The 340B Drug Pricing Program: insights, benefits and challenges for CHCs

February 28, 2023

Halle Sinnott

Created in 1992, the 340B Drug Pricing Program supports health systems and other entities by offering reduced-cost medications to underserved patients.¹

The 340B program allows Community Health Centers (CHCs) to expand the reach of increasingly scarce federal resources and reinvest those dollars in patient care — while funding more programs and services for the most vulnerable populations.²

At its core, the goal of the 340B program is simple: support the health systems supporting underserved patients. However, as with many programs in the healthcare space, the challenges of a changing landscape, financial oversight and compliance issues make 340B implementation and sustainability anything but simple.

Here, we'll explore the key components and benefits of 340B, what's happening in the 340B space and what you need to know about the program's future.

The 340B connection to CHCs

Why is the ability to purchase essential outpatient drugs at a significantly reduced cost so critical for CHCs? In part because the savings are passed on to the patients through reduced drug prices. Many of those patients include:

Those living in medically underserved urban and rural communities
Low-income and members of racial and/or ethnic minority groups
Uninsured, underinsured or publicly insured patients
Patients living with chronic care conditions and/or infectious diseases

Without access to vital yet costly medications, these patients are at an increased risk of poverty, disease and death.³

While allocating savings for programs and services, the reduced drug costs also benefit the CHCs' overall budget, thus expanding a health center's ability to act as a safety net provider.

The benefits of 340B: from reduced costs to expanded resources

CHCs serve patients and the community in a number of meaningful ways, allowing them to rely less on direct federal and state funding. Examples include:

Food pantries
Housing support
Translation services
Infrastructure improvements
Co-pay assistance programs

According to Ryan Klosky, McKesson Medical-Surgical's regional director for community health centers, savings from reduced drug costs also translate into initiatives to further reduce barriers to health care, enhance primary care health services and expand behavioral health care.

Klosky says maintaining fiscal oversight is a critical component for the sustainability of the 340B program, while compliance measures and eligibility requirements are integral to upholding the program's integrity.

Be prepared for changes to 340B

Every health provider and system whose business connects in some way to the 340B program should position itself for possible change.

Klosky says the tenuous state of base-level funding (section 330) for CHCs outside of any additional 340B generated revenue poses another challenge to those providing care for the underserved. He adds that the state of base-level funding for health centers beyond 2023 (excluding revenue generated by 340B) is also challenging to those care providers.

All health centers are feeling the pressure of waiting on pending funding measures. Advocacy efforts across all levels of the organization are critical to strengthening public support for health centers and are essential to ensure continued funding.

Still, there are compelling reasons to continue the effort. The National Association of Community Health Centers (NACHC) recently conducted a 340B survey, concluding that the program positively impacts quality outcomes. Of the participants surveyed, 88% believe 10% of their patients would forgo needed medications without the 340B program — translating into 3 million or more patients losing access to prescription drugs due to program restrictions.⁴

What can CHCs and health systems do to stay proactive?

Due diligence through education is one way to remain proactive in this uncertain environment.

Klosky states that another layer of complexity is that the 340B Ceiling Price and 340B formulary makeup are subject to quarterly updates. Providers should stay informed via the Health Resources and Services Administration's (HRSA) Office of Pharmacy Affairs (OPAIS) website.

Klosky cites compliance as the top concern for 340B Covered Entities and manufacturers alike, particularly regarding duplicate Medicaid and 340B discounts.

Take advantage of resources like the Apexus 340B Prime Vendor Program, which offers educational webinars, technical support via live chat services and other benefits to help with the many moving parts associated with the 340B program.

Establish strong relationships and foster open communication within the participating pharmaceutical distributor, drug manufacturer and pharmacy network to ensure alignment with goals, financial accountability, transparency, compliance and other performance measures.

Other best practices for preparedness and expectations management include:

Performing a self-audit
Asking questions to explore potential opportunities for exceptions
Knowing your numbers (tracking cost and revenue changes monthly)

While change is often the only certainty, it's still possible to work toward equitable care across all settings while being prepared for alternative outcomes for 340B program participants and beyond.