Fair Warning: If you ever dismissively ask that question (above) of someone who’s led the planning and launch of a 340B hospital’s specialty pharmacy, and did it with no outside support, there’s a good chance you’ll get punched. Yes, it’s that difficult.
POST OUTLINE
Why is it so hard to build a 340B specialty pharmacy?
- In one word: Access.
- Access to 340B drugs and payers.
- You can’t get access without accreditation.
- You must be accredited by URAC and ACHC.
- That process is VERY complicated, and difficult.
The accreditation process
- Brief overview of ProxsysRx’s 9-Stage process.
- Synopsis of the 12 steps in Stage One.
- Necessary expertise to secure Accreditation.
- Average cost to launch, staff and stock a specialty pharmacy.
Reporting protocols
- Overview of what must be reported.
Benefits of compliance
Overcoming manufacturer restrictions
- A workaround for the Single-Pharmacy restriction.
Specialty drug research partnership opportunities
- Why drug companies welcome 340B specialty pharmacy partners.
What to look for in a specialty pharmacy partner
- Their own URAC and ACHC accreditation.
- A willingness to share in the risk, and the cost.
ProxsysRx is here to help, if you have questions.
For more information on how to build and fund a successful specialty pharmacy, contact Howard Hall. C: 214.808.2700 | howard.hall@proxsysrx.com
FULL POST
WHY is it so hard to build a 340B specialty pharmacy?
After all, it’s true that a 340B specialty pharmacy requires the same pharmacy board licensing as a 340B retail pharmacy. What’s more, building and stocking a retail pharmacy is actually more complicated than setting-up a specialty pharmacy, since a retail pharmacy has (by its very nature) a retail component — with a lot of retail products, in addition to its prescription drugs. Not only that, a retail pharmacy stocks many more drugs than a specialty pharmacy. Then there’s the fact that retail pharmacies offer a greater scope of services than specialty pharmacies — and they serve walk-in patients, whereas specialty pharmacies typically do not.
(NOTE: We understand there’s no such thing as a “340B Pharmacy,” or a “340B Drug,” until a prescription actually qualifies. We’re using the terms simply to identify pharmacies where there is a concentration of 340B eligible drugs, and a focus on finding them.)
That said, what makes a 340B specialty pharmacy so much harder to successfully (and profitably) operate than a 340B retail pharmacy is access. Specifically, access to 340B drugs and payers. And in order to get access to both, you need accreditation — which generally means dual accreditation: One from the Utilization Review Accreditation Commission (URAC), and one from the Accreditation Commission for Health Care (ACHC). Without accreditation, your 340B specialty pharmacy can’t get In Network with many important payers. And earning accreditation is, to put it mildly, a beast.
340B specialty pharmacy accreditation: A VERY brief overview
ProxsysRx’s Specialty Pharmacy team has created a detailed punch-list of activities it manages — and personally undertakes — in shepherding 340B health systems through the process of earning specialty pharmacy accreditation. Below is only half of the process involved in the first of nine separate stages we undertake in earning a 340B health system specialty pharmacy accreditation. We call this stage “Business Support Services,” and here are six of the twelve steps we take:
- Develop and implement a call center function. (This can be accomplished in different ways, according to the volume and desires of the facility).
- Develop KPIs (Key Performance Indicators) and reporting metrics for appropriate stakeholders. These services may be performed virtually or in-person at the hospital’s facilities and/or clinics.
- Provide call center services to manage prescription orders, refill requests, medication related questions, and other calls.
- Evaluate the hospital’s PBM for available Specialty Pharmacy benefits.
- Obtain prior authorizations under the hospital’s health insurance or other Specialty Pharmacy benefit plans.
- Manage and apply financial assistance programs for the indigent and/or uninsured.
Stage Two of our process, “Specialty Pharmacy Management Services and Development,” involves no less than 12 primary steps, with 39 separate “sub-steps” spread-out across those 12 primary steps. And again, that only gets you to Stage Two in our Nine-Stage process.
Accreditation is just the first challenge for a successful 340B specialty pharmacy
It goes without saying, every stage in the planning and accrediting process isn’t merely time-consuming. It’s complicated. It requires highly-specialized expertise; the kind of expertise that only comes from highly-specialized training, and hands-on experience. And that kind of professional training and experience doesn’t come cheap. Which is why we project the average of cost of planning, accrediting and staffing a 340B specialty pharmacy will be in the neighborhood of $1 Million. That’s before you’ve even begun to stock your pharmacy with its first specialty drug, which is another matter entirely. (Rest Assured: There’s good news to follow, later in this post.)
340B specialty pharmacy reporting protocols
Accreditation is the first giant step your 340B health system must take toward proving that you can offer appropriate care for specialty-drug patients, and correctly administer specialty drugs. In addition to implementing the strict protocols required, your 340B specialty pharmacy has to report all of its relevant caring, administration and patient data back to the manufacturers; data which confirm that you’re actually handling their drugs, and your patients, correctly.
Reaping the benefits of 340B specialty pharmacy compliance
The payoff to confirming your compliance with manufacturers’ protocols is twofold: 1) You’ll get reimbursed for the specialty drugs you’ve filled, and 2) Your pharmacy will get access to more specialty drugs from the manufacturers. Which means, of course, that A) Your health system will be able to treat a broader range of conditions, and serve more of the patients in greatest need, and B) You’ll get paid for doing it. In short, your patients benefit, and so does your health system.
Overcoming 340B manufacturer restrictions
There’s another critical benefit to a 340B health system having its own on-campus specialty pharmacy: Overcoming restrictions many of the drug manufacturers have imposed on access to 340B reimbursement; most prominently, the restriction of reimbursement to only pharmacies within a 40-mile radius of your hospital campus.
An on-campus specialty pharmacy can also help many 340B health systems overcome the even more punitive Single Pharmacy restriction — which forces hospitals to choose between either a retail or specialty pharmacy as their sole Contract Pharmacy eligible for manufacturers’ 340B pricing. In many states, there is legal workaround to that restriction. In those states, hospitals can operate specialty pharmacies alongside their retail pharmacies — provided: 1) The two pharmacy operations are in two separate spaces, and 2) The two pharmacies do not have any procedural, functional or personnel overlap.
Partnering with manufacturers on specialty pharmacy drug research
As we’ve detailed in another post, there is an additional — and equally significant — benefit to 340B health systems seeking to overcome manufacturer restrictions: A well-run specialty pharmacy enables your hospital to partner with drug manufacturers in their ongoing research. After all, the level of 340B reimbursement manufacturers receive from Medicare and Medicaid for eligible prescriptions is dependent on the efficacy of their drugs — and many specialty drugs require ongoing usage and outcome data to support their efficacy claims to justify reimbursement. This is exactly the kind of data that successful specialty pharmacies can provide manufacturers in prescribing, dispensing and monitoring their 340B-eligible specialty drugs.
All that said, returning to our key theme, everything hinges on accreditation. Without it, you can’t get paid for your 340B drugs. That’s not to say you can’t buy them. You just won’t get paid for them on the 340B program. All of which is why so 340B many health systems have concluded they need an experienced partner handling the process of gaining accreditation for them.
The ultimate benefit of having a specialty pharmacy is the potential to significantly expand your health system’s ability to serve the community, while generating significantly more 340B income than your retail pharmacy alone can.
What to look for in a specialty pharmacy partner
We’ve already mentioned experience and expertise as critical qualities your partner should offer, but there’s an additional level of expertise that can cut the process (and the calendar time) of planning, accrediting and launching a 340B hospital’s specialty pharmacy virtually in half: Namely, accreditation by the very bodies that accredit your pharmacy. [NOTE: We are only accredited by URAC, but we also get ACHC for our people. There are several different accrediting bodies, but these are the main two.] When your partner holds those highly-coveted accreditations, they’re authorized to grant accreditation for many of the benchmarks your 340B specialty pharmacy must meet.
The second critical quality your specialty pharmacy partner should offer is, to use the slang term, “skin in the game.” In other words, you want a partner who’s willing to share in the investment, and the financial risk, involved in building a 340B specialty pharmacy. After all, how committed can your partner be when they profit from your specialty pharmacy even if you don’t?
Regarding the latter quality, whether building a 340B specialty pharmacy or retail pharmacy, ProxsysRx offers its services At Risk: Which means we only get paid when our clients profit from our services, and we never earn more than the hospitals we serve.
Regarding the former quality, ProxsysRx’s specialty pharmacy team has been accredited by both URAC and ACHC. And as for experience, we’re currently contracted to build and manage 340B specialty pharmacies for five health systems. Moreover, our first specialty pharmacy opened its doors in June, 2024 — and within six months was generating a monthly net income of more than $1 million. Better still, our process enables the health systems we serve to get In Network for a number of 340B specialty drugs even before their specialty pharmacies are accredited — which helps provide much-needed cash-flow in funding them.
Yes, specialty pharmacy is extremely complicated.
Administration of a 340B specialty pharmacy is much harder than it is with a retail pharmacy. Reporting is much harder. Prior authorization is much harder. So is clinical education and reporting. All of those components are much more intense for specialty pharmacy than they are for retail pharmacy. But again, the potential rewards — for your patients, your community and your health system — are that much greater.
The best news in all this is: It’s not a process you have to undertake alone.
ProxsysRx is here to help, if you have questions.
For more information on how to build and fund a successful specialty pharmacy, or for more information on any of the pharmacy-support services we offer, contact Howard Hall. C: 214.808.2700 | howard.hall@proxsysrx.com
