Download the white paper.

Background

The 340B Drug Pricing Program is a federal program that requires drug manufacturers to sell prescription drugs at discounted prices to certain healthcare facilities. Currently, under the 340B Drug Pricing Program, eligible healthcare facilities (i.e., covered entities) can choose to dispense prescription drugs purchased through the 340B program at their facility’s in-house pharmacy, contract pharmacy, or a non-contract pharmacy.  A contract pharmacy is an off-site pharmacy that agrees to dispense 340B drugs on behalf of a covered entity to eligible patients. 2010 guidance from the Health Resources and Services Administration permitted all covered entities to have relationships with an unlimited number of contract pharmacies. Since the issuance of that guidance, the number of 340B contract pharmacy arrangements has grown to over 230,000 arrangements, as of January 2026, according to the Office of Pharmacy Affairs Information System (OPAIS). Recent research shows that less than one percent of contract pharmacies only serve 340B patients and filled prescriptions with only 340B drugs. Thus, nearly all contract pharmacies dispense 340B-discounted and non-340B drugs.

Out of the eligible covered entities, FQHCs are the largest federal grantee participating in the 340B program. FQHCs often act as a safety net provider serving uninsured, underinsured, and low-income individuals. Among federal grantees, FQHCs spent the most on drug purchases under the 340B program.

Key Findings

Avalere Health analyzed data from the OPAIS and found that while the proportion of FQHCs with at least one contract pharmacy relationship remained steady at approximately 30%, the average number of contract pharmacies per FQHC more than doubled between 2018 and 2022 from eight to 18. One-third of the growth in FQHC contract pharmacy relationships between 2018 and 2022 involved pharmacies that were more than 50 miles away from the FQHC.

To assess whether contract pharmacy relationships improved drug access for patients with HIV who are treated at FQHCs, Avalere Health conducted an analysis using Medicare fee-for-service claims, Medicare Advantage Encounter data, and Part D drug event data to examine Medicare beneficiaries with HIV who received treatments at FQHCs and filled at least one prescription for HIV medication between 2018 and 2022. In this analysis, Avalere Health found the following:

• Access to more contract pharmacies did not increase the share of Medicare beneficiaries receiving at least one HIV drug fill: Among FQHCs providing care to Medicare HIV beneficiaries, the share with a contract pharmacy relationship increased during the study period. However, the share of these FQHCs’ HIV beneficiaries who filled at least one HIV prescription decreased. Furthermore, FQHCs with a greater number of contract pharmacy relationships did not have a materially greater percentage of Medicare beneficiaries with at least one HIV prescription drug fill. A similar proportion of Medicare beneficiaries received at least one HIV drug fill regardless of whether they received care at an FQHC with no contract pharmacy relationships or 20 or more contract pharmacy relationships.
• Using a contract pharmacy did not increase the annual number of HIV prescriptions fills: Among beneficiaries with at least one HIV drug fill, there are no meaningful differences in the average number of HIV prescription drug fills within a year based on pharmacy type. The average annual number of HIV prescription drug fills was similar for Medicare beneficiaries with HIV who used either in-house pharmacies, contract pharmacies, or non-contract pharmacies.

Download the white paper.

Funding for this research was provided by Gilead Sciences, Inc. Avalere Health retained full editorial control.