The Basics of 340B and the Current Attacks on the Federal Drug Discount Program – Guest Writer Ariel McDuffie

It’s no secret that everyday many patients go without vital medications due to cost. As pharmacists, many of us have heard about the 340B drug pricing program however, the details of it aren’t always well-known. The current drug manufacturer attacks on 340B are bringing the program into the spotlight: not necessarily for good press, but in their attempt to take advantage of our nation’s safety net providers struggling during these difficult times. This week, the Grassroots Pharmacists will bring to light the importance of 340B and how the attacks from drug manufacturers will harm the very patients you serve. 

What is 340B?

It all began in 1990 when Congress created the Medicaid Drug Rebate Program (MDRP) which required drug manufacturers to pay rebates to state Medicaid programs for covered outpatient drugs. Although drug manufacturers offered the rebates, the costs for other discounted drugs rose dramatically which led to Congress enacting Section 340B of the Public Health Service Act in 1992. Section 340B is administered by the Office of Pharmacy Affairs (OPA), a part of the federal Health Resources and Services Administration (HRSA), which is an agency within the Department of Health and Human Services (HHS). As a condition of participation in MDRP, manufacturers must also participate in the federal 340B program. Under a Pharmaceutical Pricing Agreement (PPA) with the Secretary of HHS, section 340B states that the manufacturers agree to charge a price for covered outpatient drugs (to safety net providers) that does not exceed the 340B price designated by HRSA. Safety net providers and clinics are non-profit entities that provide access to services without charge or using a sliding scale to low income and vulnerable patient populations. 340B is a patient service program that was created to protect safety net providers and allows safety-net clinics and health centers, known as covered entities (CE), to stretch their resources to treat more patients and provide more comprehensive services at no cost to taxpayers.

340B CEs save on prescription drug costs by purchasing 340B drugs at a discounted price for eligible patients. These savings occur one of two ways: 1) Passing 340B discounts directly to patients through a Prescription Cash Discount in which the CE provides medications at a greatly reduced price to those patients who are uninsured or underinsured, or 2) Insured claims where the CE bills the insurance like normal for those patients who have insurance and is reimbursed from insurance as a usual claim, but then the CE is able to take advantage of the discounted ingredient cost when replenishing the drug. The savings are then directly returned and invested into patient care.

Eligible CEs of 340B include community health centers, Ryan White HIV/AIDS program grantees, certain hospitals, and specialized clinics. Eligible patients must meet HRSA’s 340B Patient Definition, which include criteria such as patients must receive health care services from a health care professional who is either employed by the CE or provides health care under contractual or other arrangements such that responsibility for the care provided remains with the CE.

HRSA allows CEs to contract with outside pharmacies to act as a dispensing agent. These pharmacies are often located in accessible areas where patients live, work, pray, and play. Under HRSA’s guidelines, the CE is responsible for purchasing the prescription drugs which are then shipped directly to the contract pharmacy. The CE and contract pharmacy must establish and maintain tracking systems to prevent diversion of drugs to individuals who are not patients of the CE and to prevent Medicaid duplicate discounts from occurring.

Overall, the 340B prescription drug program has bipartisan support, reduces outpatient drug costs, provides more comprehensive services for CEs serving large numbers of low-income individuals, and leads to healthier patient outcomes.

Impact of 340B

The impact of 340B on patients is significant, as it helps in assisting the uninsured and underinsured get access to medications that they would otherwise have to go without. Health centers typically use 340B savings to subsidize the cost even further beyond the pass-through 340B discount for patients that meet certain income requirements. Community Health Centers are required by law and mission to reinvest every penny of 340B savings back into patient care and services. This is why 340B savings are so essential, as they help safety-net providers stretch scarce resources so they can serve the people and communities who need them the most.

To illustrate the impact of 340B the National Association of Community Health Centers (NACHC) hosted a press briefing on September 16, 2020. During the briefing, a patient who relies on the 340B program shared her story.

Gina Moore, a patient with diabetes at PrimaryOne Health in Columbus, OH, is among the millions of patients who will be affected by drug manufacturers no longer shipping certain 340B prescriptions to Contract Pharmacies.  She described how the highly concentrated insulin she relies on to stay alive will no longer be available on October 1st unless the health center complies with a specific drug manufacturer’s onerous and impossible data reporting requirements. Given her income circumstances, Moore is eligible for PrimaryOne Health’s prescription assistance program, which uses 340B savings to discount the costs of her prescriptions.  With the help from PrimaryOne Health, Moore’s cost is substantially less than the drug manufacturer’s 340B discount. Moore is able to pick up a 90-day supply of her insulin for less than $15 at a 340B Contract Pharmacy for a drug that would cost more than $1,000 elsewhere—a price beyond what Moore, or any average consumer, can afford.  “I am a Type 1 insulin-dependent diabetic and my pancreas does not work,” said Moore. “I need insulin every day and without it my kidneys will shut down.  I will die.”

You can view the full press conference here.

340B is under attack!

If 340B helps so many patients then why is the program under attack by drug manufacturers, especially during a pandemic? I think that is a question that we would all like the answer to!

The recent attacks began in early July with a drug manufacturer stating that they did not have to provide 340B priced drugs to contract pharmacies. This statement then prompted other drug manufacturers to get on board with attacking the 340B program and push against the use of 340B contract pharmacies. To stir the pot up even more, President Trump signed an executive order indicating that health centers are profiting from the 340B program at the expense of their low-income patients who lack insurance or have high deductibles and co-pays. This statement, although false, definitely added fuel to the fire.

Drug Manufacturers do not want to provide 340B drugs to contract pharmacies:

Recently, many big drug manufacturers have refused to provide the 340B discount prices to safety net providers that use contract pharmacies. This is a huge issue because many CEs rely on these pharmacies because they do not have an in-house (“entity-owned”) pharmacy. As previously mentioned, the contract pharmacies are often located in accessible areas that allow CEs to reach more patients and therefore, provide more services. If CEs are forced to get rid of contract pharmacies, how will vulnerable patients access vital healthcare services and affordable medications?

The attacks do not stop there. Another includes drug manufacturers wanting access to sensitive patient claims data from health centers beyond what is required to comply with statutory requirements. This places unreasonable administrative burden on the CEs and contract pharmacies and frankly, is impossible due to many existing pharmacy contracts that do not allow this.

What do these attacks mean to the safety-net providers?

Without 340B contract pharmacies, many CEs would not be able to serve low-income patients as they currently do. These aggressive actions are harmful to the CEs, but more importantly, to the millions of patients it impacts. Many healthcare professionals are scrambling to figure out appropriate alternative medication options and inform patients of the issues. However, it is near to impossible to keep up with every drug manufacturer’s changes as the attacks keep rolling in. Contract pharmacies are a vital and essential part of the 340B program. Health centers are going to be forced to close their doors at some of the clinics and scale back or completely eliminate some of their comprehensive services if 340B savings are not protected at contract pharmacies.

Why should you be concerned?

Millions of patients are being affected by these attacks nationally. At a time when many have lost their jobs and health insurance, or even been ill themselves, drug manufacturers have chosen their own way of doing things that is detrimental to so many. Unless actions are taken by Congress and HRSA to enforce the statute and protect the intent of the program by penalizing the drug manufacturers for failing to provide 340B pricing to CEs, millions of patients will see their prescription prices increase and may not be able to afford their life-saving medications as well as health centers closing doors. Community Health Centers have bipartisan support and are the primary care backbone of America.

We are the best advocates for our patients and regardless of the outcome, it is our responsibility to create the change we want to see. My hope is that the parties involved decide to put patients over profit and realize the severity in what they are doing and how it will negatively impact millions of individuals.

Guest Writers Profile

Ariel McDuffie is a current PGY2 Ambulatory Care Resident Pharmacist at The Ohio State University College of Pharmacy and PrimaryOne Health (P1H). She received her PharmD from Chicago State University College of Pharmacy and completed a PGY1 Community Care residency at The Ohio State University College of Pharmacy and the Charitable Pharmacy of Central Ohio. Her practice interests are underserved care and managing chronic health conditions. She has a passion for advocating for the field of pharmacy, reducing health disparities in the community, and providing accessible patient-centered care for all. 

Because of her passion for working with vulnerable patient populations, she has had the opportunity to work with and learn from the 340B Oversight Committee team at P1H to better understand how the program operates and its impact on the patients who need it most.

Published by The Grassroots Pharmacist

We are pharmacists passionate about engaging pharmacists in advancing health policy

3 thoughts on “The Basics of 340B and the Current Attacks on the Federal Drug Discount Program – Guest Writer Ariel McDuffie

    1. Thanks for the comment, Stan. We would recommend reaching out to your members of Congress to inform them of this issue and share your concerns. Asking them to request that HRSA enforce overcharging in the 340B program will help to address the issue outlined in this post.


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