5 Reasons 340B Matters Right Now

The 340B Drug Pricing Program is a hot topic in the healthcare industry – and for good reason. Originally enacted in 1992, at its core, this innovative safety-net program allows eligible healthcare providers – including “safety net” providers, serving low-income, rural, and indigent populations – to purchase outpatient drugs at discounted prices. While shifting political winds and evolving market trends often seem to pose a challenge for the program’s future, the positive impact its had on healthcare is undeniable.

For pharmacy benefits plan sponsors, understanding the importance of 340B is essential to navigating today’s healthcare landscape. That’s why RxBenefits partnered with the American Society for Healthcare Human Resources Administration (ASHHRA) on a podcast series to help cut through the noise. RxBenefits’ Sarah Hearn, 340B ACE, MPH, joined Rhiannon Klein, national director of advocacy for Community Voices for 340B, and healthcare lobbyist Peggy Tighe, Principal at law firm Powers, Pyles, Sutter and Verville PC, to discuss 340B pricing and its significance in today’s landscape of rising drug prices. The full podcast has a wealth of information including strategies for staying ahead in a constantly changing landscape.

But for those pressed for time, here are five things you will learn about why 340B matters right now:

1. 340B Discounts Offset Rising Drug Prices

Tighe explains in the podcast that 340B was born out of bipartisan efforts in the 1990s to curb soaring drug prices without imposing direct price controls.

Drug prices have continued to skyrocket over the years, often rising at many times the rates of inflation, creating even greater financial strain across the healthcare system. The 340B program serves as one of the few mechanisms to counteract this burden. It allows eligible providers to obtain medications at significantly reduced costs, helping them stay operational while ensuring patients can access necessary treatments.

The program remains incredibly relevant today, particularly as pharmaceutical companies continue to increase prices.

2. 340B Supports Vulnerable Communities

“Covered entities” under 340B – including safety-net providers – use the savings from drug discounts to fund critical services like free medications, expanded patient outreach, and enhanced community programs. Without 340B, taxpayers would bear the financial burden of supporting these essential services.

Tighe, a seasoned legislative consultant for 340B advocacy groups, highlights how this program acts as a lifeline for many healthcare organizations.

“What the 340B program does is enable those safety net providers to do more than just primary care. It helps them offer preventive services, mental health service, medication management, and community health programs,” Tighe says.

3. 340B Faces Ongoing Challenges from Stakeholders

Despite its benefits, the 340B program faces increasing opposition from key stakeholders, particularly pharmaceutical companies, who argue that the program is prone to abuse. Some accuse pharmacy benefits managers (PBMs) of taking profits out of the program for themselves.

For pharmacy benefits experts, whose role often involves mitigating the impact of such stakeholder conflicts to ensure cost-effective and equitable access for patients, understanding these dynamics is essential. Advocacy groups like Community Voices for 340B play a critical role in educating professionals and policymakers about these issues.  “The people on the front lines who are serving healthcare every single day are great people. And while they’re doing that, the pharmaceutical manufacturers are trying to take away the 340B discount and trying to restrict contract pharmacies,” says Klein. “They’re losing the savings that they were using to treat patients.”

4. 340B is a Political and Legislative Battleground

The very existence of the 340B program is deeply tied to political and legislative developments, which means that the program’s mechanisms and guidelines can shift with changes in Congress or regulations. For instance, election outcomes and pending legislation often determine future provisions and potential reforms.

Advocacy remains vital to protecting 340B from legislation looking to undermine any of its key elements. Klein, of Community Voices for 340B, stresses the importance of grassroots movements in keeping this program alive and effective.

“It’s a common-sense solution. Pharmaceutical manufacturers entered into this agreement willingly with the federal government and, quite frankly, got a good deal,” says Klein. “Unfortunately, those same companies have decided that they aren’t making enough money. American people are deciding between their prescription drugs and their grocery bill. This is an injustice.”

5. 340B Delivers Tangible Value to Employee Healthcare Plans

A key fact that shouldn’t be overlooked, is that 340B isn’t just about serving patients in the broader community – it can also help optimize drug spend for employers and their healthcare plans. Hearn explains how 340B savings can directly enhance employee health programs by reducing costs and expanding coverage.

“For hospitals, drug spend is one of the biggest line items for their employees,” she says. “And 99% of the time, the 340B savings are going to be greater than what the drug rebate would be. We work with clients to capture as much savings as they can so they can reduce overall spend.”

This dual functionality of 340B – benefiting both underserved communities and employee healthcare plans – makes it a powerful pharmacy benefits management tool.

Learn More About 340B

The 340B program is more than a discount mechanism. It’s a critical safety net, a cost-saving opportunity, and an essential tool for promoting equitable healthcare access. However, with growing scrutiny and evolving challenges, preserving and optimizing the program requires active participation. By better understanding its mechanisms and ongoing challenges, plan sponsors can be equipped to make decisions that positively impact their organization and the healthcare system as a whole.

Interested in learning more about the 340B program? Check out how RxBenefits’ 340B tools can help covered entities maximize their savings – and listen to the ASHHRA-RxBenefits podcasts today.