Press Release

Embargoed Until Contact

November 17, 2014

Sue Ducat
Director of Communications
(301) 841-9962


The 340B Drug Discount Program


A new policy brief from Health Affairs and the Robert Wood Johnson Foundation examines the 340B Drug Discount Program. This federal program, established in 1992, was created to allow safety-net health care organizations serving vulnerable populations to buy outpatient prescription drugs at a discount. In the past few years, government reports have highlighted deficiencies in the oversight and management of the 340B program, whose sales in 2012 were reported by the Department of Health and Human Services (HHS) to total $6.9 billion. The program has also received more attention as a result of two factors: the Affordable Care Act's (ACA's) addition of more program-eligible institutions and new guidelines from the Health Resources and Services Administration (HRSA) allowing program participants to contract with multiple pharmacies. Some critics have raised concerns about a philosophical difference between the original intent of the program (helping safety-net institutions to stretch limited resources) and the fact that many institutions see a profit when public and private payers reimburse them at a rate higher than what they paid for the drugs.


Topics covered in this brief include:


    • What's the background? The brief details the original legislative impetus of the program, which was established in response to pharmaceutical prices increasing after the enactment of the Medicaid Drug Rebate Program in 1990. The program intended to rectify this unintended consequence for safety-net institutions and restore discounts previously established by mutual agreement between these institutions and the drug manufacturers. The prime vendor program, created by the legislation to provide a consolidated contracting and distribution process for covered entities, is handled by a nonprofit called Apexus, through a direct arrangement with HRSA. This section of the brief explains the role of contract pharmacies, Apexus, and HRSA's Office of Pharmacy Affairs.  

    • What's the debate? Ongoing debate concerns two key issues: if the scope of the program is justified considering the current health care system and if the degree of government oversight is sufficient and sufficiently funded. The program's post-ACA evolution allowing 340B institutions to contract with multiple payers (something not all entities undertake) motivated several members of Congress in 2013 to ask HRSA and the HHS Office of Inspector General to increase its 340B review and oversight. The brief explains the findings of these reviews and additional steps taken by congressional committees and lawmakers to rein in program abuses. Through these actions there have been calls for modifications to 340B, making it a defined benefit program based on a patient's insurance status. The brief also notes that other members of Congress have expressed support for 340B and assert that the proposed change could cause safety-net providers to cut back on their services for needy patients because of resulting increased financial and administrative costs of the program.

    • What's next? HRSA was expected to release a comprehensive rule this past summer to clarify eligibility and compliance within the program. However, as a result of other related factors, the timeline for issuing this rule has been pushed back.
About Health Affairs

Health Affairs is the leading journal at the intersection of health, health care, and policy. Published by Project HOPE, the peer-reviewed journal appears each month in print, with additional Web First papers published periodically and health policy briefs published twice monthly at Read daily perspectives on Health Affairs Blog. Download weekly Narrative Matters podcasts on iTunes.