The 340B Drug Pricing Program is a federal program established in 1992 under the Public Health Service Act (the name “340B” derives from the section of the Act that established the program). The program allows certain providers, known as ‘covered entities,’ to purchase some outpatient medications at a discount.
What are covered entities?
‘Covered entities’ include several different designations of hospitals (including Disproportionate Share Hospitals, Critical Access and Sole Community Hospitals, Children’s Hospitals, Rural Referral Centers, Cancer Hospitals) along with grantees (including Community Health Centers, Ryan White Clinics, Black Lung Clinics, and STI Clinics).
What is the purpose of the 340B Program?
Congress established the program to “stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.”1 The benefits of the 340B program are structured to go directly to safety net providers, such as community health centers. The discounts on these medications are provided by drug manufacturers as a condition of their participation in Medicare and Medicaid.
Prior to the establishment of the 340B program, many safety net providers were unable to offer pharmacy services at all due to the high costs of medications. The 340B program allowed them to offer this critical service to their patients and provide comprehensive care.
How do health centers use the 340B program?
Adhering to their mission and in compliance with Federal law2 and regulation,3 community health centers are required to re-invest every penny of 340B savings back into patient care. In Tennessee, beyond providing affordable medications to patients, health centers rely on the 340B program to support services including:
- Behavioral health
- Care coordination
- Chronic care management
- Diagnostic services
- Dietician services
- OB/GYN
- Pharmacy and clinical pharmacy
- Staff including administrative staff and providers
The 340B program is a critical lifeline for community health centers and their patients, ensuring patients not only receive the medications they rely on at an affordable price, but that they receive the other services they need to achieve their highest level of health and well-being.
1 340B Drug Pricing Program. 2025. HRSA. Available at: https://www.hrsa.gov/opa.
2 Section 330 of the Public Health Service Act
3 45 Code of Federal Register 75.307 – Program Income #Feature
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