Health Systems Should Better Integrate Pharmacy Arrangements


Ideally, these contracts help address criticism of the 340B program, improve patient outcomes, and increase compliance.

Nine in 10 large hospitals operate a specialty pharmacy, and most of these pharmacies also participate in the federal 340B drug pricing program.1,2 Health system pharmacies participating in the program often use external contract arrangements to expand the reach of their offerings. Thirty-thousand pharmacy locations—nearly half the US pharmacy industry—participate as 340B contract pharmacies.3 Health systems often initiate these arrangements to expand access to payer contracts and increase the number of covered individuals who can participate in 340B programs. Focusing on contracts is an important consideration for health systems that expand the reach of some or all of their pharmacy services in this way. Nevertheless, focusing exclusively on payer contracts may cause health systems to miss opportunities for improving patient engagement and outcomes and for enhancing 340B compliance. Let’s review considerations beyond insurance contracts for 340B contract pharmacy partners and examine how health systems can better integrate their pharmacy arrangements to address criticism of the 340B program, improve patient outcomes, and increase 340B compliance.

Selecting a Program Partner

Organizational culture has long been understood to affect business failure or success.4 A toxic culture can affect turnover, hurt productivity, and reduce profitability.5 In health care, organizational culture has been shown to significantly affect patient experience and outcomes.6 To understand and promote a positive culture, health care leaders should examine areas where patients, service users, and staff members interface.7 In the case of buyer-supplier relationships in which a supplier acts as an extension of the organization, experts agree that cultural compatibility is an important component affecting the success of business relationships.8 Resources are available for organizations seeking to evaluate the cultural compatibility of their business partners. Jerry Ledlow, PhD, dean of the School of Community and Rural Health at The University of Texas at Tyler, and Karl Manrodt, PhD, a professor of logistics in the Department of Management at Georgia College & State University, developed a compatibility and trust assessment that examines cultural fit across 5 areas: communication, focus, innovation, team orientation, and trust.8

Given the potential for regular interaction with employees and patients,
the culture at a contract pharmacy is an important consideration for any health systems expanding their 340B programs or working to better integrate pharmacy services. The majority of 340B contract pharmacy arrangements are held by the nation’s largest retail pharmacies and the mail order/specialty pharmacies owned by large pharmacy benefit managers (PBMs).3 These organizations may hold contracts important to the health system, but their culture and patient-level experience may not always align with the goals and standards of mission-driven covered entities (CEs).

The nation’s largest retail pharmacies are increasingly dealing with a workplace culture dominated by fatigue and stress. Pharmacists and pharmacy technicians in the retail setting report high levels of burnout, with many indicating that they are fearful for patient safety.9 At the same time, patient sentiment toward the largest PBMs has reached a new low. Research from Consumer Affairs indicates that the number of patient complaints across the largest PBMs skyrocketed in 2021. These complaints included authorization, billing, customer service, and fulfillment issues.10 Market research also indicates that distrust often occurs between health systems and payers or PBMs. Payers view health systems as incentivized to keep revenue within their organizations, whereas health systems view payers as prioritizing market ownership over patient care.11 Big box pharmacies and PBMs have been accused of using their influence to increase profits at the expense of safety net providers participating in 340B programs.12

“Insurance contracts are often top of mind for health systems expanding their 340B programs,” said Ted Traurig, vice president of specialty pharmacy operations for independently owned BioMatrix Specialty Pharmacy. “It is by far the No. 1 question that comes up, but contracts are not the only way a pharmacy can create value for a covered entity.”

Traurig notes that independent pharmacies often provide more engaged, high-touch services in line with the culture and values of mission-driven organizations. “In my experience, independents offer a more focused, customized level of service and are more open to negotiation than some of our counterparts,” he said.

Pharmacy Services

Health systems using contract pharmacy arrangements should identify opportunities to better integrate services with program partners to promote positive patient outcomes and strengthen 340B compliance. Integrating pharmacists as key members of the health care team has been shown to positively affect patient outcomes and satisfaction, particularly among those who take specialty medication for chronic, difficult-to-treat, or rare conditions.13 Health systems in the United States face ongoing staffing shortages.14 Integrating pharmacists can decrease the burden for health care providers without compromising clinical care.14 CEs across the country are finding unique ways to integrate their 340B pharmacy teams and leverage cost savings from the program to enhance and improve patient care.15 A federally qualified health center in Pennsylvania assembled a multidisciplinary team, including a contract 340B pharmacy, to tackle a pervasive public health issue: hepatitis C. Working together, the team successfully designed a program that achieved an 87.2% treatment success rate in a high-risk population without an onsite gastroenterologist or hepatologist. The primary roles of the contracted 340B pharmacy were facilitating medication refills, identifying and mitigating drug-drug interactions, and obtaining prior authorization approvals.

Administrative and Support Services

CEs and contract pharmacies should work together to better integrate administrative and support services to promote patient engagement and program integrity. CEs maintain primary responsibility for their program’s compliance with Health Resources and Services Administration (HRSA) and Office of Pharmacy Affairs (OPA) 340B guidelines. A competent contract pharmacy partner will provide active and direct support for HRSA/OPA compliance, in addition to comprehensive intake, billing, and collection services. “Contract pharmacies also hold important dispense data that should be analyzed regularly to promote compliance, enhance cost savings, and identify areas of opportunity,” said Sabine Enright, director of 340B services at BioMatrix Specialty Pharmacy.

Apexus is the prime vendor for the 340B program. The organization has developed many resources, including self-auditing tools to evaluate program partners based on their ability to promote 340B program integrity.16 Using resources from Apexus, CEs and their pharmacy partners should actively develop systems and workflows demonstrating and promoting program integrity.

In addition to administrative and clinical services, many specialty pharmacies provide nonclinical patient-level support, including patient navigation designed to promote positive self-management and reduce barriers to care. This type of assistance can provide a strong value-add for CEs. Effective patient navigation has been shown to help individuals with chronic health conditions miss fewer doctor appointments, maintain insurance coverage, and obtain timely medication refills.17

Addressing Critics, Creating Synergies, Improving Outcomes

Contract pharmacy arrangements are a hot-button issue in the 340B landscape. Critics posit that the 340B program needs more transparency and stronger government oversight while asserting that patients see little benefit from the program.18 Health systems should work with their contract and in-house pharmacy partners to increase visibility around measures taken to promote program integrity while tracking and communicating the outcomes and value of their 340B programs. For more successful business relationships, CEs should think beyond managed-care contracts and seek partnerships where culture, patient experience, and values align with strategic priorities. Working together, health systems and integrated 340B program partners can create synergies that address criticism, enhance program integrity, and improve outcomes.

Justin Lindhorst, MBA, is marketing director/regional care coordinator at BioMatrix Specialty Pharmacy in Plantation, Florida.


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