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What’s the 411 About 340B?

Updated: Apr 12, 2022

If you have recently seen articles or advocacy advertisements about a US federal drug pricing program named 340B and wondered about it, this blog entry is for you.

US Capitol dome

Good Intentions

The 340B Drug Pricing Program has been around for close to thirty years. It was named after section 340B of the Public Health Service Act, created under Section 602 of the Veterans Health Care Act of 1992. “Section 340B requires pharmaceutical manufacturers to enter into an agreement, called a pharmaceutical pricing agreement (PPA), with the HHS Secretary in exchange for having their drugs covered by Medicaid and Medicare Part B…”(1) This allows qualifying providers, such as hospitals, clinics, and their allied outpatient centers in rural and low-income communities to offer outpatient drugs from the pharmaceutical manufacturers at discounted pricing to underinsured and uninsured patients. It also allows, in addition to the lower-priced medicines, those eligible facilities to “provide free care for uninsured patients, offer free vaccines, provide services in mental health clinics, and implement medication management and community health programs.”(1) The program serves as a critical safety net to the places offering care to the higher-risk and higher-need (and uninsured) demographic.


As you can imagine, any program that requires discounts on medications from 20-50% and began with about 90 hospitals to more than 2000 today, or currently about one-third of all US hospitals, will be closely examined by the manufacturers. Critics say the eligible facilities (covered entities, or CE) abuse the program and utilize the discounts as a new revenue stream. For example, 340B “allows them to buy outpatient drugs for all eligible patients, not only those who are poor or uninsured, and then use the savings in other areas. Others allege that hospitals are upselling the discounted drugs to privately insured patients and Medicare beneficiaries.” (2,3)

The Forecast

With aspects of the program again being scrutinized by Congress, after being expanded with the Affordable Healthcare Act and being reviewed by the Biden administration, interested parties are queuing up their lobbyists for what looks to be a protracted fight.



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