The 340B Drug Pricing Program


340B Drug Pricing Program at a Glance

For more than 30 years, the 340B Drug Pricing Program has provided financial help to hospitals serving vulnerable communities to manage rising prescription drug costs.

Section 340B of the Public Health Service Act requires pharmaceutical manufacturers participating in Medicaid to sell outpatient drugs at discounted prices to health care organizations that care for many uninsured and low-income patients. These organizations include federal grantee organizations and several types of hospitals, including critical access hospitals (CAHs), sole community hospitals (SCHs), rural referral centers (RRCs), and public and nonprofit disproportionate share hospitals (DSH) that serve low-income and indigent populations.

The program allows 340B hospitals to stretch limited federal resources to reduce the price of outpatient pharmaceuticals for patients and expand health services to the patients and communities they serve. Hospitals use 340B savings to provide, for example, free care for uninsured patients, offer free vaccines, provide services in mental health clinics, and implement medication management and community health programs.

According to the Health Resources and Services Administration (HRSA), which is responsible for administering the 340B program, enrolled hospitals and other covered entities can achieve average savings of 25% to 50% in pharmaceutical purchases. Despite significant oversight from HRSA and the program’s proven record of decreasing government spending and expanding access to patient care, some want to scale it back or drastically reduce the benefits that eligible hospitals and their patients receive from the program.

AHA’s Position on the 340B Drug Pricing Program

  • Protect the 340B program for all providers and ensure the program continues to help providers stretch limited resources and provide more comprehensive services to more patients.
  • Advocate that the Department of Health and Human Services (HHS) remedy all affected hospitals for the unlawful Medicare payment cuts and expand drug manufacturer transparency.
  • Thwart drug manufacturers’ efforts to unilaterally and unlawfully change the 340B program.
  • Support eliminating the orphan drug exclusion for certain 340B hospitals.
  • Oppose efforts to scale back, significantly reduce the benefits of, or expand the regulatory burden of the 340B program, including proposals to dramatically expand reporting requirements on certain 340B hospitals and impose a moratorium on new entrants into the program.
  • Support expanding the program to reach additional vulnerable communities, including investor-owned hospitals that provide care for underserved populations.
  • Support program integrity efforts that are equitable and accountable for both providers and drug companies to ensure adherence to the program’s rules and regulations.