340B Drug Pricing Program

The 340B Federal Drug Pricing Program expands access to affordable medications to low-income populations by supporting the operations of healthcare safety net providers. The program was created in 1992 with the enactment of Public Law 102-585 of the Veterans Health Care Act.

The passage of the Affordable Care Act in 2010 opened new opportunities within the Federal 340B Drug Pricing Program for hospitals, patients and pharmacies. The categories of eligible hospitals and options for pharmacy contracting were expanded. Definitions of covered entities include children’s hospitals, free-standing cancer centers, critical access hospitals (CAH), sole community hospitals and rural referral centers (RRC).

The 340B program is primarily a discounted drug purchasing option for safety net providers, including disproportionate share, rural referral centers, sole community and critical access hospitals. Public hospitals and non-profit hospitals in these categories are eligible to participate in 340B. Eligible hospitals may save an average of 25% on drug purchases for outpatient pharmacy distribution (excluding orphan drugs for CAHs, sole community or rural referral). Contract pharmacy agreements are also available to the 340B hospitals (for hospital patients only) to extend 340B pricing into the community.

To participate, an eligible hospital is required to submit an application to the Office of Pharmacy Affairs with HRSA, the federal agency responsible for the 340B program. The application materials and guidelines are posted on the Pharmacy Affairs website. Please be certain to use the forms and the application guidelines for the correct hospital type.

The posted Federal Register Notice addresses the definition of an eligible 340B patient. The key determination always requires the person receiving 340B drugs must be a patient of the 340B entity.

An individual is a “340B eligible patient” of a covered entity only if:

  1. The covered entity has established a relationship with the individual, such that the covered entity maintains records of the individual’s health care; and
  2. The individual receives health care services from a health care professional who is either employed by the covered entity or provides health care under contractual or other arrangements (e.g., referral for consultation) such that responsibility for the care provided remains with the covered entity; and
  3. The individual receives a health care service or range of services from the covered entity which is consistent with the service or range of services for which grant funding or Federally-qualified health center look-alike status has been provided to the entity. Disproportionate share hospitals are exempt from this requirement.

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