340B Drug Pricing Program Debate: The Main Points of Contention

Drug Pricing Program

If you are in any way involved in utilizing or administering the federal government’s 340B Drug Pricing Program, you are undoubtedly aware of the ongoing debate surrounding the program. Proponents and critics have been debating the value of 340B for decades. Unfortunately, the debate only intensifies with each new development.

So what is this debate about? The answer is more complex than a single issue that could probably be resolved with a little give and take on both sides. Multiple issues are at play and, as you would expect, the two size have quite different views on each of them. To better understand the debate, let us look at the main points of contention.

1. Program Growth

When the 340B Drug Pricing Program was first launched in 1992, there were only about 1000 participating healthcare providers, also known as covered entities. As of 2020, the program had grown to accommodate 50,000 covered entities. Critics say that the program has grown too large. Proponents say there is still room for more growth.

Much of the growth can be attributed to rule changes that have allowed more healthcare providers to register for 340B. But the growth of 340B consulting services has also contributed. 340B experts like Ravin Consultants have done a decent job helping facilities understand and navigate the program, directly leading to higher enrollment numbers.

2. Contract Pharmacies

If program growth is the number one point of contention, contract pharmacies would take a close second place. Contract pharmacies are pharmacies that dispense 340B drugs on behalf of covered entities. Originally, the program accommodated one contract pharmacy per covered entity. But 30 years later, it is theoretically possible for a covered entity to utilize an unlimited number of contract pharmacies.

Pharmaceutical companies are obviously unhappy about this. Every contract pharmacy represents another entity looking to purchase deeply discounted drugs. While covered entities say they need access to as many contract pharmacies as possible, pharmaceutical companies claim that covered entities are using the pharmacies as cover to pad their profits.

3. The Definition of a Patient

Though it might seem odd, yet another area of contention is how a patient is defined under the 340B statute. The statute itself is pretty vague. So in order to standardize things, the Health Resources & Services Administration (HRSA) has attempted to come up with a narrow definition that can be easily applied to most situations.

Covered entities are not happy with this definition. In fact, a group of covered entities that filed a lawsuit against HRSA won a recent ruling in their favor. A federal court in South Carolina ruled that the HRSAs definition was too narrow to comport with the statute.

4. Covered Entity Compliance

Finally, there is considerable disagreement over whether covered entities are actually complying with all aspects of the 340B statute. Among the concerns are those relating to the fact that covered entities are supposed to be using their drug savings to expand healthcare access among vulnerable populations.

While some covered entities are doing just that, there is ample evidence suggesting others are not. Evidence suggests that some covered entities are using the savings to acquire private practices, open new facilities completely unrelated to the 340B mission, and boost the bottom line.

The debate over the 340B Drug Pricing Program continues unabated. It is not likely to be resolved until Congress steps in and overhauls the program. Even at that, disagreement over 340B will likely continue in some way, shape, or form. 340B is a controversial program; it cannot possibly make everyone happy all of the time.