340B Drug Discount Program
340B Drug Discount Program
The 340B Drug Discount Program was created during the era of President George H. W Bush and was passed by Congress into law in 1992. The 340B drug discount program is now a U.S. federal government program that requires drug manufacturers to provide outpatient drugs to eligible health care organizations at a significantly reduced price.
The drug discount program was designed to allow covered entities to further stretch scarce federal resources as far as possible, in order to reach more eligible patients and at the same time provide more comprehensive services to patients.
Under the Public Health Service Act (PHSA) for the drug discount program, it is mandatory for drug manufacturers and healthcare professionals alike to maintain efficient services and reduce the cost of medication for patients on a consistent basis with the purpose of this program.
To be eligible for the 340B drug discount program as defined under the federal law, only four categories of hospitals can participate in the program which includes:
- Disproportionate share hospitals (DSHs)
- Sole community hospitals
- Rural referral centers
- Critical Access hospitals
Other sets of hospitals like the children’s hospital and the cancer hospitals have been exempted from the Medicare prospective payment system.
Furthermore, the classification of hospitals in each of the categories must be:
Owned or operated by or under contract with state or local government non-profit,
a public or private non-profit corporation that is formally granted governmental powers by a state or local government, or
a private non-profit hospital that has a contact with a state or local government to provide indigent care and, with the exception of critical access hospitals. However, all hospitals must meet payer-mix criteria related to the Medicare DSH program.
For non-hospitals, there are ten categories of healthcare institutions that are also eligible to participate in this program. They include federally qualified health centers (FQHCs), Ryan White HIV/AIDS program grantees, tuberculosis, black lung, family planning and sexually transmitted disease clinics, hemophilia treatment centers, public housing primary care clinics, homeless clinics, urban Indian clinics, and native Hawaiian health centers.
To participate in the 340B drug discount program, the covered entities must register, be enrolled, and comply with all program requirements. Once enrolled, covered entities are assigned a 340B identification number that vendors must verify before allowing an organization to purchase discounted drugs. Covered entities must complete the recertification process on the Office of Pharmacy Affairs (OPA) 340B database website every year. Failure to recertify will result in removal from the 340B drug discount program.