The 340B Drug Pricing Program

Posted at 12:23 AM on Apr 24, 2022


Author: Keinah Baron, National Student Advocacy Committee (NSAC). NSAC brings together student advocates across the country to build support for and further Prescription Justice’s legislative and policy agenda to end the crisis of high drug prices. The NSAC authors are proudly responsible for their own content. 

Medication can be a powerful healing substance to treat or prevent disease, infections, and other health-related complications. However, medication cannot fulfill its purpose if it is not taken. There are many reasons why patients nationwide avoid taking it, simply from inadvertently neglecting or facing its side effects. A survey by the National Center for Health Statistics (NCHS) researchers reveals another reason: adult Americans do not take their medicines as prescribed because they can’t afford them.

Unfortunately, skyrocketing drug prices constitute one of the many heinous outcomes of corporate America. Of a particular note, the effects of the healthcare pricing crisis do not affect all equally. A report from the National Center for Health Statistics claims that the consequences of high prescription drug prices particularly jeopardize the lives of low-income and uninsured patients who cannot afford it. The same affected patients are in a plight between choosing meals or medication in one of the world's most prosperous countries. To address this ongoing nationwide prescription crisis, section 340B of the Public Health Service Act mandates pharmaceutical manufacturers to provide outpatient drugs at reduced prices to financially struggling patients on Medicaid plans across the country. The 340B program has been a crucial component of our nation’s healthcare safety net since 1992. President Bush and bipartisan representatives in congress signed section 340B, precursing the Medicaid rebate law, which provided a similar relief from high drug costs but with more benefits and services.

An article from the Association of American Medical Colleges (AAMC) shares that compared to other drug pricing bills, 340B provides “big benefits” without “big government”. Meaning, the Drug Pricing Program enables their covered entities to stretch federal resources to provide comprehensive services to communities and the most financially disadvantaged at no cost to taxpayers. In turn, since the covered entities get savings from pharmaceutical companies, any remaining costs must be used to further expand medical services to struggling patients. The American Hospital Association (AHA) states this includes “offering free vaccines, selling other drugs at a much lower rate, providing services in mental health clinics, and implementing medication management and community health programs”.

Based on the information the AHA provided, the program’s covered entities usually include: 

  • rural referral centers 
  • outpatient clinics
  • outpatient cancer center hospitals
  • critical access hospitals 
  • community health centers 
  • children hospitals 
  • safety net hospitals 
  • critical access hospitals 
  • sole community hospitals 
  • nonprofit disproportionate share of hospitals that serve low-income and indigent populations 

The 340B program significantly grew over the past couple of decades. As of 2019, More than 2,000 hospitals and 25,000 contract pharmacies are partnered with and covered by the program. While 340B seems to perform well, debates about the program’s clarity have spiked overtime during its 30-year-old statute. Under Trump’s administration, several members of congress offered new proposals to alter the program’s fiscal 2019 budget. Furthermore, some critics questioned whether 340B hospitals were congruously utilizing their program savings appropriately. Others under Trump’s watch also assumed that participating entities are not using the remainder of 340B savings to provide further extensive free care for struggling patients. 

To address these concerns, researchers at the L&M Policy Research shared updated statistics in their Analysis of 340B Disproportionate Share Hospital Services to Low-Income Patients. The report claims 340B Disproportionate share hospitals (DSHs) treat significantly more low-income patients than non-340B hospitals, “with the average low-income patient load for 340B DSHs being 41.8%, compared to 27.2% for non-340B hospitals”. These results help verify the legitimacy of 340b, proving the program is fulfilling its purpose of aiding low-income patients in two ways: it enables patients to receive a wide range of medical services and allows them to get their prescribed medication at affordable prices. When it all comes down to it, both routes proactively encourage patients to get checked without worrying about costs. 

On May 17, 2021, the Biden administration and the Health Resources and Services Administration (HRSA) raised attention to 340B as they addressed the program in an assertive statement. Based on the information the National Law Review provided, the report claims pharmaceutical manufacturers must immediately begin offering "340B discounted covered outpatient drugs to covered entities" regardless of whether the covered entity uses "an in-house pharmacy or contract pharmacy" to distribute those prescriptions to eligible patients. Furthermore, HRSA asserts that pharmaceutical manufacturers who "restrict access to 340B pricing based on covered entities' will result in HRSA's assessment of Civil Monetary Penalties against those manufacturers who fail to comply with these regulations. Seeing Biden taking administrative action to reform and habilitate 340B is one of the most significant changes we currently see in the healthcare and medical industry. These revisions help mend our prescription crisis in some way, even though our nation has a long way to go to end it entirely.  

Until this day, ordinary citizens continue to suffer from our ongoing prescription crisis. However, programs like 340B slowly improve our damaged pharmaceutical industry by enabling patients nationwide to seek the medication they need at a much lower rate. With the program’s recent revisions, low-income patients from impoverished communities continue to acquire better access to affordable medicines. By granting these patients reduced drug prices, 340B’s efforts lighten the hardships they face from overpriced prescriptions and compel Americans to purchase their medication to sustain their health affordably. 


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