340B Drug Pricing Program
A federal program requiring drug manufacturers to sell outpatient medications at steep discounts to safety-net providers serving low-income populations. Eligible entities use the savings to stretch resources and expand patient access.
What is the 340B Drug Pricing Program?
The 340B Drug Pricing Program is a federal initiative that requires pharmaceutical manufacturers to offer outpatient drugs at significantly reduced prices to certain providers that care for large numbers of low-income and uninsured patients. Participation in 340B is a condition of having drugs covered under Medicaid, so manufacturers that want Medicaid coverage must also extend the discounts.
Eligible organizations, often called covered entities, include disproportionate share hospitals, federally qualified health centers, Ryan White clinics, and several other safety-net categories. They purchase qualifying outpatient medications at the discounted ceiling price and can use the difference between that price and their reimbursement to support their operations.
Why is the 340B Drug Pricing Program important?
The program is designed to let safety-net providers stretch scarce dollars so they can serve more patients and offer services they might not otherwise afford. The savings are not earmarked for specific uses by statute, which has made the program both popular with participating providers and a frequent subject of policy debate over how the discounts are ultimately spent.
For the broader pharmaceutical and revenue landscape, 340B shapes drug acquisition economics, contract pricing, and compliance obligations such as preventing duplicate discounts and diversion. Organizations participating in the program must maintain careful records to demonstrate that 340B-purchased drugs are dispensed only to eligible patients.
- what is 340b program
- 340b drug discount program
- 340b pricing explained
- 340b covered entity meaning
- 340b eligibility
- section 340b public health service act