340B Provider Groups Protest Two PBMs’ Reimbursement Policies

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October 6, 2011—Groups representing 340B providers have asked pharmacy benefits manager (PBM) Prescription Solutions to stop insisting that the groups’ members sign a contract addendum that would force them to hand over much of their 340B savings.

In a Sept. 21 letter to the PBM, the four groups—Hemophilia Alliance, the National Association for Community Health Centers (NACHC), the National Association of Public Hospitals and Health Systems (NAPH) and Safety Net Hospitals for Pharmaceutical Access (SNHPA)—took issue with contract language that would reimburse their members’ 340B pharmacies at rates significantly lower than those offered to non-340B pharmacies.

“Not only is this rate well below the rate that Prescription Solutions offers to pay its non-340B participating pharmacies, it would essentially rob 340B providers of most of the 340B discount to which they are entitled under federal law,” the 340B groups said. The contract addendum is “discriminatory and inconsistent with the 340B program,” they said, and Prescription Solutions should discontinue its use immediately.

On Aug. 5, the groups sent a separate letter to the Office of Pharmacy Affairs (OPA) protesting a contract addendum that Argus Health Systems has been sending to the groups’ members. If executed, they said, it would limit the pharmacies’ 340B reimbursement to the drug’s actual acquisition cost (AAC) plus a $2.00 dispensing fee. Not only is the Argus rate well below the rate that Argus offers to non-340B pharmacies, it also would require covered entities to disclose their 340B ceiling price to Argus in violation of federal confidentiality standards, the groups wrote. Although the Prescriptions Solutions addendum does not pose this confidentiality concern, it nevertheless undermines the purpose of the 340B program, the 340B groups say.

“Reimbursement under the [Argus] contract addendum would be insufficient to cover dispensing and other overhead costs and would consume nearly all of the pharmacy margins that 340B providers rely on to underwrite their safety net activities,” the groups said in their letter to OPA. “340B providers would receive reduced reimbursement on every prescription filled with 340B drugs, amounting to millions of dollars in lost revenue and eroding their capacity to continue offering pharmacy services to low income populations.”

Other members of the 340B community have also expressed concern about PBMs offering lower reimbursement rates to 340B pharmacies.

“Providers, manufacturers, and Congress should be concerned about these discriminatory contracts because they undermine the intent of Congress to support safety net providers through the 340B program,” said Billy Tauzin, the former chairman of the House Energy and Commerce Committee who is now a senior executive and director of 340B services company Capture Rx. “If these parties are taking the discounts, safety net providers are being denied them. Congress may well have an interest in preventing such an abusive practice.”