Proposed Cuts to 340B Drug Discount Program

340B Cuts

The 340B Drug Discount Program was created by the U.S. government in 1992 to require drug manufacturers to provide outpatient drugs to certain eligible “safety-net” hospitals at reduced prices. The program’s intent was to “stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.”

340B’s aim is to lower medication costs for low-income patients while keeping up the quality of services. Under the program, the covered hospital treats the insured patient with discounted medication, is reimbursed for the full amount, and keeps the difference for funding programs within their hospital and community.

Recently Congress has been debating over a proposed rule to the 340B Program which would cut up to $1.65 billion from the program.

An influential advisory panel us asking CMS to reject the cuts to 340B. Currently, Medicare pays eligible hospitals an average sales price plus 6% for most Part B drugs they purchase. The proposed rule would cut that to the average sales price less 22.5%.

340B hospitals across the nation use the savings from the program to enhance patient services and create programs that allow vulnerable populations to access care and get discounts on drugs, and to care for the homeless.

A final rule is expected this fall, and CMS is still accepting comments on the proposed rule until September 11. Stay tuned for updates on the rule decision. To learn more, see the 340B Health hospital membership organization’s website.

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