This week, I’m rerunning some popular posts while I work on the forthcoming 2020-21 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors. Click here to see the original post and comments from July 2020.
I'm rerunning this post to provide context for manufacturers' recent actions regarding 340B contract pharmacies. The “SUBREGULATORY MISCHIEF” section below explains crucial background.
Yesterday, Eli Lilly announced that its products can be dispensed only at covered entities and their child sites, but not via external pharmacies. However, Lilly will permit its insulin to be dispensed from 340B contract pharmacies—as long as patients receive the discounted 340B prices of $0.03 per 3 mL pen or $0.10 per 10 mL vial. Amazing.
It’s time for our annual look at the 340B Drug Pricing Program’s booming pharmacy component.
Our exclusive analysis of government data finds that 28,000 pharmacy locations—almost half of the U.S. industry—now act as contract pharmacies for the hospitals and other healthcare providers that participate in the 340B program. Over the past 12 months, the number of pharmacies in the program has grown by more than 3,300 locations.
As you will see below, multi-billion-dollar, for-profit, publicly traded pharmacy chains—Walgreens, CVS, Walmart, Rite Aid, Kroger, and Albertsons—continue their unchecked 340B expansion.
Despite this astonishing growth, the contract pharmacy component does not have—and has never had—a regulatory infrastructure. That’s because the subregulatory notice that created contract pharmacies wasn’t subject to any rulemaking procedures. Eli Lilly recently challenged this notice, which forced the government to concede that its own pharmacy guidance is “not legally enforceable.”
As you review our analysis, ponder why manufacturers still comply with HRSA’s non-binding guidance—and why investors remain unconcerned with the risks of public companies’ participation in the out-of-control 340B program.
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