For-Profit Pharmacy Participation in the 340B Program

In March 2010, the Health Resources and Services Administration (HRSA) expanded guidance allowing 340B covered entities to establish contract pharmacy arrangements with an unlimited number of pharmacies.

What started as a well-intentioned effort to provide safety-net providers free or discounted drugs to treat uninsured and vulnerable patients appears to have evolved into a profit-centric corporate initiative that has fundamentally altered the 340B program. Today, half of the twenty largest for-profit corporations in the United States—including Walgreens, Cigna, CVS Health, and Walmart—are active participants in the 340B program through contract pharmacy arrangements. Using vertically integrated supply chains consisting of pharmacies, pharmaceutical benefit managers (PBMs), and health plans, these corporations can leverage their market power to drive growth in the 340B program and capture profits related to 340B sales.

In light of this evolution in the 340B program, BRG professionals conducted this analysis to better understand historical trends in 340B contract pharmacy arrangements, the increased participation of for-profit corporations in the 340B program, average profit margins on 340B purchased medicines dispensed through contract pharmacies, and the potential impact of growth in 340B contract pharmacy participation.

This study was funded by the Pharmaceutical Research and Manufacturers of America.