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Despite a number of state laws protecting 340B covered entities (CEs) access to contract pharmacies, lawsuits by manufacturers, court decisions, and pending appeals create significant uncertainty for these entities. These contract pharmacy restrictions can limit access to important 340B medications and it’s critical that CEs know what may loom ahead for their state and have plans to mitigate any impacts. It’s thanks to resources like 340B Report that have allowed CEs and vendors alike to stay on top of these constantly changing regulations.
Looking towards the legal landscape, here is where we’ve been seeing movement lately:
- Pro-Covered Entity:
- State Contract Pharmacy Access Laws: So far we’ve seen over 20 states enact laws protecting contract pharmacy access.
- State Bills: There are contract pharmacy protection bills pending in 10 state legislatures (Arizona, California, Florida, Georgia, Illinois, Iowa, Kansas, Massachusetts, Michigan, New York, Ohio).
- Appeal Courts: In 3-0 decisions, the U.S. 5th Circuit and 8th Circuit Courts of Appeals have decided in favor of state contract pharmacy access laws in Arkansas, Louisiana and Mississippi after lawsuits from manufacturers.
- Pro-Manufacturer:
- District Courts: There was a district court decision favoring manufacturers in Oklahoma late last year.
- Appeals Courts: In 2-1 decisions, the U.S. 4th Circuit Court of Appeals recently sided with manufacturers in cases on Maryland and West Virginia’s similar laws, handing drugmakers their first appellate court wins.
- Federal Government Action: The US Department of Justice (DOJ) and US Department of Health and Human Services (HHS) filed an amicus brief requesting that the 5th Circuit overturn an earlier decision to uphold a contract pharmacy access law in Louisiana.
- State Government: Some attorneys general have argued that existing 340B statutes are unenforceable, such as in Kansas, causing state lawmakers to propose new bills.
- Pending Rulings
- District Courts: There are challenges to contract pharmacy access laws pending in district courts in a number of states, including : New Mexico, North Dakota, Oregon, Utah, Vermont, Washington
- Appeals Courts: Appellate court decisions are pending in several states, including Colorado, Hawaii, Maine, Rhode Island, Tennessee.
While legal clarity may take years to emerge, CEOs and other health care leaders don’t have the luxury of waiting. The continued tightening of contract pharmacy access means organizations must increasingly look inward to protect their 340B programs.
One strategy gaining significant traction is in-house prescription capture optimization.
Health systems are recognizing that improving prescription capture within their own networks can offset losses from contract pharmacy restrictions. This is particularly critical in specialty pharmacy, where margins and patient complexity are highest—but it also applies meaningfully to retail prescribing.
A Proven Approach: Reducing Leakage
We deployed our AI Pharmacy Care Navigator with a rural Disproportionate Share Hospital (DSH) to improve in-house capture in response to the contract pharmacy restrictions they were facing. Our AI Agent automated the following steps in their capture workflow:
- Identify: Analyzed health system data to pinpoint exactly where leakage is occurring
- Intervene: Deployed patient outreach to educate patients on benefits of the in-house pharmacy and ask about barriers to medication compliance
- Escalate: Prioritized outreach based on patient-identified pain points and escalated to the right resource (e.g., pharmacist, provider, etc)
The results were significant:
- Their capture rates saw over a 30% improvement
- This translated into a seven-figure increase in 340B savings, even in the face of contract pharmacy restrictions
Looking Ahead
The evolving legal landscape will continue to shape the future of the 340B program, but it’s unlikely to deliver near-term certainty. CEs that rely heavily on contract pharmacy arrangements remain exposed to ongoing disruption.
The organizations best positioned to succeed will be those that:
- Stay informed on state-specific legal developments
- Diversify their strategies beyond contract pharmacy reliance
- Invest in data-driven approaches to maximize in-house capture
In an environment defined by uncertainty, operational control becomes the most reliable lever.
To learn more about strategies to improve in-house capture and mitigate contract pharmacy risk, reach out to hello@compassrx.com.
Alice Cheng is chief operating officer of CompassRx. She can be reached at alice@compassrx.com.
