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Get to Know 340B: Rebate Model

 
Community health centers rely on the 340B program drug pricing program to provide affordable medications and services to patients. Learn more about recent threats to the fundamental structure of the program:
 
How is the 340B program structured? 
The 340B drug pricing program allows certain qualified providers, including community health centers, to purchase medications from drug manufacturers at a discount. Drug manufacturers are currently required to provide a discount on 340B medications at the point of sale. Health centers rely on the savings generated from the program to provide access to affordable medications and other services to patients. 
 
How are third parties trying to change the program? 
Drug manufacturers have been working with certain third parties, including an information technology company, Kalderos, to shift the 340B program from an upfront discount program to a retroactive rebate system. Under this system named 340B Pay, eligible providers, including health centers, would be required to purchase medications at the Wholesale Acquisition Cost (WAC), the drug manufacturer's list price. The health center would then submit information about the medication to Kalderos.  
 
Kalderos would then check for duplicate discounts. Duplicate discounts in Medicaid occur when a drug manufacturer provides a medication at the 340B price to a health center and provides a rebate to the state under the Medicaid rebate program for the same medication.1 The 340B statute explicitly prohibits duplicative discounts under Medicaid, and health centers must already take steps to avoid duplicate discounts as part of 340B compliance. After checking for duplicate discounts, Kalderos would then determine whether to provide a rebate to the health center equal to the 340B discount.  
 
What do changes to the program mean for health centers? 
The rebate model would require health centers to pay high prices for drugs without a guarantee that they would receive a rebate at a later point in time. It would also give drug manufacturers control over when and under what circumstances they would provide the 340B discount.  
 
What is the latest on the rebate model? 
The 340B Pay platform officially launched in September of 2020. In December of 2020, Kalderos announced that its system allows 340B providers to choose whether between receiving 340B savings as upfront discounts or after-the-fact rebates – but only for their in-house pharmacies. The rebate system still applies to contract pharmacies.  
 
 
 
[1] NACHC, 2018. NACHC 340B Manual for Health Centers Second Edition.

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