By Jennifer Hagen, PharmD, 340B ACE, Vice President Pharmacy Compliance

Embarking on the journey of transitioning from contract pharmacy to entity-owned pharmacy, or launching a new in-house pharmacy, is a multifaceted endeavor that requires meticulous planning and execution. Considering continued manufacturer restrictions, this transformation not only enhances the operational efficiency of healthcare facilities but also significantly impacts patient care and the overall financial health of the institution. Below are comprehensive considerations and steps to guide you through this complex process:

Opening a Pharmacy

• File DBA Name with State
• Lease or Own Building
• Design and Construction
• IT Considerations: Software, Hardware
• Licensing and Ownership: BOP, DEA, Liability Insurance
• Accounts: Wholesaler Accounts and CSOS, Supplies, Reverse Distributor, Split Billing, PSAO, Direct with PBMs
• Marketing
• Apply for NPI on NPPES
• Medicare Enrollment
• Medicaid Billing Number with State
• Liability Insurance
• Finance and Reconciliation
• Staffing, Training, Workflow

When changing ownership of a pharmacy, the following are important considerations:

• Bill of sale.
• Employee Transfer, plan for Staffing, Training, Workflow.
• Communication to BOP and the DEA – Assign POA, Obtain new license.
• Medicare change of ownership (CHOW).
• Medicaid Billing Number – change of ownership form.
• Obtain new NPI.
• NCPDP – Should be able to stay the same.
• Inventory and Business Valuation – Inventory should be neutral when based on a replenishment model.
• Update Liability Insurance.
• Update Accounts: Wholesaler, Supplies, Reverse Distributor, Third Party Administrator (review settings), PSAO, Direct Accounts, PBMs
• Market the transition and new offerings.
• Determine a plan for proof of CE ownership (e.g., pharmacy license, business license, certificate of liability insurance, or listing of the pharmacy on the CE’s grant or MCR and corresponding trial balance).

Benefits of Owned Pharmacy

• Improve patient experience.
• Increase health system revenue.
• Increase collaboration between clinics and pharmacy.
• Likely shared EHR access.
• Specialty staff embedded into clinics and pharmacies.
• Utilize the Patient Assistance Program at the pharmacy.
• Patient retention.
• Align employee benefits.
• Patient assistance programs.
• Improved outcomes.
• Hospital discharge follow-up rate improves, decreases in 30-day readmissions, improved patient satisfaction and quality scores, and population health management – Evans, PharmD, CGP. “Every hospital needs an outpatient pharmacy.” Pharmacy Times, 2018-01-02, 09:15:45. Accessed October 19, 2021.

Challenges of Ownership:

• Initial costs
• Location and space
• Implementation time
• Labor
• GPO implications
• Supply chain
• Limited distribution drugs
• Restricted payer network
• Decreasing reimbursement
  • Validate pricing – Update PVP information and verify that the profile on 340B ESP is accurate if previously submitted.
  • Does your state have laws in place that protect from PBM discrimination?
• Clawback

340B Operational Consideration

• Closed Door or Open Door
• Carve-in or Carve-out
• Inventory Type
• Auditable Records

Key Compliance Considerations:

• List the pharmacy as a ship to the parent, especially if the address is different than the parent. FAQ1577.
• Add the NPI(s) and MBN(s) to OPAIS for the parent and all Child/Associated Sites if Carving in.
• Watch for contract changes, meaning watch that reimbursement doesn’t change as a 340B entity type.
• Hospitals subjected to the GPO prohibition, which plan to operate an in-house retail pharmacy, must have a 340B and WAC account.
• Give vendors ample notice of change.
• Update policy with new entity-owned pharmacy procedures to prevent diversion and duplicate discounts.

Transitioning to an entity-owned pharmacy or launching a new in-house entity-owned pharmacy is a strategic move that can significantly benefit healthcare facilities. While the process involves numerous challenges and considerations, the potential improvements in patient care, operational efficiency, and financial performance make it a worthwhile endeavor. By carefully planning and addressing each aspect of the transition, healthcare providers can ensure a smooth and successful implementation.