Recent Updates to the 340B Program

Recently, the 340B program has seen some significant changes. The passage of the Patient Protections and Affordable Care Act (PPACA) on March 23^rd, 2010, and the Unemployment Compensation Extension Act on May 28^th, 2010, expanded the scope of the 340B drug discount program to include more patients and healthcare facilities.¹

The 340B program originally came into effect in 1992, and requires pharmaceutical manufacturers participating in the Medicaid program to provide discounts on outpatient drugs to covered entities. Currently the 340B program provides reduced price prescription drugs to 14,250 heath care facilities that serve more than 10 million people in all 50 states. (NCSL) Drug discounts can range from 25-50%, and some entities are able to negotiate directly with the manufacturer or wholesaler for an ever greater discount.²

With the passage of the PPACA, 340B will be expanded to include the following healthcare facilities:

• Critical Access hospitals

• Free standing cancer hospitals

• Rural Referral centers

• Sole Community hospitals

• Additional children's hospitals, not-for-profit, and owned or operated by a unit of state or local govt.

It is important to note that additional eligibility requirements will apply and can be found on the Health and Human Services website Facilities must be enrolled in the Medicaid program to be eligible for the 340B program, and will need to complete a registration form to initiate the enrollment and eligibility review process.

Among the many hotly contested issues surrounding healthcare reform, was whether Congress should further expand 340B pricing to include inpatient drugs. The final draft of PPACA excluded any such provision, limiting coverage to outpatient drugs. The issue did not die however, and was addressed as an amendment to the Unemployment Compensation Extension Act. Sections 516 and 517 of the bill further expand the 340B program to cover inpatient drugs for individuals with no insurance or prescription drug coverage, and also allows for the coverage of orphan drugs for rare diseases that were previously excluded from coverage.³

One of the primary goals of healthcare reform was to make adequate medical coverage and healthcare available to all Americans. With the expansion of Medicaid, and the creation of state-based health insurance exchanges, hospitals should see a significantly smaller portion of uninsured patients, and the 340B program could see a significant increase in enrollment of newly eligible hospitals. Healthcare facilities who regularly provide service to Medicaid patients who are considering providing services to these patient's can review further eligibility guidelines on the Health and Human Services website

References:

¹ "Important News for Critical Access Hospitals and Other Providers: Healthcare Reform Legislation Expands Access to 340B Drug Pricing Program." Foley and Lardner LLP, April 20, 2010.
http://www.foley.com/publications/pub_detail.aspx?pubid=7039¹⁴

² "States and the 340B Drug Pricing Program". National Conference of State Legislators. February 2010.
(http://www.ncsl.org/default.aspx?tabid=14469)

³ H.R. 4213, The Unemployment Compensation Extension Act, Passed May,28 2010, 111th Congress, 2nd session, available at.
http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h4213eah.txt.pdf. Sec. 516, 517.