340B requires drug manufacturers to offer outpatient drugs at discounted prices to covered entities including disproportionate-share hospitals, FQHCs, and other safety-net providers. Primarily a drug program, it intersects with combination products and physician-administered drug-device pairs. The program was created in 1992 under Section 340B of the Public Health Service Act and is run by HRSA. Most devices are not covered drugs, but disputes over contract pharmacies and Medicare payment cuts to 340B drugs in OPPS have shaped hospital finances. Hospital savings from 340B can influence how they budget for capital equipment.

Why it matters

Affects pricing strategy for combination products and physician-administered therapeutics distributed through 340B-eligible sites.

Common pitfalls

•A common pitfall is misinterpreting which specific drug-device combination products are subject to 340B discounts, leading to incorrect pricing or compliance issues.
•Failing to maintain accurate records of 340B eligible purchases and distributions can result in HRSA audits and potential sanctions.
•Manufacturers may incorrectly classify drugs, including those in combination products, as exempt from 340B discounts.
•Covered entities might not have robust systems to prevent diversion of 340B-purchased drugs to ineligible patients or for ineligible uses.
•Not staying updated on HRSA guidance and policy changes can lead to inadvertent non-compliance.

Sources

HRSA 340B · HRSA
340B ceiling price calculation · HRSA
340B program FAQs: covered outpatient drugs · HRSA

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