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Time Inventory Management and 340B Clearinghouse
The 340B program has experienced significant changes and disruptions over the past five years, prompting both legislative and judicial action. On May 15, a federal judge rejected efforts by four manufacturers to impose rebate-only models within the program without government approval. The court ruled that such unilateral restrictions violate the statutory requirement to offer 340B discounts at the point of sale. In response to the ruling, on June 2, the Department of Health and Human Services (HHS) submitted its Inflation Reduction Act (IRA) rebate guidance to the Office of Management and Budget (OMB) for review. The guidance has not been made public, and the OMB has up to 90 days to complete its review.
Regardless of the outcome of the rebate model debate, covered entities (CEs) can mitigate difficulties in replenishing specialty drugs at 340B prices, particularly when the discounted cost remains high. To support this effort, some wholesalers are introducing innovative models that improve access to high-cost specialty medications. One such model is forward-deployed inventory, which places these drugs closer to the point of care to enhance availability, reduce delays, and ease the financial burden on providers.
Exploring a Forward-Deployed Inventory Model
Unlike traditional inventory models, a forward-deployed inventory allows CEs to access medications without purchasing them upfront. In this model, the wholesaler retains ownership of the drugs and partners with strategic technology providers, to implement advanced tracking systems. These systems enable real-time monitoring of when inventory is dispensed to a patient.
Once a dispense event is tracked, the wholesaler collaborates with the CE, their 340B third-party administrator (TPA), and the pharmacy to determine whether the drug qualifies under the 340B program. If confirmed, the wholesaler then invoices the CE at the applicable 340B price. This model is especially beneficial for high-cost drugs, as it allows CEs to acquire them without relying on upfront cash reserves. The wholesaler ultimately reconciles the transaction with the manufacturer.
Key Benefits for CEs:
- Dynamic Replenishment: Inventory is reordered in alignment with actual usage, reducing the risk of overstocking or shortages.
- Real-Time Visibility: Instant access to inventory data improves operational oversight, planning, and forecasting.
Role of Neutral 340B Clearinghouse and Forward Inventory
A neutral 340B Clearinghouse serves as an independent platform that receives 340B data from CEs and their TPAs. It then facilitates coordination with the wholesaler’s invoicing process and the manufacturer’s chargeback system. The implementation of a forward-deployed inventory model may also pave the way for alternatives to the traditional chargeback mechanism between wholesalers and manufacturers, offering greater flexibility and efficiency.
As detailed in our article, SUSTAIN 340B – The Imperative for a Clearinghouse to Strengthen the 340B Program , a neutral 340B Clearinghouse represents a collaborative and transparent solution that promotes compliance with 340B program requirements, resolves duplicate discount concerns, and supports adherence to federal regulations, including provisions under the IRA.
RxParadigm’s collaborative, neutral 340B Clearinghouse is designed to uphold the integrity of discount programs like 340B and regulatory mandates such as the IRA. This service fosters a transparent, sustainable, and equitable environment for all stakeholders across the healthcare ecosystem.
Conclusion
The ongoing debate and uncertainty surrounding the 340B program has created space for meaningful and compliant innovation. Regardless of the final HHS-approved approach to IRA discount administration, whether through traditional upfront discounts, rebates, or a hybrid model, a combination of a neutral clearinghouse and forward-deployed inventory can help cut through the noise.
Rather than prolonging disputes between CEs and manufacturers, the focus should shift toward joint innovation and mutual accountability. A neutral clearinghouse, integrated with real-time inventory tools from wholesalers, offers more than just a technical fix. It represents a forward-looking business strategy for ensuring transparency, compliance, and long-term sustainability.
The future of 340B depends on proactive cooperation, not reactive resistance. Stakeholders should explore ways to collaborate, not clash, and leverage tools that foster transparency, scalability, and shared value.
Mesfin Tegenu is CEO and Chairman of RxParadigm. He can be reached at Mesfin.Tegenu@rxparadigm.com.
