Feeling left out of 340B?

By David Hardman, MBA 340B ACE; Jason Atlas, RPh, MBA, 340B ACE

Put your pharmacy on the path to a 340B partnership

Perhaps you’ve heard of the benefits of 340B from a friend, colleague, or pharmacy association. Maybe you’ve been trying to find a potential 340B partnership. How to become a 340B contract pharmacy is one of the most common questions our 340B Advisory Team receives. And although there isn’t an easy answer, our road map will help you understand whether 340B makes sense for your pharmacy. From there, you can identify, evaluate, and engage with the right covered entity partner.

Why not me?

Let’s start by exploring some of the reasons your pharmacy may have been overlooked. Independent pharmacies continue to make up a small portion of the total number of 340B contract pharmacies. What makes chain pharmacies so desirable are the efficiencies, standardizations, and ease of partnership that are challenging for independent pharmacies to replicate. A chain pharmacy offers multiple store locations under the same contract and dispense fee, while an independent pharmacy requires an individual contract, negotiated dispense fee, and, often, education prior to enrollment.

This simplicity makes it easy to see why 340B entities often prefer contracting with chains — the quick way to set up multiple contract pharmacies, maximizing script capture for the covered entity. Additionally, chain pharmacies offer a dedicated 340B resource that handles analytics and contracting for all store locations. For an at-a-glance comparison of chains vs. independents, refer to Figure 1 below. The differences are stark, and you can begin to understand the perceived value in prioritizing a chain network.

Figure 1:  Comparison of chain and independent pharmacies

Pharmacy type

Dispense fee

Wholesaler

Number of pharmacies

340B expert

Chain

Single

Single

5-50

Dedicated

Independent

Variable

Variable

1

N/A

 



But how do you level the playing field for your pharmacy?

First and foremost, you need to understand the basics of the 340B program — the benefits, the concerns, and whether 340B is the right decision for your pharmacy business. You can start by reviewing resources from AmerisourceBergen and Apexus to establish a foundation of 340B knowledge, with a focus on contract pharmacy. 340B concepts you should review and understand before exploring partnerships include:

  • 340B patient eligibility criteria
  • Virtual inventory and drug replenishment
  • Role of the third-party administrator (TPA)
  • Quarterly registration and contract pharmacy eligibility criteria
  • Prescription eligibility (see Figure 2 below)
  • Dispense fee models
Figure 2: Prescription eligibility

Plan

340B eligible

Considerations

Commercial Insurance

Yes

 

Medicare Part D

Yes

 

Cash

Yes

TPA capability

Medicaid FFS

No

 

Managed Medicaid

TBD

State restrictions, TPA capability, Submission Clarification Codes


Once you build your 340B foundation, you can begin your journey. Follow these three steps to put your pharmacy on the path to 340B participation.

1. Identify the right partner.

The Office of Pharmacy Affairs utilizes OPAIS, a public database that identifies all covered entities currently eligible for the 340B program. If a facility resides in this database, it is currently enrolled and eligible to participate in 340B. The search function on the OPAIS website can help you identify a covered entity near your pharmacy. A best practice would be to export a covered entity report by your state and search city or zip to identify potential partners close to your pharmacy.

While proximity doesn’t guarantee a contract pharmacy relationship, it is the first step in identifying a potential 340B partner. Once that potential covered entity is identified, you can begin evaluating your script data.

2. Evaluate your prescription data.

To warrant a partnership with a covered entity, your pharmacy needs existing third-party prescription volume (Medicare Part D and commercial insurance) from their patients. The scripts need to originate at the covered entity or an ancillary eligible location. The higher the script total associated with the covered entity, the higher the likelihood of a partnership. While cash patients are a critical component of the program, the ability to steer uninsured patients to a contract pharmacy limits the value in cash scripts (for these purposes). Generally speaking, uninsured patients may change their pharmacy preferences based on access to 340B discounts.

To confirm third-party script volume, run a top prescriber report from your pharmacy system, based on the covered entity’s provider list. If unable to identify providers, utilize address matching with the main covered entity location and any ancillary clinics. The OPAIS website can once again assist with outpatient clinic eligibility and determine which locations to include in your analysis. We recommend reviewing six months of data, if possible, to minimize fluctuations from a shorter time frame. Your report should include:

  • Total number of prescriptions
  • Brand/generic mix
  • Exclude Medicaid FFS

As a rule of thumb, we are aiming for a minimum of 50 branded scripts per month, non-specialty. Plenty of factors can move the target number, but this should provide you with conservative guardrails. Once you confirm sufficient prescription volume, you are ready to approach the covered entity.

A more thorough analysis can be completed by either the TPA or AmerisourceBergen once a complete exclusive provider panel is shared by the covered entity. 

3. Engage the covered entity. 

There are a couple of different methods to engage with the covered entity to discuss your participation in their 340B network.

  • An existing relationship. You may have a personal contact or previous collaboration with the covered entity on a different project. Use that relationship as an opportunity to initiate a 340B conversation.
  • An OPAIS search. Search the database, find the 340B Primary Contact (see Figure 3 below), and connect directly with the individual that oversees the covered entity’s 340B program. This individual will be familiar with the process of adding a pharmacy and how to evaluate your script data.
  • An external party. The AmerisourceBergen 340B Advisory Team or a TPA can help broker a discussion. Often, a covered entity is working with a TPA to help with pharmacy evaluation and contracting. Contact the TPA directly to determine if the covered entity is considering expansion of their network and the process of establishing a relationship.
Figure 3: 340B Primary Contact in OPAIS search result

Using this road map provides a great start to your 340B journey. Once you complete your initial education, you’ll have the skills to identify potential partners, evaluate your 340B prescription volume, and engage with the right stakeholders at the covered entity.

340B Advisory Services

Find out how AmerisourceBergen enables independent pharmacy owners to navigate the complexities of the 340B program


About the Authors

David Hardman, MBA 340B ACE

Director, 340B Enterprise Strategy and Solutions
AmerisourceBergen
View Bio

Jason Atlas, RPh, MBA, 340B ACE

Vice President, 340B Enterprise Strategy & Solutions
AmerisourceBergen
View Bio