July 17, 2017

One in Four U.S. Pharmacies is Now a 340B Contract Pharmacy

Drug Channels published an article titled, “One in Four U.S. Pharmacies is Now a 340B Contract Pharmacy.” The article reads in part as follows;

“As part of Drug Channels’ ongoing coverage of the 340B drug pricing program, I want to highlight our new analysis showing that the 340B drug pricing program continues to expand at a breakneck pace.

More than 15,300 pharmacy locations now have 35,000 contract pharmacy agreements with 340B covered entities. That accounts for nearly a quarter of total U.S. retail, mail, and specialty pharmacy locations. Walgreens still dominates, but its share is shrinking as CVS, Rite Aid, and Walmart pile into the market.

This dramatic growth, combined with pharmacies’ 340B profit opportunities, makes me wonder how 340B networks could be undermining payers’ network pharmacy models.

Tomorrow, I’ll explain how a very small minority of hospitals may be disrupting traditional managed care contracting strategies with large 340B mega-networks.

For background on 340B contract pharmacies, I highly recommend the new AIR340B report The Impact of Growth in 340B Contract Pharmacy Arrangements.

To profile the 340B contract pharmacy market, Pembroke Consulting examined the Health Resources and Services Administration’s (HRSA) Contract Pharmacy Daily Report, as published on July 1, 2014. We screened out all contracts that were terminated earlier than 6/30/14 (n=10,466). Then, we classified pharmacies by parent organization. For instance, our analysis classified Duane Reade and Happy Harry’s pharmacies as Walgreens pharmacies.

The number of contract pharmacies keeps rising. (See chart below.) As of July 1, 2014, there were 4,801 340B entities with 35,343 contract pharmacy relationships. We counted 15,330 unique pharmacy locations, which account for 25% of total U.S. retail, mail, and specialty pharmacy locations.”

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