Get to Know 340B: Federal Refresher

The 340B Drug Pricing Program is a key element of community health centers' ability to expand access to affordable medications and other services to patients.
What is 340B?
The 340B Drug Pricing Program is a federal program, established in 1992, which allows certain providers to purchase outpatient medications at a discount. The savings accrued from the program are reinvested into patient care through affordable medications and investments in additional services. 
What is discriminatory reimbursement?
In recent years, there has been a concerning acceleration in actions from drug manufacturers, Pharmacy Benefit Managers (PBMs), and other third parties, which are retaining 340B savings for themselves, rather than passing them on to health centers. Generally, this practice is known as discriminatory reimbursement, or ‘pick-pocketing.'
Discriminatory reimbursement can occur in several different ways and may take on the following forms: 
  • Pharmacy Benefit Managers (PBMs) reimbursing pharmacies less for 340B-priced medications than non-340B priced medications1 
  • Insurers refusing to contract with health centers for services unless the health center charges certain lower prices for medications2 
  • Pharmacies refusing to contract with health centers unless they can keep a portion of the 340B savings on medications or collect additional fees3  
What can be done to address discriminatory reimbursement?
Federal statute does not currently prohibit the practice of discriminatory reimbursement from third parties such as Pharmacy Benefit Managers (PBMs), insurers, and contract pharmacies. Legislation is the primary way to address these harmful practices. Legislation, Public Chapter 569, was already passed in Tennessee to prohibit third parties from: 
  • Reimbursing 340B entities less for drugs than non-340B entities
  • Assessing fees, chargebacks, or adjustments on 340B entities that are not also applied to non-340B entities
  • Excluding 340B entities from network of participating pharmacies
  • Discriminating against a 340B entity in a way that prevents or interferes with patient choice
Tennessee joined several other states in implementing protections for the 340B program. These state trends are now being mirrored at the federal level where momentum is growing to pass federal protections.
[1]  "Pick-Pocketing" Of Health Center's 340. 2020. Ebook. National Association of Community Health Centers.
[2]  Ibid.
[3]  Ibid.



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