Based on our experience, it’s a claim we can make with 100% certainty.
Since 2019, when ProxsysRx launched its 340B Support Services division, we’ve managed the 340B programs of 18 health systems. Altogether, we’ve generated more than $500 million in 340B Savings and Revenue for those health systems — $98M in the first 10 months of 2023 alone. Since the 2020 advent of manufacturer restrictions, while the average 340B hospital’s revenues have decreased significantly, the 340B revenue of every hospital we serve has increased.
How have we increased 340B revenue under manufacturer restrictions?
For a multifaceted answer to that question, click here to learn how ProxsysRx quadrupled one 340B entity’s savings & revenue in a single quarter. We’ve published multiple other posts explaining how we’ve managed to overcome manufacturer restrictions.
That said, here is one fundamental issue we haven’t previously discussed:
Optimizing the quality and number of your 340B eligible contract pharmacies
The simple truth is, we’ve never served (or seen) a 340B health system with adequate in-house resources to do just that. The typical number of quality 340B contract pharmacies we’ve added to the networks of health systems we serve is five to ten. , and with those increased numbers has come an increase in 340B contract pharmacy revenue. In countless instances, we’ve identified solid contract relationships with pharmacies located within walking distance of the hospitals. For the network of one health system in South Carolina, we’ve added nearly thirty contract pharmacies in two years — and we’re still adding more.
What’s so complicated about identifying and adding 340B contract pharmacies to a health system’s network?
“After all,” any reasonable 340B hospital administrator would have to ask, “why can’t I just pick-up the phone and call all the potentially-eligible contract pharmacies in my area — then add the good ones to my network?” As any experienced professional will tell you, “sales” (for lack of a better term) ultimately comes-down to the number of calls you make. And in truth, that’s partly how we’ve done it for the health systems we serve. At the same time, by this post’s publish date, our 340B team is 13 professionals strong — and everyone on the team is trained to make those calls to pharmacies. What’s more, we make those calls armed with reams of data analytics that we’ve been compiling since we launched our 340B services. Analytics to which we continue adding data on a weekly (sometimes daily) basis.
Factors to consider for your 340B contract pharmacy network
Pharmacy fees
For starters, you have to consider the fees a pharmacy charges to process your 340B prescriptions. Pick a pharmacy mismatched to your hospital’s dispensing patterns, and you could easily end-up spending more in fees for them than they generate for you in 340B savings.
Pharmacy fee structures, and your resulting 340B contract pharmacy revenue, can vary wildly. And not just from independent pharmacy to independent pharmacy, but even among different locations within the same pharmacy chain. For instance, one health system we serve has 15 CVS stores in its local market — and we’ve determined that only six of those pharmacies make good 340B contract pharmacy matches with the hospital’s dispensing patterns.
TPA fees | TPA compatibility with your 340B contract pharmacies
In addition to pharmacy fees, TPAs often charge for simply attempting to process 340B prescriptions — whether they’re eligible or not. We know of one TPA that charges 30¢ for every attempt. Now imagine you have a TPA like that, and their processing procedures are badly mismatched for a pharmacy in your network — where thousands of otherwise-eligible 340B prescriptions aren’t being allowed every month. That 30¢ fee can add-up quickly — let alone the significantly greater losses you incur, due to the missed savings opportunities.
340B Manufacturer restrictions
Many manufacturer restrictions limit 340B replenishment for certain medications to just one pharmacy per health system. Pick the wrong 340B contract pharmacy for a particularly costly manufacturer-restricted 340B drug that your providers routinely prescribe, and the consequences for your savings and revenue can be catastrophic.
Negotiated pricing for specialty drugs
Fees from specialty pharmacies also vary for 340B prescriptions. Some charge cost-plus percentage, some charge flat rates. If your health system has a strong buying history with a specialty pharmacy, you may be able to negotiate with them for better pricing.
For instance, ProxsysRx recently added a specialty pharmacy to the 340B network of a health system we support in South Carolina. Given our existing relationship with the pharmacy — not to mention the buying power that came with the number of other hospital networks in which we’ve placed them — we were able to negotiate a flat rate (rather than a percentage) for their pricing. Which, we project, will save the health system $400,000 in the first year alone.
PBM relationships. One example.
Most specialty pharmacies are owned and operated by PBMs. And if, for example Caremark is your PBM, you have to go to a CVS specialty pharmacy to get 340B savings on specialty drugs. A lot of hospitals don’t realize that — and again, it’s because they simply don’t have access to the data we’ve collected using our resources.
Educating your physicians on best practices
In addition to all the challenges hospitals have in identifying and partnering with eligible contract pharmacies, they simply don’t have the human resources necessary to educate their physicians about which pharmacies to use for which patients and which prescriptions (all of which adds up to untold thousands, if not millions, in lost 340B savings and revenue. Once again, ProxsysRx provides that service for the health systems we serve.
Analytics + Manpower + Restriction Know-How + Buying Leverage
In summary, the number of contract pharmacies is critical to optimizing your hospital’s 340B savings and revenue — but clearly, there is a LOT more to the equation than just pharmacy numbers. “To use an old metaphor,” says 340B Optimization Manager Chance Spivey, “it’s important to cast a wide net when you’re looking for contract pharmacies, but it’s just as important to use a net that’s capable of pulling-up fish.” All of which begs the question: How confident are you really that your health system’s contract pharmacy network is everything it should be?
Capturing 340B savings with onsite pharmacies — retail and specialty
ProxsysRx has built-and-owned or managed hospital pharmacies since 2014 — many of them for health systems whose 340B programs we manage. When we sign a combined 340B / pharmacy contract with a hospital, we can place a pharmacist (specialty and/or retail) in their facility, and — practically from Day One — start filling 340B prescriptions that the hospital has been missing.
Before we undertake the first step in building their pharmacy(s), our 340B team has already analyzed their 340B prescription program, cross-referencing our existing database of 340B-eligible pharmacies — which is how we help them immediately take advantage of more savings opportunities.
What’s more, when our pharmacies are open, they’re operated with the intent to supplement health systems’ existing 340B prescription volumes — without sacrificing net 340B revenue and savings from other contract pharmacies. Our ultimate goal is always the health system’s optimal net benefit from our services.
ProxsysRx is here to help, if you have questions.
There are so many ways to optimize your 340B drug program savings & benefits, and overcome manufacturer restrictions while still minimizing the likelihood of noncompliance. For more information, contact Howard Hall. 214.808.2700 | howard.hall@proxsysrx.com
