Fact Sheet: The 340B Drug Pricing Program

The Issue

For more than 25 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 community health centers, children’s hospitals, hemophilia treatment centers, 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 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 percent in pharmaceutical purchases. Despite increased 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 significantly reduce the benefits that eligible hospitals and their patients receive from the program.

AHA Position

  • Supports efforts to rescind the Centers for Medicare & Medicaid Services’ (CMS) drastic payment cuts for many hospitals in the 340B program and expand drug manufacturer transparency.
  • Supports eliminating the orphan drug exclusion for certain 340B hospitals.
  • Opposes 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. These proposals would involve major changes in hospital inventory practices, could prove to be unworkable in mixed-use settings and are unwarranted given the value the 340B program provides to the communities these hospitals serve.
  • Believes the 340B program is essential to helping providers stretch limited resources to better serve their vulnerable communities.
  • Supports expanding the program to reach additional vulnerable communities, including investor-owned hospitals that provide care for underserved populations.
  • Supports voluntary program integrity efforts already underway to ensure this vital program remains available to safety-net providers.

Related Resources

Letter/Comment
Legal Documents
As part of its yearly process to establish Medicare rates under the Outpatient Prospective Payment System (OPPS), the U.S. Department of Health and Human…
Letter/Comment
Member Non-Fed
Re: CMS–10709, Hospital Survey for Specified Covered Outpatient Drugs; Agency Information Collection Activities: Proposed Collection; Comment Request (Vol. 84…
Advisory
Member
The Centers for Medicare & Medicaid Services (CMS) Nov.
Legal Documents
Public
AHA, Associations, Hospitals response to the government’s letter to the D.C.
Legal Documents
Public