What is the 340B Program?

The “340B Program” was established by Section 602 of the Veterans Health Care Act of 1992 (P.L. 102-585), which put Section 340B of the Public Health Service Act into place. Sometimes referred to as “PHS Pricing” or “602 Pricing,” the 340B Drug Pricing Program requires drug manufacturers to provide outpatient drugs to certain covered entities specified in the statute 42 U.S.C. 340B(a)(4)at a reduced price, also defined in the statute.

These covered entities are Health Resources and Service Administration (HRSA) grantees, Federally Qualified Health Centers (FQHCs) and FQHC look-alikes, family planning clinics, HIV/Ryan White clinics, state-operated AIDS drug assistance programs, black lung clinics, hemophilia treatment centers, urban Indian organizations, Native Hawaiian health centers, sexually transmitted disease and tuberculosis clinics, and disproportionate share hospitals.

The 340B price defined in the statute is a ceiling price, meaning it is the highest price a covered entity would have to pay for a given outpatient drug. Entities can negotiate below ceiling prices with manufacturers. As a result, 340B prices have been found to be roughly 50% of the Average Wholesale Price (Schondelmeyer, Prime Institute, University of Minnesota (2001)).

The following document is one of nine sections taken from the ACU/PSSC 340B Pharmacy Resource Series and provides an overview of the 340B Drug Pricing Program.

Section 340B Drug Pricing Program: An Overview by Katheryne Richardson, PharmD