What is the 340B Drug Pricing Program?

The 340B Drug Pricing Program is a federal program managed by HRSA (Health Resources and Services Administration) that requires drug manufacturers participating in Medicaid to provide outpatient drugs at significantly reduced prices to eligible safety-net providers. Eligible providers include disproportionate-share hospitals, federally qualified health centers, Ryan White HIV/AIDS Program grantees, and certain other safety-net entities.

340B-priced drugs are typically 25-50% below NADAC and can be 70-90% below brand wholesale price for high-cost specialty drugs. The discounts are statutory — manufacturers are required to offer them to qualify their drugs for Medicaid coverage.

The complication for commercial plan sponsors: 340B drugs can flow back into the commercial dispensing channel through contract pharmacies, creating opportunities for 340B-discounted product to be billed to commercial plans at non-340B prices. This is called 340B leakage and is increasingly tracked by sophisticated plan sponsors.