Department of Health and Human Services

The Department of Health and Human Services’ Office of the Inspector General (OIG) recently issued a report on drug supply chain security with implications for 340B contract pharmacies, which have recently drawn scrutiny by critics of the 340B program. The report, titled “Drug Supply Chain Security: Wholesalers Exchange Most Tracing Information,” is the first in a series of OIG reports on drug supply chain security following the implementation of the Drug Supply Chain Security Act, otherwise known as the “track-and-trace” law.  The track-and-trace law, implemented by the Food and Drug Administration (FDA), requires trading partners in the drug supply chain to exchange information about each transfer of ownership of a drug in order to trace the movement of drug products. The FDA can then use these records to investigate suspected diversion of drugs in the supply chain.

In the OIG’s report, three large wholesalers reported complications with sending drug product tracing information to 340B contract pharmacies. While 340B covered entities purchase and own the 340B drugs, the wholesalers ship the drugs directly to 340B contract pharmacies to dispense on behalf of the covered entity.  Wholesalers reported that 340B contract pharmacies often request drug product tracing information even though they do not own the product. Some wholesalers  send drug product tracing information to contract pharmacies that show they have a contract pharmacy  agreement with the covered entity, while others will only send the information to the covered entity. Wholesalers requested clarification about sharing drug product information with 340B contract pharmacies because they are concerned about sharing information with an entity that does not own the drug products. The OIG recommended that the FDA provide technical assistance to wholesalers regarding the complex intersection between 340B and the track-and-trace law.