What is a 340B ceiling price?

The 340B ceiling price is the maximum price a manufacturer is allowed to charge a 340B-covered entity (safety-net hospital, FQHC, Ryan White grantee, etc.) for a covered outpatient drug. It is calculated as Average Manufacturer Price (AMP) minus a unit rebate amount based on Medicaid Drug Rebate Program data.

For brand drugs, the ceiling price is typically 25-30% below AMP. For generic drugs, the ceiling is usually 13% below AMP. For drugs that have experienced price hikes greater than the rate of inflation, the discount can be far steeper — sometimes 70-90% below AMP — because the Medicaid Drug Rebate Program includes an inflation penalty that flows through to the 340B price.

For plan sponsors, the 340B ceiling price is the floor of what a covered entity pays. Any markup above that price flowing through to commercial claims represents 340B leakage — where 340B-discounted product is billed to commercial insurance at non-340B prices.