Working in healthcare means no two days are ever the same!
Policies, procedures, and payment models shift as new technology is developed, as new politicians and federal agency leaders come and go and as we learn how to increase efficiencies or accommodate unprecedented situations such as COVID-19. In this shifting landscape, it’s only natural that the 340B program, and the ways in which covered entities engage with the program, has evolved as well.
For years, covered entities received savings from the 340B program largely by contracting with retail pharmacies. The brick and mortar storefronts in their local communities provided the most benefit for covered entities in the early years of the program.
In the past five or six years, however, there’s been a significant uptick in hospitals contracting with specialty pharmacies. Specialty drugs are different from other prescription medications in a few ways:
- Often prescribed to treat rare or complex health conditions
- Generally higher cost
- Sometimes have additional wholesaler requirements
- Usually shipped to the patient or administered in a clinical setting (such as oncology infusion drugs)
- Do not have brick-and-mortar locations where patients pick up the medications
Because specialty drugs — and relationships between hospitals and specialty pharmacies — are slightly different when compared with non-specialty medications and retail pharmacies, it’s worth exploring the nuances of what to know, what to look out for and the pros and cons of those relationships.
So, you have a specialty pharmacy contract … what now?
There are a few special concerns and processes covered entities should be aware of once they’ve established a relationship with a specialty pharmacy:
Request wholesaler accounts — for each contract with a specialty pharmacy, a covered entity needs a designated account with the specialty pharmacy division of their wholesaler (usually Cardinal, ABC, or McKesson). Without this, the covered entity will not be able to replenish most of the specialty drugs that the pharmacy is dispensing, because those drugs are not on the regular wholesaler drug catalog.
Additionally, it’s important for covered entities to alert their wholesaler of the specialty items they need added to the price catalog, or to reach out to the manufacturer/third-party vendor to request access and replenishment permissions.
Review HRSA notices for information regarding specialty drugs and limited distribution plans — HRSA compiles and posts notices from pharmaceutical manufacturers that dictate which specialty pharmacies fill and replenish which specialty drugs. The manufacturer makes the determination on which specialty pharmacies they choose to have relationships with, and often has specific requirements or processes that covered entities must be aware of in order to replenish those drugs.
The manufacturer notice may share not only which one or two specialty pharmacies the drug must be filled through, but also how covered entities should contact them with replenishment requests, information on package configurations (for example, a 30-day supply of 300mg tablets), and more. If a covered entity does not check this website regularly for changes in replenishment policies, they may run into challenges where they are not receiving the drugs they need and expect.
Contracting with specialty pharmacies — pros and cons
There are, of course, benefits and downsides of contracting with specialty pharmacies. The higher cost of specialty drugs means that potential 340B savings is higher as well, and covered entities can, therefore, earn more saving with fewer pharmacy contracts. However, specialty drugs have a higher dispensing fee than other medications. Additionally, insurance companies, not covered entities, decide which specialty pharmacies patients must use to fill their drugs; meaning there’s no guarantee it will be the specialty pharmacy that the covered entity has contracted with.
Working with specialty pharmacies can be complex, but having a 340B management and compliance partner to help you navigate the nuances can make all the difference.