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When Congress created the 340B Drug Pricing Program over 25 years ago to help safety-net hospitals pay for prescription drugs, it set up a unique government program that costs taxpayers nothing but makes vital medications available to millions of uninsured and low-income patients. 

By requiring participating Medicaid drug manufacturers to sell their outpatient drugs at discounted prices to providers in underserved communities, the 340B program has also created the ability to expand community health investments, which hospitals are able to make, in part, thanks to the savings they realize from discounted drug prices. These investments include programs like preventive health screenings and mobile clinics.

340B drug discounts are crucial to patients and hospitals in vulnerable communities. That’s why, when the program itself became vulnerable to state and federal proposals this year, CHA intensified efforts in both Sacramento and Washington, D.C., to protect 340B hospitals.

At the federal level, a proposal to reduce Medicare reimbursement rates for some 340B-covered drugs has been challenged by a lawsuit and, while a court has stalled the rate reduction, it hasn’t yet been ruled out. Meanwhile, CHA is urging the Centers for Medicare & Medicaid Services to move forward with full retroactive adjustments that are not budget neutral for 340B hospitals.

In California, Gov. Newsom issued an executive order early this year creating a single drug purchasing system and transitioning the Medi-Cal pharmacy benefit out of managed care and into fee-for-service. This will impact some 20 hospitals in the 340B program — specifically, those that dispense 340B-purchased drugs to Medi-Cal managed care beneficiaries through their retail pharmacy will now be paid the actual acquisition cost of the drug plus a dispensing fee, which might be lower than what they are paid under managed care. We’re convening the affected hospitals to more fully understand the implications of the proposed changes.

As we keep a watchful eye on the outcome of proposals and changes for 340B hospitals, it is imperative that we ensure lawmakers understand the remarkable care that 340B hospitals provide with programs like expanded mental health services, urban and rural primary care clinics, transportation to medical appointments, and so much more — created specifically to meet their patients’ most pressing needs.

In the meantime, if your hospital participates in the 340B program and hasn’t yet signed on to the American Hospital Association’s 340B Good Stewardship Principles, we encourage you to do so. AHA has posted the names of hospitals that have committed so far, but it’s not too late to make the pledge. It’s an important step that more than 85% of California’s 340B-covered hospitals have already taken — a way of demonstrating their value to their communities and amplifying the importance of this essential program.

— Carmela