Call to Action – A Threat to the 340B Drug Pricing Program

By James Blackmer posted 03-21-2018 16:41


James Blackmer, PharmD, MPA.

PGY1 Health System Pharmacy Administration Resident. Cleveland Clinic Main Campus. Cleveland, Ohio.


The 340B Drug Pricing Program was enacted in 1992. Through this program, eligible health care providers, known as covered entities, are able to purchase certain manufacturers’ covered outpatient drugs at discounted prices, no greater than the 340B ceiling price. The purpose of this program is to stretch scarce federal resources as far as possible, in order to reach more eligible patients and provide more comprehensive services. 340B eligible covered entities serve the nation’s most vulnerable patient populations. Covered entity types include, but are not limited to, children’s hospitals, free standing cancer hospitals, rural referral centers, critical access hospitals, and disproportionate share hospitals. The governmental agency charged with managing the 340B Drug Pricing Program is the Health Resources and Services Administration (HRSA), and specifically, HRSA’s Office of Pharmacy (OPA).

Efforts to modify the program have increased in recent months. On November 1, 2017 CMS finalized cuts to reimbursement for separately payable Part B drugs purchased through the 340B Drug Pricing Program. Prior to this change covered entities were reimbursed at the Average Sales Price (ASP) of the drug plus 6%. After the changes, reimbursement has fallen to ASP minus 22.5%. An estimate by the American Hospital Association (AHA) says that these cuts will cost hospitals $1.6 billion annually. Sole community hospitals in rural areas and exempt children’s hospitals and cancer hospitals are exempt from these payment changes. Senator Chuck Grassley (R-Iowa) released legislation that would require hospitals and health-systems to report to the Department of Health and Human Services all revenues received for the medications from private insurers, and government insurers (e.g., Medicare, Medicaid, and CHIP). Finally, congressmen in the Senate and the House have introduced bills that would prohibit new 340B hospitals or registration of associated sites. Without these discounts low-income patients may lose access to their medications.  A weakened 340B program may undermine some hospitals ability to care for their patients and keep their communities healthy. On March 15th, 2018 Joseph Hill, director of ASHP’s Government Relations Division, testified before the Senate Committee on Health, Education, Labor & Pensions. Mr. Hill’s testimony mentioned that savings from the 340B program fund critical pharmacist-provided care services such as treatment for opioid abuse, medication management services, and disease management for chronic diseases.

Why does this matter to you and your patients? The 340B Drug Pricing Program is utilized by many hospitals to provide care and medications for uninsured and underinsured patients. For patients, this means affordable medications, expanded access to care, and managing chronic conditions. This program allows low-income patient’s access to medications that they may not otherwise have access to depending on their insurance coverage. To combat these changes ASHP is working with other stakeholders on congressional outreach and potential legal action. Please consider reaching out to your congressional representative in this pre-filled form