The 340B Drug Discount Program

The 340B Drug Discount Program

Last week’s Pharmacy Management Tip of the Week discussed safety net clinic operations. This week, we delve further into patient care and management concerns specifically regarding the 340B Drug Discount Program. This program provides highly discounted medications to safety net clinic patients. To provide these discounts, the 340B program establishes a maximum price that a “covered entity” pays for a given drug. The 340B discounted prices are roughly 25% to 50% less than the average wholesale price (AWP). The program mandates certain provisions that a covered entity must follow while enrolled in the program. First, they may not transfer or resell the discounted drugs to anyone other than a patient of that entity. Second, the drugs purchased through this program are not eligible for Medicaid rebates. Finally, drugs purchased under the program are to be used only for eligible outpatients of the covered entity.

Some have contended that the 340B program has lacked proper oversight and is thus being abused. However, some covered entities are investing the savings from participation back into effective patient care programs. Wu et al reported on one institution’s use of 340B drug discounts to financially justify providing bedside medication delivery services to patients at the time of discharge from an inpatient admission. A simple financial model was developed using hospital data and inputs from the literature to estimate gross profit and earnings with and without 340B discounts. Without the discounts, the service would operate at a financial loss.

Pharmacy managers can and should incorporate a team approach to remain astute of financial implications for participating (and not participating) in this and other programs. An astute pharmacy manager can leverage savings or additional revenues to provide superior patient care services while maintaining financial solvency for the pharmacy.  

Additional information about Applications in Safety Net Clinics can be found in Pharmacy Management: Essentials for All Practice Settings, 4e. If you or your institution subscribes to AccessPharmacy, use or create your MyAccess Profile to sign-in to Pharmacy Management: Essentials for All Practice Settings, 4e. If your institution does not provide access, ask your medical librarian about subscribing.

1Wu T, Williams C, Vranek K, Mattingly TJ. Using 340B drug discounts to provide a financially sustainable medication discharge service. Res Social Pharm Adm. 2018.


Go to the profile of Shane Desselle
over 3 years ago

Are you in favor of curbing back 340B to its original intent or continuing expansion to fund services at hospitals not known for providing much charity care.