The 340B drug pricing program was established to help safety net providers, such as community health centers, serve low-income patients and those in rural areas. The program requires pharmaceutical manufacturers to provide discounts on outpatient medications to eligible healthcare providers. However, recent 340B manufacturer restrictions have significantly impacted the program's effectiveness and ability to serve these communities.
In 2020, AstraZeneca, Sanofi, Novartis, and Eli Lilly all announced plans to limit the distribution of 340B drugs to contract pharmacies, and many other manufacturers have followed suit with over 20 manufactures now restricting Covered Entities access to 340B through their contract pharmacy partnerships. These restrictions limit the ability of covered entities to use multiple contract pharmacies, which is a common practice in the 340B program. These limitations have led to reduced access to discounted medications for patients in underserved communities.
The restrictions have also led to legal challenges, with covered entities arguing that they violate the terms of the 340B drug pricing program. The American Hospital Association has also filed a lawsuit against the Department of Health and Human Services over its enforcement of the restrictions.
Additionally, these limitations have led to increased costs for covered entities as they would be required to purchase more medications at full price from manufacturers and wholesalers. This would lead to reduced savings for the covered entities and their patients.
The 340B program has been instrumental in providing relief for low-income patients and those in rural areas. Over 90% of hospitals that participate in the 340B program belong to rural or urban safety net networks, making this program vital to the health of our nation's most vulnerable communities. Additionally, the program saves covered entities an estimated $6 billion annually, which can be reinvested in patient services and community health programs.