340B Drug Pricing Program
Federal program providing discounted drugs to safety-net providers.
Definition
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.What this means in practice
Affects pricing strategy for combination products and physician-administered therapeutics distributed through 340B-eligible sites.Examples
- A manufacturer of a pre-filled syringe (a combination product) containing an outpatient drug must evaluate if that drug component is subject to 340B pricing when sold to a covered entity.
- A disproportionate-share hospital, as a 340B covered entity, purchases insulin pens at a discounted 340B price for its eligible outpatients.
- A pharmaceutical company ensures its contract pharmacies adhere to 340B program rules for dispensing eligible drugs to covered entity patients.
- •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.
Frequently asked questions
Related terms
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· Hand-selected related conceptsMore in Reimbursement
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Sources
3 sourcesSources support the definition or relevant regulatory context, not necessarily every claim on this page. Each is graded against our source-tier hierarchy so you can see what rests on binding law versus commentary.
Official citation replacements checked: . Medicare documents support Medicare coding, coverage or payment context, not every payer policy or CPT editorial procedure. Citation replacement does not change the full term review date.
- 1HRSA 340BTier 2 VerifiedHRSAhrsa.gov
- 2340B ceiling price calculationTier 2 UncheckedHRSAhrsa.gov
- 3340B program FAQs: covered outpatient drugsTier 2 UncheckedHRSAhrsa.gov
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