Contract with an Outside Pharmacy
340B eligible clinics can contract with a community pharmacy to dispense medications purchased through the PHS 340B Drug Pricing Program.
Contracted Pharmacies are pharmacies that are licensed, owned, or operated by chain or independent drug stores rather than by the health center.
The pharmacy signs a contract with the health center to provide all of the pharmacy services for the health center. The health center purchases
and maintains overall responsibility for the 340 B drugs but contracts with the pharmacy for the services related to ordering, dispensing, and
Only one pharmacy site per covered entity may be used for 340B contract pharmacy
Current Opportunities for Contracting With a Retail Pharmacy to Dispense 340B Drugs
In California, community clinics and County Health Systems outpatient clinics have developed
contract pharmacy arrangements with both independent and chain pharmacies. For example, one county uses a third party
adjudicator to transfer patient eligibility information to the pharmacies, to provide the county with claims information
and to pay the dispensing fee. The county has assumed responsibility for tracking patient eligibility, monitoring pharmacy
dispensing history and ordering drugs.
From the chain pharmacy perspective, one such company has developed a purely electronic model that
fully meets the 340B statutory regulations. Features of this model include electronic inventory separation and a choice
Contract Pharmacy FAQs
Medpin, working with attorney Cary Adams
of Murphy, Austin, Adams, Schoenfeld LLP, has developed the following
questions and model contract for clinics considering taking advantage
of this new California law. Click here for our Sample
Who owns the 340B drugs?
The drugs are owned by the eligible clinic which is responsible for
paying for the drugs when purchased from the distributor, and is
entitled to receive any unused inventory at the end of the contract.
The clinic is also responsible to make sure that the drugs are not
diverted to ineligible patients and that, if dispensed to Medicaid
patients, that Medicaid is charged only the cost plus dispensing fee.
What is a ship to / bill to arrangement?
The order submitted to the supplier will indicate that the drugs
should be shipped to the pharmacy and billed to the clinic.
How does the clinic establish its initial inventory?
If a separate physical inventory of 340B drugs is to be maintained,
the clinic and pharmacy should agree at the outset as to what volume
of which drugs to maintain as a standing inventory, and the first
order will establish this inventory. If an electronic inventory
is to be maintained, the clinic and pharmacy may determine not to
build an initial inventory, and instead to order replacements each
day/week/month for the 340B drugs dispensed. Or a combination of
these is possible, but an accurate inventory is essential at all
times. The costs will depend entirely upon the volume of pharmaceuticals
covered, but the costs under the 340B Program should be lower than
prices otherwise available.
Sample Model Contract »