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About 340B and Why It Needs to Be Fixed

The 340B program was created by Congress in 1992 to help vulnerable or uninsured patients access prescription medicines at safety-net facilities. Manufacturers provide steep, mandatory discounts on medicines to certain types of clinics and hospitals as a condition of their drugs being covered by Medicaid. However, even as the number of Americans with insurance is on the rise, 340B is growing exponentially. While clinics that receive government grants largely use the program to improve access to medicines for needy patients, not all 340B hospitals are good stewards of the program.





History of 340B

For a printable version of the legislative and regulatory history of the evolution of the 340B program since its creation in 1992, click here.


Areas for Needed 340B Reform

PhRMA supports the original intent of the program and is committed to working with Congress and the administration to reform the 340B program to ensure it reaches the vulnerable or uninsured patients it was intended to help. Areas of needed reform include:

  • Patient Definition: The definition of “patient” for purposes of the 340B program should ensure the program’s benefits flow to the individuals whom Congress sought to help, primarily vulnerable or uninsured patients.
  • Hospital Eligibility Criteria: The qualifying criteria for 340B hospitals need to be calibrated to ensure proper identification of safety net facilities that serve large numbers of uninsured and vulnerable patients.
  • Contract Pharmacies: The use of contract pharmacies, which enable covered entities to contract with multiple outside pharmacies to dispense drugs that receive 340B discounts, should fulfill the intent of the 340B program and directly benefit vulnerable patients.
  • Consolidation: The 340B program should be reducing prescription drug costs for patients, not increasing them. However, hospitals acquiring more independent physician practices, which enable the formerly independent practices to access the hospitals’ 340B discounts, can drive up costs for patients and payers, in addition to reducing patient access to community treatment options.
  • Oversight: Increased government oversight of the 340B program is needed to ensure program requirements, including prohibitions on drug diversion, are being met. Entities participating in the 340B program must be fully and readily accountable for properly and safely handling and dispensing medicines and ensuring program integrity.

Explore the 340B Spotlight Series on the Catalyst Blog. And click here for even more information on 340B.