The 340B Drug Discount Program

A Review and Analysis of the 340B Program
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Congress created the 340B program in 1992 to help uninsured indigent patients gain better access to prescription medicines. To achieve that goal, Congress created a program that requires pharmaceutical manufacturers to provide discounts on outpatient prescription drugs to entities that serve high numbers of uninsured indigent patients. This program, as originated, provided discounts to outpatient facilities for the purpose of sustaining certain services to this population. 340B is important today and going forward for the many patients who are dependent on this program. This white paper examines the history and original intent of the program as well as highlights key findings to help policymakers ensure that the 340B program meets its stated purpose and to provide a roadmap for next steps to be considered.

In addition to making other important observations, this paper also raises questions about whether the 340B program is leading to unintended and potentially harmful consequences for patients. Areas of most concern include the following:

  • Concerns that some uninsured indigent patients may not be experiencing direct benefit from the program's existence.
  • Anecdotal evidence that clinical decisionmaking may be skewed by efforts to take advantage of the 340B discount.
  • Growing evidence of displacement of non-340B providers who serve a key role in providing patient access to important health care services. The paper also identifies critical ambiguities in the 340B standards and potential deviations from Congressional intent that, along with limited oversight of the program, have made it difficult to determine whether the program is meeting Congressional goals.

In addition to identifying unintended and potentially harmful consequences for patients, the paper identifies several key findings to help policymakers ensure that the 340B program meets its stated purpose—helping uninsured indigent patients gain better access to prescription medicines. These key findings provide a roadmap for next steps:

  • Adequate funding for the Health Resources and Services Administration (HRSA) is needed to ensure it is appropriately resourced to oversee the 340B program in support of the efforts it has already begun.
  • Continued oversight of the 340B program is needed to ensure that the program is consistent with its statutory purpose.
  • Improved transparency is necessary to help advance the program's goals and ensure that resources are being directly used to reduce drug costs for uninsured indigent patients.
  • Full and transparent accounting for all costsavings derived from the 340B program should be required to ensure that they are used to reduce drug costs for uninsured indigent patients.
  • Clearer definition of the term "patient" is needed to ensure that it corresponds to the purpose of the 340B law, particularly given the increased coverage of prescription medicines by commercial insurance, coverage of uninsured persons through the Affordable Care Act and creation of Medicare Part D providing prescription drug insurance to seniors and disabled persons.
  • Clarification of hospital eligibility criteria to ensure the 340B program is (1) meeting its intended purpose of helping uninsured indigent patients improve access to prescription medicines and (2) does not further expand because more patients are insured and fewer are uninsured.
  • 340B guidance should follow formal notice and comment rulemaking under the Administrative Procedures Act in order to ensure that careful, well-informed decisions are made and that all stakeholders have the opportunity to provide information and perspectives before HRSA policies are finalized.

Conclusion: Because of the potentially serious consequences that could evolve from these and other findings, Congress should conduct a thorough examination of the 340B program to ensure it is meeting its original goals.

Download the full whitepaper

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