Understanding the 340B Drug Pricing Program
Created by Congress in 1992, the 340B program is a vital lifeline that helps safety-net providers stretch scarce federal resources to reach more eligible patients and provide more comprehensive services.
Watch this brief introduction to understand how the 340B program works and its impact on healthcare access.
Program Overview
The 340B Drug Pricing Program requires drug manufacturers to provide significant price discounts on outpatient drugs purchased by certain federal government grantees and healthcare providers.
The program allows qualifying healthcare providers (known as covered entities) to purchase discounted outpatient prescription drugs from manufacturers and bill payers at the nondiscounted price. This generates revenue that these hospitals and clinics can use to expand care for low-income and uninsured patients.
Who Qualifies?
To qualify for the 340B program, healthcare providers must meet specific requirements. These "covered entities" serve the nation's most vulnerable populations.
Eligible Hospital Types
Federal Grantees
- Federally Qualified Health Centers
- Ryan White HIV/AIDS Program
- Tuberculosis Clinics
- Black Lung Clinics
- Hemophilia Treatment Centers
- Urban Indian Health Centers
Key Benefits
Subsidizing Uncompensated Care
Savings help cover the costs of care for uninsured patients who cannot afford to pay, reducing the financial burden on safety-net hospitals.
Patient Access to Medication
Allows patients to receive free or significantly discounted medications, improving adherence and health outcomes.
Expanded Services
Enables covered entities to offer comprehensive services like transportation, case management, and specialized clinics that might otherwise be unaffordable.
History & Context
The 340B program was designed to fix an unintended consequence of the Medicaid Drug Rebate Program enacted in 1990. When the Medicaid rebate program required manufacturers to provide the "best price" to Medicaid, this included voluntary discounts to community health centers and public hospitals.
Consequently, drug manufacturers stopped offering voluntary discounts, causing drastic price increases for safety-net providers. Congress enacted the 340B program in 1992 to address this problem and restore access to affordable medications.