For many covered entities, the pharmacy strategy conversation starts with a critical question: should we build and operate our own pharmacy, or should we rely on contract pharmacy arrangements? Both models have benefits and challenges, and the right path depends on your organization’s goals, patient population, and risk tolerance.

At RxTrail, we’ve worked with covered entities navigating both options. Here’s a breakdown to help you think through which approach might fit best.

1. CE-Owned Pharmacy: Taking Control In-House

A CE-owned pharmacy is operated directly by the covered entity, typically on-site or closely integrated with the clinic.

Benefits:

• Greater control over 340B compliance and oversight
• Stronger integration with care teams and patient services
• Creates a reliable, long-term revenue stream that stays within the organization
• Reduces dependency on manufacturer contract pharmacy restrictions

Considerations:

• Higher upfront investment (staffing, space, systems)
• Requires operational expertise and compliance infrastructure
• Limited patient reach compared to multiple external locations

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2. Contract Pharmacy: Extending Reach Through Partnerships

A contract pharmacy is a retail or specialty pharmacy outside of the CE that dispenses drugs on the entity’s behalf.

Benefits:

• Expands patient access through multiple locations
• Lower upfront cost and operational burden
• Can capture additional prescriptions that wouldn’t otherwise be filled at the CE

Considerations:

• Revenue is shared with the contract pharmacy and often diluted
• Compliance oversight can be more complex
• Impacted by manufacturer restrictions and ESP reporting
• Less direct integration with your care delivery model

How to Choose the Right Pharmacy Model for Your Health Center?

The decision doesn’t always have to be “either/or.” Many covered entities start with contract pharmacy arrangements to establish a revenue stream quickly, then build out their own pharmacy for greater long-term stability and compliance control. Others run both side by side, balancing community reach with internal sustainability.

The pharmacy landscape is shifting quickly, and what worked five years ago may no longer be sustainable today. For covered entities, evaluating CE-owned vs. contract pharmacy options is about more than revenue, it’s about safeguarding your 340B program, supporting patient access, and building a resilient foundation for the future.

At RxTrail, we help covered entities analyze the financial impact of each model and create a pharmacy strategy that aligns with both your mission, your long-term business goals and 340B Program.

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