7 things to know about the 340B Drug Pricing Program

The 340B Drug Pricing Program — which has stirred up considerable controversy in recent years — allows certain safety-net healthcare organizations to purchase outpatient drugs at discounted prices.

Here are seven things to know about the 340B Drug Pricing Program.

1. Congress enacted section 340B of the Public Health Service Act in 1992 to establish the 340B Drug Pricing Program. The program is administered by the Health Resources and Services Administration within HHS.

2. The following types of hospitals are eligible to enroll in the 340B Drug Pricing Program: children's hospitals, critical access hospitals, disproportionate share hospitals, free-standing cancer hospitals, rural referral centers and sole community hospitals. In testimony before the House Energy and Commerce Health Subcommittee in March, Ann Maxwell, assistant inspector general for evaluation and inspections for HHS' Office of Inspector General, said there were 11,180 providers participating in the program as of Feb. 28.

3. Fueled in large part by the participation of disproportionate share hospitals, the 340B Drug Pricing Program is expected to rapidly expand in coming years, according to a whitepaper by the Berkeley Research Group, which was funded by the Alliance for Integrity and Reform of 340B. There were 185 disproportionate share hospitals enrolled in the 340B program in 2003, and that number grew to approximately 1,000 by 2013. The growth is largely due to the alteration of the disproportionate share hospital calculation for certain hospitals under the Medicare Modernization Act of 2004, according to the study.

4. The Berkeley Research Group analysis also found 340B drug sales have grown, with total drug purchases at the 340B price increasing from $1.1 billion in 1997 to more than $7 billion in 2013. Continuing with the growth trend, total purchases are expected to increase to more than $16 billion by 2019.

5. An audit by the Government Accountability Office released in July revealed the 340B Drug Pricing Program may be leading to the prescription of more drugs or more expensive drugs. The audit found average spending on Medicare Part B drugs was $144 per patient at 340B disproportionate share hospitals in 2012, more than double the $60 per patient in 2012 at non-340B disproportionate share hospitals.

6. Pharmaceutical companies and some lawmakers have criticized the 340B Drug Pricing Program, claiming hospitals are abusing the discount for monetary gain. HRSA estimated the program saved providers approximately $3.8 billion in 2013. However, drug companies want the government to require healthcare organizations to show those savings are being used for patient care.  

7. Industry groups, including the American Hospital Association, have offered strong support for the program. In March, the AHA called on Congress to preserve the 340B Drug Pricing Program in a statement submitted to the House Energy and Commerce Health Subcommittee for a hearing examining the program. The statement highlighted how the program helps hospitals improve access to comprehensive healthcare services for more patients.

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Editor's Note: This story was updated on July 8, to include the organization that funded the Berkeley Research Group study.


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