WASHINGTON – Today, U.S. Senator Bill Cassidy, M.D. (R-LA), ranking member of the Senate Health, Education, Labor and Pensions (HELP) Committee, is seeking information from major contract pharmacies as part of his ongoing investigation into how health care entities use and generate revenue from the 340B Drug Pricing Program.
According to the Health Resources and Services Administration (HRSA), 340B covered entities may choose to distribute 340B drugs to patients through contract pharmacies. In 2010, HRSA issued guidance allowing 340B covered entities to contract with an unlimited number of pharmacies, leading to a dramatic increase in the number of participating pharmacy locations. Between 2009 and 2022, the number of 340B retail pharmacy locations grew from 789 to 25,775, an approximately 3,166 percent increase. The dramatic increase in the use of contract pharmacies led the Department of Health and Human Services (HHS) Office of Inspector General and other federal oversight bodies to question the integrity of the 340B Program and whether patients were receiving the program’s intended benefits.
Currently, the 340B Program serves as a source of revenue for many contract pharmacies. According to the Drug Channels Institute, contract pharmacies can earn 25 to 35 percent of total 340B discounts.
Given that CVS Health and Walgreens are the two largest 340B contract pharmacy participants, Cassidy is requesting information to understand how these companies generate revenue from 340B, and how, or if, that revenue results in direct benefits for patients.