Overview of the 340B Drug Pricing Program

Endnotes
1 According to the Health Resources and Services Administration’s interpretation of the
340B statute, CAHs, cancer hospitals, RRCs, and SCHs are prohibited from using orphan
drugs under 340B when the drugs are used for the rare disease or condition for which
they received an orphan designation (the orphan drug exclusion). Because claims data do
not identify the indication for which a drug was used, we could not determine whether
an orphan drug used by one of these hospitals was eligible for 340B discounted prices.
Therefore, we excluded all orphan drugs used by these types of hospitals.
2 When the sequester began in April 2013, it reduced the amount that Medicare paid for all
services by 2 percent. For separately payable drugs in the OPPS, Medicare normally pays
80 percent of 1.06 × ASP, but the sequester reduces this to 80 percent of 1.039 × ASP.
At the same time, Medicare beneficiaries are responsible for 20 percent of 1.06 × ASP,
and the sequester has no effect on the beneficiary’s portion of the payment. The net effect
of the sequester is to reduce the combined payment from Medicare and beneficiaries for
separately payable drugs in the OPPS from 106 percent of ASP to 104.3 percent of ASP.
For OPPS-covered drugs provided after the start of the sequester, we divided Medicare
payments by 1.043 (rather than 1.06) to estimate the hospital acquisition cost.
Overview of the 340B Drug Pricing Program | May 2015 29