340B Drug Program Changes: How Hospitals Get Cheaper Drugs for Poor Patients

The 340B program helps hospitals get drugs for low-income patients at lower prices. This program is now being looked at closely by the government.
By Newsroom | Healthcare, Government Programs |

The 340B Drug Pricing Program, a federal initiative designed to lower prescription drug costs for healthcare facilities serving vulnerable populations, is currently a subject of intense discussion and policy debate. While its proponents argue it effectively expands access to care, critics raise concerns about its structure and potential for financial gain by some participants. Understanding the program's origins, operations, and impact requires a careful look at various perspectives and available data.

The 340B program, established by Congress, allows eligible hospitals and clinics, known as "covered entities," to purchase outpatient drugs at significantly reduced prices from manufacturers. These savings are intended to help these facilities provide a wider range of services to low-income and uninsured patients, thereby supporting their safety net mission. However, questions have arisen regarding how these savings are utilized and whether the program is consistently achieving its original aims. Recent legislative proposals and administrative actions highlight ongoing efforts to address these complexities.

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  • 340B Program: A federal discount program providing reduced drug prices to eligible healthcare facilities.

  • Covered Entities: Hospitals and clinics that qualify to participate in the 340B program.

  • Safety Net Mission: The role of certain healthcare facilities in providing care to underserved populations.

Program Origins and Intent

The 340B Drug Pricing Program was created in 1992 as an amendment to the Public Health Service Act. Its core objective was to shield safety net providers from the escalating costs of prescription drugs, enabling them to better serve their patient populations. This intention is underscored by America's Essential Hospitals, which states that "Enabling access to complex care is the exact intent of the 340B program." The program allows these entities to obtain drugs at discounted prices, which are then expected to be reinvested into patient care and services.

Program Mechanics and Criticisms

Participating hospitals that are eligible as disproportionate share hospitals (DSH-type) face specific restrictions. They are unable to utilize Group Purchasing Organizations (GPOs) for outpatient drugs if they are enrolled in the 340B program. Additionally, rural hospitals participating in 340B cannot receive pricing benefits for drugs designated as orphan drugs, regardless of their medical use. This complexity has led to discussions about how savings are managed, with some reporting suggesting that hospitals can indeed generate revenue from these drug discounts.

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  • DSH-type hospitals: A category of hospitals that serve a disproportionately large number of low-income patients.

  • Orphan drugs: Medications developed to treat rare diseases or conditions.

Reforming and Refining the Program

There are ongoing efforts to assess and potentially reform the 340B program. The U.S. Department of Health and Human Services (HHS) is exploring options, including a potential 340B Rebate Model Pilot Program. A recent court decision in Maine vacated and remanded a previous rebate model pilot application to HHS, indicating a need for further administrative review. The Health Resources and Services Administration (HRSA), an agency within HHS, has issued a Request for Information (RFI) to gather public input on using rebates to enforce the program's ceiling price.

Legislation also plays a role in shaping the program's future. Proposals such as the "340B Transparency Act" aim to increase clarity in program operations. The "Rural 340B Access Act" seeks to expand eligibility to Rural Emergency Hospitals. Other proposed legislation, like the "Equitable Access to 340B Act" and the "340B PATIENTS Act," focuses on extending discounts to territorial disproportionate share hospitals and codifying policies related to contract pharmacy usage, respectively.

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  • Rebate Model Pilot Program: A proposed initiative by HHS to use rebates to manage drug pricing within the 340B program.

  • Request for Information (RFI): A formal request for public comments and data on a specific issue.

Program Growth and Utilization

The growth of the 340B program has been noted, with some sources attributing it to rising drug prices and compliant utilization rather than widespread abuse. America's Essential Hospitals argues that the program's expansion reflects these factors, maintaining that "Program growth reflects drug price growth and compliant utilization—not abuse." This perspective suggests that the program's current scale is a natural consequence of its design and the broader healthcare market.

Diverse Perspectives on Program Impact

Research into the 340B program's effects is ongoing. A scoping review of empirical, peer-reviewed literature is examining the program's consequences, including its relationship with hospital provision of uncompensated care. This academic approach aims to provide a data-driven understanding of how the program influences healthcare delivery and financial outcomes for participating facilities and their patients.

  • Scoping Review: A type of literature review that maps out the existing evidence on a particular topic.

  • Uncompensated Care: Healthcare services provided to patients who cannot pay for them.

Conclusion

The 340B Drug Pricing Program remains a complex but vital component of the U.S. healthcare system, intended to support access to care for vulnerable populations. While its fundamental purpose is to leverage drug discounts for patient benefit, ongoing policy discussions, legislative proposals, and administrative reviews highlight a continuing effort to ensure its effective and equitable operation. The program's future will likely be shaped by efforts to balance its original intent with concerns about transparency and financial integrity, informed by both academic research and public input.

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Frequently Asked Questions

Q: What is the 340B Drug Pricing Program?
The 340B program is a US government plan that helps hospitals and clinics serving many poor or uninsured patients buy medicines for less money. The goal is to help these places offer more care to people who need it.
Q: How do hospitals save money with the 340B program?
Eligible hospitals, called 'covered entities,' can buy drugs from makers at a lower price. They are supposed to use these savings to help pay for care for low-income patients and offer more health services.
Q: Why is the 340B program being talked about now?
Some people question if all the savings are used to help patients, or if some hospitals make too much money from the discounts. The government is looking at the program to make sure it works as planned.
Q: What changes might happen to the 340B program?
The government is looking at new ways to manage drug prices, like a pilot program using rebates. There are also new laws being proposed to make the program clearer and possibly include more types of rural hospitals.
Q: Do more hospitals use the 340B program now?
Yes, the program has grown. Supporters say this is because drug prices are higher and hospitals are using the program correctly to help more patients.
Q: What is the main goal of the 340B program?
The main goal is to help hospitals that serve many poor and uninsured people afford to give them care. It uses drug discounts to help these hospitals keep their 'safety net mission' of caring for those who need it most.