In 2020, multiple pharmaceutical manufacturers announced they would be implementing major restrictions on 340B pricing discounts offered to contract pharmacies across the United States. These restrictions are the result of changes in how manufacturers interpret the 340B Drug Discount Program since its inception in 1992. The original goal of the program was to assist hospitals that routinely cater to uninsured patients, undocumented immigrants, and other vulnerable populations not already benefiting from Medicaid.

Unlike Medicaid discounts, which are typically applied when contract pharmacies dispense medication to a Medicaid patient, 340B discounts are applied on a portion of the drugs a hospital buys from a wholesaler and keeps in inventory. The Medicaid and 340B programs were not designed to overlap due to the fact each targets different vulnerable populations.

The recent announcements and corresponding actions by top drug manufacturers aim to eliminate duplicate discounts (1), which occur when inventory, purchased with a 340B discount, is also submitted for a Medicaid rebate, causing the manufacturer to pay two discounts on the same drug. According to some reports, as much as 25% of 340B and Medicaid discounts overlap (2).

Over the past 10 years, the number of covered entities (i.e., hospitals, clinics) eligible for 340B discounts increased 34% to 13,000. During that same time period, the number of contract pharmacies on the 340B eligibility list has skyrocketed 1,700% to 23,000 (3). This expansion of contract pharmacies in the 340B program is the primary concern for manufacturers as contract pharmacies are where the bulk of Medicaid discounts are applied.

Manufacturers placing restrictions on 340B access for contract pharmacies also now creates challenges for many covered entities that depend on contract pharmacies to dispense 340B drugs and serve these vulnerable patient populations. These challenges place an undue burden on individuals already experiencing barriers to high-quality healthcare.

New challenges in 340B Contract Eligibility Alignment

Prior to these announcements, drug manufacturers did not distinguish between covered entities and contract pharmacies when approving 340B discounts, making it simple for manufacturers to align with wholesalers on who gets 340B pricing. There was no need for a system capable of managing 340B exceptions. That has now changed.

Multiple manufacturers in 2020 started with a blanket ban for contract pharmacies in an attempt to rectify the duplicate discounts problem. However, the populations the 340B program aims to serve have been negatively impacted by this ban, which is not what manufacturers or anybody else want.

To both serve these populations and rectify the duplicate discounts problem, manufacturers are taking on the herculean task of manually determining, maintaining, and sharing detailed 340B contract eligibility lists with wholesalers. As more manufacturers implement different processes for 340B eligibility, wholesalers will take longer and longer to update pricing, leading to more and more chargeback errors and extremely poor customer service outcomes for all.

Real-time Alignment on 340B Contract Exceptions

Fortunately, there is a comprehensive solution to aid drug manufacturers in this challenge of determining and managing 340B program eligibility with wholesalers. A new add-on to the Contracts & Chargebacks solution on the MediLedger Network will enable manufacturers to customize eligibility exceptions for each 340B covered entity and synchronize these eligibility lists in real-time with wholesalers. The MediLedger Network is the leading blockchain-based pharmaceutical industry network, helping companies build automation and manage revenue between them and their trading partners.

There are three primary components to this add-on solution for managing 340B exceptions: Automation, Customization, and Communication.

Automation

The solution integrates the entire 340B HRSA database and, based on eligibility rules each manufacturer chooses within MediLedger, automatically places and maintains covered entities in contracts. Changes to the database are updated in real-time, and contract pharmacies stay tied to covered entities while enabling flexibility for how different manufacturers choose to include contract pharmacies in contracts.

Customization

Through MediLedger, manufacturers can select contract pharmacies for each covered entity as global exceptions to be included in any contract in which the covered entity is included. This gives manufacturers the flexibility to be very specific about how 340B discounts are given. Contract pharmacies also can be granted eligibility on a per-contract basis depending on each manufacturer’s contract rules and policies.

Communication

Through the MediLedger Network, contract eligibility information is shared and synced in real-time with wholesalers. That means wholesalers can follow any policy changes or shifts in the 340B data in real-time, enabling agility and adaptability as manufacturers update their 340B discount policies going forward. Wholesalers also eliminate guesswork around eligibility and pricing and no longer have to spend resources resolving chargeback errors or disputes.

As discussions around 340B regulations and manufacturer policies continue to change, hospitals and pharmacies serving vulnerable populations should not have to contend with any additional pricing complexities or delays. We are excited to help drive efficiency and improve this process for everyone.

To learn more about the MediLedger 340B eligibility add-on, visit www.chronicled.com or contact us at contact@chronicled.com.

1 — https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4699484/

2 — https://www.gao.gov/assets/720/711209.pdf

3 — https://www.gao.gov/assets/710/703966.pdf

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