The 340B Drug Pricing Program: Cut Backs or More Addendum’s?

The 340B Drug Pricing Program: Cut Backs or More Addendum's?

Created by the US federal government in 1992, the 340B Drug Pricing Program was supposed to help poor patients acquire outpatient drugs at significantly reduced prices. It mandates drug manufacturers to allow covered entities to reach as many eligible patients as possible by stretching scarce federal resources. Unfortunately, the pricing program has now become a source of pain, rather than cure, for many patients.

A clever lawyer discovered a massive loophole in the 340B Drug Pricing Program, turning it from an obscure government program into a means for hospitals to make money at the expense of patients. 340B specifies that drug manufacturers provide discounts for poor people, not whoever provides the outpatient drugs. This gave hospitals the idea to keep the discounts for themselves, instead of passing it on to patients. Pharmacies, especially brand new stores, are exploiting the loophole as well.

But the benefits that hospitals and pharmacies are enjoying right now are at risk of coming to an end. A report by AIR 340B, a group linked to drug makers, revealed that the 340B Drug Pricing Program has gone unchecked for too long, resulting in an estimated program sales of $16.1 billion in 2016 and an expected total drug sales to reach $23 billion by 2021. The group is urging policymakers to reexamine the program, and ensure that it serves its original intent. They're also pushing to limit the program's expansion.

In an AIR 340B-sponsored roundtable discussion, senior legislative assistant for Rep. Chris Collins (R-N.Y.), Ted Alexander said that Collins is looking to improve transparency of the program, but nothing is certain about what will happen to it. What is certain, however, is that a number of different health care bills will be submitted next Congress, and stakeholders would do well to gather information as to how the 340B Drug Pricing Program will affect federal spending

Last November, the Health Resources and Services Administration (HRSA) has released an addendum to the 340B Drug Pricing Program. This required drug manufacturers to include in their existing PPA the following terms:

  • Manufacturer shall furnish the Secretary with reports, on a quarterly basis, that include the price of each covered outpatient drug that is subject to the Agreement, that according to the manufacturer, represents the maximum price that covered entities may permissibly be required to pay for the drug (referred to in this addendum as the “ceiling price”).
  • Manufacturer shall offer each covered entity covered outpatient drugs for purchase at or below the applicable ceiling price, if such drug is made available to any other purchaser at any price.

With the new changes coming, the fight to discredit the drug pricing program is renewed.

Hospitals, pharmacies and other safety-net providers, however, claim that the program must be protected, since it allows entities to provide improved healthcare services with little to no insurance.

In a December email to Bloomberg BNA, 340B Health’s vice president of communications, Randy Barrett, accused the drug industry to have “commissioned a cynical report designed to protect future profits”. Any move that will cut back the program could have an adverse effect to the poor across America, since this will result in an increase in medicine prices and a decrease in access to clinical care.

With the ongoing debate and opposing moves, the future of the 340B Drug Pricing Program is definitely uncertain.


12 1582