Key Considerations to Reduce Impact of Contract Pharmacy Restrictions


Confucius once said that “roads were made for journeys, not destinations.” Hudson Headwaters has been at the forefront of the 340B journey for 20 years while continuously leveraging field-driven experience to help clients effectively navigate and manage their 340B involvement. Our goal is to prevent the 340B program model from reaching an unexpected destination.

Hudson Headwaters 340B, LLC (a wholly owned subsidiary of Hudson Headwaters Health Network) has pioneered a natural path to compliant management of multiple contract pharmacies from their roots as a team within a participating Covered Entity. Our careful and focused concentration on 340B has made us a well-respected resource for 340B eligible entities as a contract pharmacy third party administrator, independent auditor, consultant, and educator.  We treat each client as if their 340B program is our own, offering the very same confident oversight we provide to our parent organization. 

Today’s 340B challenges from manufacturers make it crucial for entities to have partners who can proactively navigate the changing landscape. Hudson Headwaters 340B scrutinizes purchases and inventory reports daily to verify pricing is accurate based on each manufacturer’s unique exclusion rules.  Proper oversight of the 340B environment is crucial for covered entities in retaining the 340B benefits they are entitled to, while outside threats remain constant.

Considerations for your Covered Entity:

  • Has your CE agreed to comply with manufacturer requirements in order to access their products through your contract pharmacies?

If yes and approval is received, ensure all blocks have been removed and qualifying/purchasing has resumed at all pharmacies. If no, review options with legal counsel to see if there are viable options to restrict pharmacies while retaining access to medications.  We have seen success in various registration arrangements to preserve access to products.

  • Are the proper exclusions in place to prevent further issues downstream?

Ensuring the proper exclusions are in place (and understanding what is intended) can protect program benefits by preventing unanticipated spending at non-340B prices. Covered entities must carefully pay attention to purchases and inventory reports. If NDC quantities are being qualified but are not being purchased, true-up processes on slow moving items may require higher pharmacy acquisition costs to be paid by the entity.  These added expenses can add up quickly and the duration of the manufacturer exclusions may be quite lengthy as the courts work to resolve the issues. 

  • Which manufacturers’ exclusions and product restrictions apply to your entity type?

If your entity is an FQHC and a manufacturer has stated that their restrictions only apply to hospitals. Has your wholesaler, pharmacy, TPA lifted the restrictions on your purchases? There may also be products not initially listed on the manufacturers’ exclusion lists by NDC which now require active investigation and special forms to be submitted to receive 340B pricing.

Navigating the 340B highway through tumultuous conditions requires a copilot that you can count on. Hudson Headwaters 340B is committed to be your partner for continued compliance and diligent oversight at all legs of the 340B journey. Our partnership shares the mutual goal of preserving program access through contract pharmacies to maintain integral support for the communities served by the healthcare safety net. Don’t travel alone – let Hudson Headwaters 340B be your guide for the next leg of your 340B journey. E-mail to learn more!

Jim Donnelly is President of Hudson Headwaters 340B. He can be reached at You can learn more about Jim in our 340B Industry Leader Spotlight here.

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