If by "necessary" you mean that without it one would die than I'd say physical contact is not a need or necessary. In fact as adults we only have 5 true needs.
1. Air 2. Water 3. Food 4. Shelter 5. Clothing (It's the law in most places) Naturally all of these things are available in any county jail.
Most of us however want more out of life than then what is "necessary" to live. We desire physical contact, love & romance, as well as various material possessions to enhance our lives.
You could live without having physical contact with another person but most people wouldn't be "happy" living that way.