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About 340B

Congress created the 340B program in 1992 to help certain healthcare “safety-net providers” that serve many uninsured or vulnerable patients reduce outpatient prescription drug costs. The 340B program requires prescription drug manufacturers to provide discounts to specified federally-funded clinics and certain hospitals, otherwise known as “covered entities,” as a condition of participation in the Medicaid program. Since its inception, the program has grown exponentially, yet patients have not always seen the benefits of that growth.

In fact, today, about 45 percent of all Medicare acute care hospitals participate in the 340B program. Sales at the 340B price were estimated to be $16 billion in 2016, and research shows the program is forecasted to exceed $20 billion by 2019 and $23 billion by 2021 (measured at discounted 340B prices).

This growth has continued in recent years despite declines in the number of uninsured and lower charity care burdens for hospitals. The major drivers of this growth are threefold:

In 2015, the Health Resources & Services Administration (HRSA) released a proposed omnibus guidance, addressing several issues, including the definition of a 340B eligible patient. The guidance went through a notice and comment period and was withdrawn in early 2017. The proposed guidance would have more clearly defined when hospitals can obtain 340B discounts by clarifying who meets the definition of a 340B patient.

Those clarifications would have been an important initial step toward increasing oversight and accountability in the 340B program. Beyond a strong patient definition, additional fixes will be needed to address other key aspects of the program.