Overview of the 340B Drug Pricing Program

(Health Resources and Services Administration 2015a). In addition, HRSA reviews contract
pharmacy arrangements when it audits covered entities.
Debate about the scope of the 340B program
In recent years, there has been a debate between 340B hospitals and drug manufacturers
about the proper scope of the program. About 45 percent of all Medicare acute care hospitals
participated in 340B in 2014. In addition, hospitals in 340B accounted for 48 percent of
Medicare spending for Part B drugs at all acute care hospitals in 2013, up from 22 percent in
2004. There is a concern that the increase in the number of drug sales that are subject to 340B
discounts will lead manufacturers to raise prices for other purchasers (Conti and Bach 2013,
Government Accountability Office 2011, Hirsch et al. 2014). Manufacturers have questioned
whether all of the hospitals in the program need discounted drugs and whether the criteria for
hospitals to participate in the program—such as the DSH adjustment percentage—should be
changed (Government Accountability Office 2011). Manufacturers seek to narrow the program’s
focus to helping patients who are poor and uninsured gain access to outpatient drugs.
In contrast, 340B hospitals seek to preserve the current criteria for program eligibility and
their ability to use revenue generated through the program without restrictions. They argue that
the program is essential for maintaining the full range of services they provide to low-income
and other patients in their communities. As support for their position, they cite the conference
report that accompanied the bill that eventually became the 340B statute, which stated that the
program’s intent is to enable covered entities “. . . to stretch scarce Federal resources as far as
possible, reaching more eligible patients and providing more comprehensive services” (U.S.
House of Representatives 1992). ■
Overview of the 340B Drug Pricing Program | May 2015 17