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More Contract Pharmacy Restrictions

  • 1.  More Contract Pharmacy Restrictions

    Posted 06-07-2024 08:26
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    Update from Colleen Meiman, National Policy Advisor for State & Regional Associations of Community Health Centers-6-7-2024

    Unfortunately, there's more bad news to share on the contract pharmacy (CP) front.  Yesterday, the drug maker Sanofi – a major manufacturer of insulin -- significantly tightened its restrictions on CHCs' use of CPs, including placing unprecedented restrictions on CHC-owned off-site pharmacies. 

    Background:  Sanofi was one of the first three drugmakers to impose CP restrictions, starting in October 2020.  Since then, Sanofi has allowed CHCs to use unlimited CPs if they submitted data to ESP.  To date, CHCs have also been able to designate a single CP for each care delivery site without an in-house pharmacy.

    New rules effective July 1, 2024

    1.     Sanofi is ending the option for CHCs to receive 340B pricing at an unlimited number of CPs in exchange for submitting data to ESP.  (This leaves Gilead and Novo Nordisk as the only manufacturers who still allow CHCs to avoid CP restrictions by reporting data to ESP.)

    2.     CHCs who own one (or more) of their own pharmacies are ineligible to receive 340B-priced Sanofi drugs at any contract pharmacy.

    3.     CHCs who do not own a pharmacy that is co-located within a care delivery site registered on OPAIS can designate a single contract pharmacy to receive 340B-priced drugs.  These CHCs:

    ·       will not be required to submit data to ESP for this CP, and

    ·       must designate their single CP on ESP as soon as possible – even if they have already designated a CP.  It appears that all current CP designations will soon be erased.

    4.  Sanofi distinguishes between two types of CHC-owned pharmacies: 

    ·       those that are co-located at a CHC care delivery site registered on OPAIS ("CHC-owned on-site"), and

    ·       those that are stand-alone ("CHC-owned off-site").  

    Sanofi effectively treats CHC-owned off-site pharmacies as CPs, making them ineligible to receive 340B-priced drugs unless the CHC:

    • has no on-site pharmacies and
    • designates its CHC-owned off-site pharmacy as its single CP location. 

    This is very concerning precedent, as it marks the first time that any manufacturer (or other stakeholder) has sought to limit access to 340B drugs at CHC-owned pharmacies.

    5.     Going forward, Sanofi will consider all a CHC's care delivery sites together as constituting a single covered entity (CE.)  This means that the strategy of registering one pharmacy (in-house or contract) for each CHC delivery site will no longer work for Sanofi. 

    I am attaching the letter that Sanofi sent to CHCs (and other covered entities.)  Collen will be talking today with several stakeholders in the hopes of better understanding why Sanofi is targeting CHC-owned off-site pharmacies, and what recourse CHCs may have.  We will share once we learn more. 

    Paula Straub
    Director of Pharmacy Services
    Kentucky Primary Care Association
    Frankfort KY
    (502) 545-0989