340B Drug Pricing
Sep 07, 2023

The federal 340B Drug Pricing Program, created in 1992, allows qualifying hospitals and clinics that treat low-income and uninsured patients to buy outpatient prescription drugs at a discount.  It  has been a critical program for many hospitals and health systems, providing significant savings and the ability to offset a fraction of their uncompensated care.


Drug manufacturers have expressed concern about the program’s expansion, especially since multiple contract pharmacy relationships were permitted.  Purchases under the 340B program were $44 billion in 2021, about 16 percent more than in 2020. Manufacturers have argued that the statute creating the 340B program does not expressly permit multiple contract pharmacy arrangements. They also assert that the program lacks transparency and oversight, and question whether the savings are being used to lower costs and improve care for vulnerable patients.


Hospitals and other covered entities dispute that the 340B program’s growth is unwarranted, given that a significant amount of the care provided to America’s under- or uninsured population is provided by 340B entities, and policymakers intentionally expanded the program to address this.  Furthermore, the cost of the discounts that drug manufacturers provide remains a small percentage of their total U.S. sales (approximately 7% of total drug expenditures) in 2020.  They argue that manufacturers are attempting to limit use of the discount drug program only to maximize their profits, and that any effort to limit use of contract pharmacies is a violation of the 340B statute as well as HHS guidance.


Over 20 manufacturers now have placed restrictions on providing discounts to prescriptions filled through contract pharmacy arrangements.  Most are requiring covered entities to submit patient drug claims data through a program called 340B ESP to receive the discounted price, or they have severely limited the number of contract pharmacies permitted by a covered entity. They argue these steps are needed to ensure that duplicate discounts are not being applied and to ensure that providers are adhering to the program’s intent.