house independently owned and operated pharmacies and chain pharmacies as well who are not benefitted by the government subsidy.

    The sane and thoughtful advocacy of the NCPA and NACDS are necessary and vital if we are rationalize the 340B program which was never intended to disadvantage community pharmacies-however, we are witnessing the largest expansions of federally funded healthcare programs since 1965. As much of the expansion is under-funded, our elected officials have a fiduciary duty to safe guard the public coffers/ Kudos to NCPA and NACDS for their past advocacy. Keep up the good work!

  2. 2 steve Zielinski RPh October 17, 2010 at 1:19 pm

    The benefits that a 340B Technology Company such as SUNRx brings to the table allows 340B covered entities to remain 340B compliant while eliminating a separate process for dispensing and tracking then has been attempted since the introduction of the 340B contract pharmacy model in 1996. Patient eligibility, inventory management, revenue certainty are assured with SUNRx technology. 340B covered entities are finding it impossible to create a multi-contract pharmacy arrangement without a “PBM-like” management facilitator. The opportunity is enormous for independent pharmacists to work locally with the entities (Critical Access Hospitals, Federally Qualified Health Centers, Disproportionate Share Hospitals, etc)in their areas and solidify a relationship preventing erosion of their current business by others who are thinking of the future.

  3. 3 trish January 27, 2012 at 7:07 am

    To be a pharmacist I am suprised you always side with the PBM. They are what have eliminated the independent pharmacy.

  4. 4 Richard Thibodeau February 3, 2012 at 4:04 am

    Can 340b force me away from my pharmacy ? DO I have still have freedom of choice ?

    • 5 ncpa1 February 7, 2012 at 2:45 pm

      It depends on your particular health plan. A plan could be structured in such a way as to include only 340B providers resulting in patients having to go to a 340B provider and pharmacy to avoid out-of-pocket expenses. Technically, the patient still has the choice to go to another pharmacy and pay for their prescriptions out of pocket, without the 340B discount. But a health plan structured such as the hypothetical one mentioned above, creates financial hurdles that significantly undermine the patient’s freedom of choice. NCPA sees a number of problems with the 340B program that need fixing.

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