Sanofi Joins the Ranks of Manufacturers Tightening Restrictions on Use of Contract Pharmacies

Unfortunately, there’s more bad news to share on the contract pharmacy (CP) front. Last week, the drug maker Sanofi – a major manufacturer of insulin – significantly tightened its restrictions on Community Health Center use of CPs, including placing unprecedented restrictions on CHC-owned off-site pharmacies. Sanofi was one of the first three drugmakers to impose CP restrictions, starting in October 2020. Since then, Sanofi has allowed CHCs to use unlimited CPs if they submitted data to ESP. To date, CHCs have also been able to designate a single CP for each care delivery site without an in-house pharmacy. The new rules, effective July 1, 2024:

·    Sanofi is ending the option for FQHCs to receive 340B pricing at an unlimited number of CPs in exchange for submitting data to ESP. (This leaves Gilead and Novo Nordisk as the only manufacturers who still allow health centers to avoid CP restrictions by reporting data to ESP.)

·    FQHCs who own one (or more) of their own pharmacies are ineligible to receive 340B-priced Sanofi drugs at any contract pharmacy.

·    FQHCs who do not own a pharmacy that is co-located within a care delivery site registered on OPAIS can designate a single contract pharmacy to receive 340B-priced drugs. These health centers will not be required to submit data to ESP for this CP and must designate their single CP on ESP as soon as possible – even if they have already designated a CP. It appears that all current CP designations will soon be erased.

·    Sanofi distinguishes between two types of CHC-owned pharmacies: those that are co-located at an FQHC care delivery site registered on OPAIS (“CHC-owned on-site”), and those that are stand-alone (“CHC-owned off-site”). Sanofi effectively treats CHC-owned off-site pharmacies as CPs, making them ineligible to receive 340B-priced drugs unless the CHC has no on-site pharmacies and designates its CHC-owned off-site pharmacy as its single CP location. The new policy is very concerning as it marks the first time that any manufacturer (or other stakeholder) has sought to limit access to 340B drugs at CHC-owned pharmacies.

·    ·Going forward, Sanofi will consider all of a CHC’s care delivery sites together as constituting a single covered entity (CE.) This means that the strategy of registering one pharmacy (in-house or contract) for each delivery site will no longer work for Sanofi.

Questions? Contact Eric Kiehl, PACHC Director of Policy and Partnership.

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