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Merck extended its restrictions on 340B pricing involving contract pharmacies to community health centers.

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Merck Extends its Conditions on 340B Pricing Involving Contract Pharmacies to Health Centers

Drug manufacturer Merck today extended its restrictions on 340B pricing involving contract pharmacies to community health centers. The restrictions have applied only to hospital covered entities until now.

Other grantee covered entities remain exempt “at this time,” Merck said, adding that “we will continue to evaluate our 340B program integrity initiative to determine if further updates may be warranted.”

A health center covered entity received a letter via email from Merck this afternoon notifying it about the policy change.

Merck said in a statement this afternoon: “Merck remains committed to providing 340B discounts to eligible covered entities. Since June 2020 Merck has pursued an incremental approach to our program integrity initiative and we have continued to analyze the risks of duplicate discounts affecting covered outpatient drugs dispensed through contract pharmacies. Based on our concerns regarding heightened risks for duplicate discounts within community health centers we will now also apply our policy to this one category of federal grantee covered entity types.  This change does not apply to any other federal grantee type and will not affect a 340B covered entity’s ability to continue to benefit from the 340B discount on contract pharmacy transactions if the requested claims data is provided.”

Health Centers Decry Decision as “Unconscionable”

Health centers slammed the company over the decision. “Merck’s announcement to restrict drug shipments, coming on the same day they announced their first-quarter earnings, is a slap in the face to health centers across the country,” said Rachel Gonzales-Hanson, Interim CEO of the National Association of Community Health Centers (NACHC). “As the company knows through the sale of its COVID treatment, this pandemic is not over, and health centers continue to be on the frontlines. Threatening access to care for some of the most vulnerable in our nation while posting billions in profit is unconscionable. We urge them to reverse course immediately.”

According to the letter that Merck sent today to the health center, beginning on May 31, “Merck will no longer voluntarily honor 340B discounts or chargebacks for contract pharmacy transactions” for entities enrolled in 340B as consolidated health center (CH) programs “that have not begun to provide 340B claims data for all claims originating from their contract pharmacies.”

If a health center lacks an in-house pharmacy, it may designate a single contract pharmacy, Merck said. 

As has been the case with hospital entities since Sept. 1, 2021, if health centers agree to provide their 340B contract pharmacy claims data to 340B ESP, “we will again voluntarily honor 340B discounts or chargebacks for contract pharmacy transactions for these covered entities, including multiple contract pharmacy arrangements,” Merck said in the letter.

Merck said in an accompanying FAQ document that “data uploaded by 340B program covered entities will be used to identify and resolve duplicate Medicaid, Medicare Part D, and commercial rebates.”

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