Does anyone have any idea as to how it is profitable and why would a hospital contract it with an outside pharmacy as opposed to dispensing it in house?
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340B
Started by ZakMeister
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You save money on the drugs you buy as the 340b price is generally lower. Hospitals contract with outside pharmacies as a way of making additional profits (but this is a contractual thing only...the hospital typically buys it's own drugs and the contract pharmacies buy theirs).
There are a lot rules and policy involved in 340B program. Payor, retail, specialty, hospitals and manufacturers are all stakeholders.
The best way to gain knowledge is to get on Apexus website or HRSA site. FAQ section has all the answers you need.
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The best way to gain knowledge is to get on Apexus website or HRSA site. FAQ section has all the answers you need.
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This is probably very oversimplified but...
Imagine buying a $100 drug at 2 pennies. Possible for your patient bucket (say you are a hospital that uses 340B) that qualifies. For each patient in that bucket that uses this $100 drug you spend only 2 cents per patient. Now let's say that person has an insurance that covers the drug. Many insurances reimburse pharmacies at a rate of AWP - % plus a dispensing fee which is unrelated to the 340B acquisition cost. So you bought the $100 for pennies but then got reimbursed as if you had brought it at the "standard wholesale price."
Now apply that example to specialty meds like hep C that can cost $1000 per pill or more. Hopefully that "paints a picture" how profits can be made 🙂
FYI that's just my understanding of the basics. As I said it's much more complicated than that and I just graduated so I haven't really seen a lot of it in actual practice. Lol
The contract pharmacy doesn't earn the spread, the hospital does. They pay the pharmacy a flat fee for dispensing.
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Yes, the hospital earns the spread. In turn, the hospital pays the pharmacy a flat fee. This is why it's important when an independent makes a contract to do 340B, they look at the fee for each type of medication. They must look at the fee for brands, for generics, etc.
So why is my chain pharmacy always going bananas about us using 304b when possible? They would rather us use 304b than have a person literally pay $25 cash for a med that costs about a dollar wholesale.
So you'd rather us get $2 copay+dispensing fee? Makes no sense to me.
While I'm ranting, for Gods sake can stop taking these f*****g discount cards? There is nothing more frustrating and time-consuming than that woman who has a pocket full of 34 discount cards for her $12.99 alprazolam. "Can you see which one makes it the cheapest?"
Hey corporate, you just paid me $10 in salary, spent $3 on ink and umpteen leaflets, lost $5 on the NyQuil she shoplifted, paid $1.50 fee to the processor & $3 for the drug itself, and received a $6 copay in return. Oh, but we gained her "LOYALTY!" Whatever you say, corporate Gods. She'll be about as loyal as my first wife, you bunch of pencil-necked, nepotist, no common sense-having, mouth-breathing upper-management nerds.
So you'd rather us get $2 copay+dispensing fee? Makes no sense to me.
While I'm ranting, for Gods sake can stop taking these f*****g discount cards? There is nothing more frustrating and time-consuming than that woman who has a pocket full of 34 discount cards for her $12.99 alprazolam. "Can you see which one makes it the cheapest?"
Hey corporate, you just paid me $10 in salary, spent $3 on ink and umpteen leaflets, lost $5 on the NyQuil she shoplifted, paid $1.50 fee to the processor & $3 for the drug itself, and received a $6 copay in return. Oh, but we gained her "LOYALTY!" Whatever you say, corporate Gods. She'll be about as loyal as my first wife, you bunch of pencil-necked, nepotist, no common sense-having, mouth-breathing upper-management nerds.
So the pharmacy just makes money off of that flat fee? They don't get the AWP reimbursement? This is the part that baffles me. They shouldnt get the AWP reimbursement since they don't buy the drugs right?
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Why would the pharmacy get AWP reimbursement if they aren't buying those drugs?
Thanks for the elaborate explanation though!
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The pharmacy is not buying the drugs, the hospital does. In most cases there is "virtual inventory" which is tracked and replenished by a 3rd party administrator. The pharmacy is not eligible to buy drugs at the 340B discounted price.
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