GlaxoSmithKline wordmark and GSK logo on a building
GlaxoSmithKline and Pfizer announced updates to their 340B contract pharmacy policies to comply with new state laws that will take effect in July.

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GSK Extends 340B Pricing Conditions to all Covered Entities and all Products

UPDATE Friday, March 31, 2023, 6:45 p.m. EDT—Story updated with comment from the National Association of Community Health Centers.

Drug manufacturer GlaxoSmithKline this afternoon announced a major expansion of its conditions on 340B pricing in the contract pharmacy setting. It is the second manufacturer today to expand 340B pricing limits.

GSK said in a notice that, effective May 1, it is modifying its policy to cover all GSK products and 340B covered entity types including federal grantees.

The announcement means community health centers in a month will be subject to GSK conditions on 340B pricing in the contract pharmacy setting. On March 9, the National Association of Community Health Centers announced it reached an agreement with Pharmaceutical Research and Manufacturers of America on 10 principles to guide reform of the 340B program. The principles say that contract pharmacy arrangements should be permitted for “grantees providing care to a specific population, such as patients with HIV or chronic illness, for qualified prescriptions provided within the scope of the grantee’s 340B-qualifying Department of Health and Human Services (HHS) grant.” GSK is a PhRMA member.

“Today’s unfortunate announcement by GlaxoSmithKline underscores the need for a comprehensive legislative solution,” said NACHC Interim President and CEO Rachel Gonzales-Hanson. “Simply put, community health centers need Congress, not individual drug companies, to set the rules of a program that millions of patients rely on for life-saving medications. GSK’s terrible decision today threatens patient care and the viability of health centers. NACHC’s partnership with ASAP 340B is now even more important to drive towards a long-term solution that works for the true safety-net, including health centers.”

GSK’s notice

“Covered entities are no longer able to have unlimited contract pharmacies. GSK will no longer require the submission of 340B claims data or allow ‘bill to/ship to’ replenishment orders for an unlimited number of contract pharmacies,” GSK’s notice said.

An entity without an in-house pharmacy capable of dispensing 340B purchased drugs may designate just one contract pharmacy location, GSK said. “In some instances, a covered entity may need to designate separate contract pharmacies for GSK products, subject to a limited pharmacy network,” GSA said in an FAQ. “For example, if a covered entity cannot dispense specialty/oncology products at its in-house pharmacy but can dispense GSK retail products, this covered entity may designate a single contract pharmacy that is part of GSK’s limited pharmacy network to dispense the specialty/oncology products.”

Unlike the four other manufacturers that have significantly expanded their 340B pricing conditions in recent weeks—Johnson & Johnson, Amgen, AbbVie, and Pfizer—GSK will continue to let contract pharmacies that are wholly owned by the covered entity or that have common ownership with the entity remain eligible to receive bill to/ship to replenishment orders of 340B priced drugs. “Covered entities can ship 340B purchased drugs to all of their wholly owned contract pharmacies without limitation,” GSK said in the FAQ.

“Each covered entity must act by April 15, 2023, in order for its eligible contract pharmacy location designation to take effect on or before the effective date of this policy update. Hospital covered entities that have already designated a contract pharmacy for GSK retail products will not have to re-designate this pharmacy,” the notice said.

Under GSK’s original policy, which took effect April 1, 2022, 340B hospitals without an in-house pharmacy could designate just one contract pharmacy for 340B bill to / ship to replenishment orders of nine of its inhaled drugs for asthma, bronchitis, and other breathing problems. If hospitals agreed to share their 340B contract pharmacy claims data for the products with GSK they could continue to use multiple contract pharmacies to dispense the drugs. Grantee entities were exempt from the conditions.

Earlier today, Pfizer stiffened its conditions on 340B sales to hospitals of the immunosuppressant Xeljanz.