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Hospitals, pharmacists and clinics say manufacturer limits on contract pharmacies are stranding rural patients
Summary
Hospital leaders, community pharmacists and clinic directors told a Kansas committee that manufacturer restrictions on where 340B‑discounted drugs may be dispensed are reducing access in rural areas and complicating operations.
TOPEKA, Kan. — Hospital leaders, community pharmacists and medical‑clinic directors testified Oct. 25 that manufacturer limits on where 340B‑discounted drugs may be dispensed are complicating care in rural Kansas and, in some cases, forcing patients to travel farther to pick up medicines.
“We have our own pharmacy, but we also contract with local independent pharmacies so patients can get medication closer to home,” said Matthew Schmidt, chief executive of Health Ministries Clinic in Harvey County. “When manufacturers restrict contract pharmacies, patients can lose local access.”
Why it matters: Contract pharmacies historically have allowed covered entities to dispense 340B medicines through off‑site locations. Witnesses described manufacturer actions that limit which pharmacies may be used for 340B fills, and they said the limits sometimes block the local pharmacy where a patient normally fills prescriptions.
Local examples: Paul Shiffrell, a pharmacist who operates Citizens Medical Center’s 340B program and consults for other critical‑access hospitals, described a patient who avoided painful injections after staff used a 340B discount to supply a $600 outpatient drug for $10. Shiffrell said the saving came through the hospital’s 340B program and enabled a less burdensome treatment plan. He and other pharmacists said manufacturers’ restrictions on contract pharmacies have interrupted similar programs in other Kansas towns.
“We set up a cash‑card program to pass savings directly to patients. When manufacturers limit contract pharmacies that option can disappear,” Shiffrell said. He added that many small hospitals use 340B revenue to subsidize services that otherwise run at a loss.
Hospitals’ perspective: Brian Anderson, CEO of Prairie Star Health Center in Hutchinson, said hospital leaders ask only that states protect existing contract pharmacy arrangements so safety‑net providers can preserve access. “Kansas safety‑net providers are simply asking for 340B contract pharmacy arrangement protections requiring drug manufacturers to ship 340B drugs to contract pharmacies without conditions,” Anderson said.
Pharmacists’ perspective: Pharmacists said the impact is not just theoretical. “We’ve had to designate a single in‑town pharmacy to receive 340B fills; when patients go to the other independent pharmacy they lose the discount unless they transfer their prescription,” said Paul Shiffrell. Independent pharmacy owners warned that low reimbursement and opaque contract terms threaten the viability of standalone pharmacies that many rural residents rely on.
Manufacturers and industry view: PhRMA and industry witnesses told the committee the program needs federal rules and better reporting to ensure discounts reach patients and to limit practices that could increase costs for employers and taxpayers. Caitlin Lucarello of PhRMA said expanding contract‑pharmacy networks is not the only answer and noted litigation challenging state mandates that would force manufacturers to sell to unlimited contract pharmacies.
What lawmakers heard: Committee members pressed witnesses about data showing charity care levels, hospital revenue sources and whether contract‑pharmacy restrictions were intended to limit patient access. Witnesses for hospitals and clinics argued the limitations often reduce access and sometimes force patients to travel 30–60 minutes for outpatient drugs. Witnesses representing manufacturers and some federal‑policy organizations argued the primary need is federal transparency and contract tweaks to guard against misuse.
What did not happen: The session was informational and produced no legislative action. Several committee members requested additional Kansas‑specific data on 340B flows and the number and location of contract pharmacies serving Kansas hospitals.
Ending: Hospital and clinic leaders left the committee with a clear request: state‑level protections for existing contract pharmacy arrangements and better public reporting on how 340B revenues are used in Kansas.
