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340B Contract Pharmacy


The Drug Supply Chain Security Act (DSCSA) and 340B contract pharmacy regulations are both complex and multifaceted. It can be difficult to decide how these laws interact with each other and what parts may apply to your organization. As such we have we have put together this history to give you some background to help you navigate these pieces of legislation. This is our interpretation of the law and we encourage you to talk with your legal counsel and make your own decisions regarding your operations.

How do 340B Contract Pharmacy and DSCSA regulations interact?

340B contract pharmacies provide prescription drug dispensing services to 340B Program eligible patients for 340B covered entities. These contract pharmacies are vital to vulnerable patients and may be the only way that covered entities can provide pharmacy services due to lack of resources. Most covered entity/contract pharmacy relationships rely on a replenishment model where the contract pharmacy dispenses drug to a 340B eligible patient from their own stock; in essence the covered entity borrows the drug from the Contract Pharmacy to dispense to the patient. The covered entity then buys the drug from their wholesaler on their 340B account and ships the drug to the contract pharmacy under a “bill to/ship” to arrangement in order to replenish the drug to the contract pharmacy. The covered entity must retain title of that drug under 340B regulation when purchased but as soon as it reaches the contract pharmacy the drug becomes the property of the contract pharmacy and it can be dispensed to any patient not just 340B eligible patients.

DSCSA regulations come into play whenever direct ownership of drug product changes. When ownership changes, the previous owner “prior to or at the time of, each transaction” must supply the subsequent owner with transaction documents including the transaction history (TH), transaction information (TI), and transaction statement (TS) otherwise known as the 3Ts. Furthermore, the subsequent owner “shall not accept ownership of product unless the previous owner prior to, or at the time of, the transaction” unless the previous owner provides the same transaction documents. DSCSA does allow for transfer of drug product from one trading partner to another without the need for sending the transaction documents in one exception which is for a “specific patient need.” This is defined “the transfer of a product from one pharmacy to another to fill a prescription for an identified patient.” Therefore, it is our understanding that when a covered entity borrows drug from the contract pharmacy to dispense to a 340B eligible patient this transaction is exempt. This should not be confused with replenishment though as the definition of specific patient need goes on to say that it “does not include the transfer of a product from one pharmacy to another for the purpose of increasing or replenishing stock.” When the covered entity ships drug to the contract pharmacy to replenish the drug dispensed to the patient the transaction is not exempt under DSCSA regulation and the transaction documents must be provided to the contract pharmacy. We also strongly believe that to be completely compliant with DSCSA regulation the transaction history must include entries for both the covered entity and the contract pharmacy to indicate the ownership change.

Didn’t 340B Health (formerly SNHPA) ask for an exemption to the DSCSA regulation for Contract Pharmacies?

In October 2014 340B Health did meet with FDA and in March 2015 they sent a letter formally requested that the FDA allow and exemption to the DSCSA regulation. They proposed that FDA allow the wholesalers to send transaction documents along with the drug product directly to the contract pharmacy bypassing the covered entity altogether. A subsequent letter sent in April 2015 further stated 340B Health’s case and again asked for the same exemption. On March 1, 2016 340B Health was notified that FDA would not create an exemption to the DSCSA for 340B contract pharmacy relationships. The FDA noted that in the instance that covered entity retains ownership of the product up until it is dispensed they could use a third party to maintain the transaction documents on the dispensers behalf. FDA was silent on the instances where the covered entity transfers ownership of the product to the contract pharmacy as seen in the replenishment model. It is therefore reasonable to assume that FDA did not agree with assessment of 340B Health and that both the covered entity and contract pharmacy need to be a part of the transaction history. Both entities would need access to the transaction documents as well. 340B Health off17ers the following advice:

– Consult with the hospital’s legal counsel

– Assure that the hospital and/or contract pharmacy can receive, store, and access the tracing information in case the FDA or another government agency requests information related to a product recall or the investigation of a suspect or illegitimate product

To read more about this from 340B Health you can visit this link for corporate partners and this link for members.

Can my wholesaler provide access to the 3T documents?

Wholesalers may have the ability grant some access to the 3T documents to contract pharmacies but they most likely only have an entry in the transaction history for the covered entity and not the contract pharmacy. This is because they are transferring ownership to the covered entity not the contract pharmacy. Covered entities also may have many different wholesaler relationships and each wholesaler has a slightly different approach to storing and access the transaction information making is confusing to your contract pharmacies. There is also the problem of porting and storing your data if you happen change wholesaler accounts. All of this data must be kept for a minimum of six years and possibly longer if the product is part of an FDA investigation. Wholesaler will also not store data for many drop ship or direct orders. These may still be paper documents sent with the drug product. For all of these reasons we do not recommend simply using your wholesaler for tracking your transaction data.

How can Drug Track IQ help me?

Our solution, the Drug Track Engine, meets all requirements of DSCSA and solves all the issues mentioned previously. We are a complete track and trace solution and will help your organization meet all requirements of DSCSA. In the case of 340B and contract pharmacy specifically, we are able to electronically capture all 3T documents from your wholesaler and provide a portal for both parties to access them on demand 24/7 regardless of which wholesaler you use. All of your data is in a single repository and readily retrievable in case of an FDA audit. We also ensure the transaction history contains entries for both the covered entity and contract pharmacy because we believe that is the interpretation from FDA. We believe this approach ensure yours organization is bullet proof with DSCSA regulations. Contact us (contact@drugtrackiq.com) to learn more about our cloud based Drug Track Engine and how we can help your organization.

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