How 340B discounts work

Recognizing the importance of access to prescription medicines, Congress created the 340B program in 1992 to help vulnerable or uninsured patients served by safety net facilities get the medicines they need at a discount.

So how do 340B discounts work? The premise of the program is simple: biopharmaceutical manufacturers provide 340B hospitals with discounted medicines, which are then available to patients of the facility. Watch our video here.

When patients are insured, their insurers then reimburse the hospital for the medicines at the full negotiated rate, with the patient potentially seeing no benefit. Instead, some 340B hospitals are pocketing the extra funds as profit. 

Our new chart pack – Biopharmaceuticals in Government Programs – explores the 340B program and where it has veered off course, including unsustainable program growth, lagging charity care rates and an increased presence of contracted pharmacies in wealthier neighborhoods—where the patient population the program aims to help isn’t living.

Unfortunately, insufficient guidance, historically weak oversight and other factors have led to dramatic growth in the program, driven by large hospitals. The program’s current structure means that this growth has come without any clear benefit for patients and is threatening the long-term sustainability of the program.

Learn more about 340B at PhRMA.org/340B and stay tuned to 340B Spotlight posts for more on this important program and the changes needed to ensure it benefits those it was intended to help.