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  • Writer's pictureLyssa Limbrecht-Moss

Arguing 340B: Truth or Lie?

In November 1992 the 340B Drug Pricing Program was signed into existence to “enable covered entities to stretch scare Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services”. More than 30 years later, many people have started misrepresenting what the program’s intent really is.


Why does this matter?


Well, as of today, more than 21 drug manufacturers have been severely restricting or outright refusing to provide 340B discounts for any dispensations through a non-entity owned pharmacy. Their arguments (for breaking the law) range from it being ‘unfair’ that there aren’t any restrictions on the number of contracted pharmacies a facility can utilize, that covered entities (CEs) are ‘vastly abusing’ the program and getting access to discounts that they shouldn’t be entitled to, to the mistruth that the program isn’t being used to give patients direct benefit.


The reality.


Let’s just touch on each of these arguments.


1. The lack of restrictions on the number of contracted pharmacies in 340B is ‘unfair’ to drug manufacturers because it causes them to lose money hand-over-foot.


Guess what, drug manufacturers make plenty of money on non-340B medications that there should be NO reason they should be attacking 340B. In fact, drug manufacturers that are restricting or refusing discounts reported record revenues in 2021[1]. This continues to be the trend so far through 2022. Meanwhile in 2022, more than half of U.S. hospitals ended the year with a negative operating budget[2]. This means big pharma is, again, profiting off of breaking the law.


2. Covered Entities are ‘vastly abusing’ the 340B program and taking discounts they shouldn’t be entitled to.


This is a very twisted view on the fact that there are audit findings on about half of covered entity programs that are audited by HRSA. The reality really is, FY2018 through FY2021 shows that there was less than one-quarter of all audits show any findings of what’s called diversion or duplicate discounts, while one-half of audits had no findings at all and the other one-quarter with findings were things like the 340B database not being kept up to date. Manufacturers are only impacted by diversion and duplicate discounts. Diversion is when a medication is ordered on 340B when it shouldn’t have been for any number of reasons, and duplicate discounts are when there’s a dispensation of medication where Medicaid is a payer, and so the drug manufacturer ends up, possibly, giving both the state and the 340B discount, so they are ‘losing out twice’.


What happens, usually, is that there are rules listed in the 340B statute, but there’s no easily accessible, or consistent assistance available to covered entities in actually implementing those rules into their 340B Programs according to how their facilities are equipped technologically and with personnel. This means that it’s up to CEs to try and work the rules into their 340B Programs while not having the knowledge of real-world applications and settings.


3. The 340B Program isn’t being used to give patients direct benefit.


There are actually two ‘pillars’ of 340B. One of which is giving un-/under-insured patients access to discounted medications through the 340B Drug Pricing Program. The other pillar is where 340B provides a source of revenue to facilities that otherwise would not have access to. This revenue can be used for anything that furthers care for the patients and communities that are served by covered entities. Much of the time, 340B revenue is used simply to keep facilities doors open or provide care to patients regardless of their ability to pay.


In 2022, hospitals across the country faced the ‘worst financial year since the start of the pandemic’[2] and had nearly a full year of operational losses. Operational losses in layman’s terms means the facility is spending more money on care and keeping the doors open than they’re getting paid or collecting through fundraising and like efforts. If a facility cannot manage to get back into a positive operating budget, eventually they’re going to have to close, and that means there will be that much less care available to the community surrounding that facility.


Providing care to patients regardless of their inability to pay? Imagine you didn’t have health insurance and had a car accident and needed to go to the Emergency room for lifesaving care. I’m sure 95% or more of people wouldn’t be able to pay the bills that would come out of something like that. That’s only one example of uncompensated care. In 2020, 340B Disproportionate Share Hospitals (DSH), only one of the types of facilities that can be eligible to participate in 340B, provided over $41 Billion (yes, with a B) in uncompensated care. All while their operating margins dropped to -6.1 percent in the same period of time[3].


Additionally, many 340B covered entities are able to provide new sources of care that they couldn’t previously, such as a facility purchasing their first CT scanner, or expanding their providers in order to serve more patients in any period of time. Also many covered entities provide amazing community service benefits such as free diabetes and pregnancy classes, free cancer support groups, mobile vaccine clinics, and so much more!


In summary


340B is so much more than what big pharma, and those supporting them, are trying to say. There are certainly ways to improve the programs in individual facilities across the entire spectrum, but there are so many benefits that aren’t always easy to pinpoint and report directly dollar by dollar. Because of that, anti-340B rhetoric will almost always be shouting these untruths and misrepresentations.


While no one has a single answer for all things 340B, you can certainly find good partners to ensure your 340B Program is running compliantly and that you are accessing all of the savings possible. Optimal340B is here to be your 340B experts to ensure you get A Better 340B. For you. For your community.


Reach out today to schedule your free consultation. Call us 1-866-OPT340B (678-3402), use our Calendly link, submit a request on our site, or email directly with our CEO, Lyssa, Lyssa@optimal340B.com




1. 340BInformed: Drugmakers Cutting 340B Discounts Reported Record Revenues in 2021 https://340binformed.org/2023/01/updated-drugmakers-cutting-340b-discounts-reported-record-revenues-in-2021/

2. Fierce Healthcare: Hospitals faced 'worst financial year since the start of the pandemic' in 2022, Kaufman Hall data show https://www.fiercehealthcare.com/providers/approximately-half-us-hospitals-end-2022-negative-operating-margin

3. Practice Management News: 340B DSH Hospitals Provided $41B in Uncompensated Care in 2020 https://revcycleintelligence.com/news/340b-dsh-hospitals-provided-41b-in-uncompensated-care-in-2020

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