What is 340b? Learn more

What Is 340B and How Does It Affect You?

By Ryan Yuhas, Director of Federal Government Relations at UPMC

The 340B drug pricing program helps hospitals care for vulnerable patients in some of the most underserved areas of the country — and new cuts to the program could pass increased costs from the hospitals to the consumer.

Learn more about what this program is and why it matters to you and your community.

What Is 340B?

Passed by Congress in 1992, the 340B drug pricing program requires that pharmaceutical companies sell outpatient drugs to health care organizations at discounted rates.

Discounts are only offered to health care providers that serve a large number of uninsured and low-income patients, usually in rural communities, and offer vital services to cancer patients and children. The discounts for the medications can be up to 50 percent of the medication cost and are negotiated with the drug companies.

The money saved allows facilities that qualify to continue caring for vulnerable populations in some of the most underserved areas of the country. 340B hospitals and clinics also use their savings to reinvest in comprehensive services, such as trauma care, labor and delivery, HIV-AIDS, immunizations and chronic conditions.

What Is Changing with the Program?

As of Jan. 1, the Centers for Medicare and Medicaid Services (CMS) started cutting the payment amounts for these medications by 28.5 percent for some hospitals and clinics. For health care providers in the 340B program, that is a $1.6 billion loss in reimbursement, according to CMS.

With these dramatic cuts, drug prices will increase and providers that offer care to vulnerable populations will be profoundly affected and likely forced to eliminate or scale back vital programs such as cancer care, mental health and opioid services. In addition, because cost is the number one reason patients do not fill their prescriptions, any increase in cost will put medication even further out of reach for even more patients.

Understandably, organizations affected are concerned about how it will impact their ability to treat the underserved communities and stay afloat.

Advantages of the 340B Pricing

The 340B drug pricing program doesn’t just impact the hospitals and clinics being reimbursed. The program also serves as a benefit to countless people who live in the communities and go to those hospitals and clinics for care.

Why 340B Matters

Without the current levels of 340B Medicare reimbursement, the cost of prescription drugs for the uninsured and underinsured could be passed onto the hospitals, making it harder for them to treat people with no or very little insurance.

Additionally, if hospitals and clinics have to absorb that cost, some facilities may not be able to afford it and could shut down as a result. The 340B program plays a critical role in creating and caring for vulnerable communities across the country, and given the ever-increasing cost of pharmaceuticals, the program remains essential.