News Releases

340B Program Faces Ambiguity, Further Restrictions

The 340B Drug Pricing Program is critical to many hospitals and patients across the country and has historically enjoyed bipartisan support, yet it continues to encounter hurdles by regulators and pharmaceutical companies.

340B is a federal government program that requires drug manufacturers participating in Medicaid to sell outpatient drugs to eligible healthcare organizations at discounted pricing. It has been considered by many to be a valuable asset, with 340B eligible hospitals acting as a safety net for their communities. These hospitals care for a significant portion of the nation’s underserved populations as well as children, cancer patients, and rural patients.

In May, the Health Resources and Services Administration (HRSA) created uncertainty when it rescinded guidance outlining how hospitals could use the program to treat patients at off-site clinics. With the end of the COVID-19 Public Health Emergency, HRSA’s policy regarding the registration of outpatient facilities returned to a pre-COVID requirements in which outpatient facilities need to be registered as child sites in the 340B Office of Pharmacy Affairs Information System for their patients to be eligible for discounted 340B medication.

This move puts hospitals at risk of being audited and breaking federal rules if 340B drugs are used at clinics that have not yet appeared on their most recent Medicare cost reports. Critics of this change point to unnecessary delays in which it can take up to 22 months for an open and fully functioning off-site location to become 340B qualified.

Pharmaceutical Company Restrictions

This month, drug company Teva Pharmaceuticals was the latest to announce restrictions on access to 340B discounts on drugs dispensed at community pharmacy partners, with the policy taking effect on July 5. Entities enrolled in the 340B program as a hospital with an in-house outpatient pharmacy will no longer be eligible to have 340B discounted products shipped to contract pharmacies and will only be shipped to the in-house outpatient pharmacy.

This makes Teva the 23^rd drug company to impose restrictions on discount pricing. Additional drugmakers with 340B pricing restrictions include AstraZeneca, Pfizer, Bayer, and Johnson & Johnson.

Supporters of 340B — including the organization 340B Health and the American Hospital Association — point to the benefits of the program and the positive impact seen within their communities while expressing disappointment in the new restrictions placed by some drugmakers.

“The price of Teva’s decision will be measured in the harm it causes the patients in need who rely on access to these lifesaving medications and all those who rely on safety net care,” said 340B Health President and CEO Maureen Testoni in a June 8 statement. “Two federal appeals courts are considering lawsuits involving such drugmaker restrictions, and we urge the Biden administration to continue its strong defense of its interpretation of the 340B law.”

Testoni further explained these new restrictions will “block access to three dozen brand name drugs for patients with chronic conditions such as asthma/COPD, migraine, and chronic myeloid leukemia.”

340B Health, a membership organization of more than 1,500 public and private nonprofit hospitals and health systems participating in the federal 340B drug pricing program, serves members as an advocate on federal legislation and regulatory issues related to drug pricing.

AHA Defends 340B Program

The 340B program has been the subject of legal action by the American Hospital Association (AHA) and others that went all the way to the U.S. Supreme Court, which ruled unanimously last summer that cuts to the program by the U.S. Department of Health and Human Services were unlawful. AHA last month issued a report on the program, its history and its value to patients and providers.

“The 340B program plays an important public policy role in ensuring access to essential drugs and services for low-income and underserved Americans receiving care at 340B hospitals nationwide,” the report concludes. “Without the program, many patients could have trouble accessing affordable medications and critical health services, jeopardizing their health and well-being.”