HRSA 340B Drug Pricing Program

Here is a brief breakdown of the 340B Drug Pricing Program

Requires participating drug manufacturers to provide discounted prices on outpatient prescriptions for eligible healthcare organizations aka “Covered Entities” that serve the country’s indigent/vulnerable populations.

Intent

“To permit Covered Entities (CE) to stretch scarce Federal resources as far as possible to reach more eligible patients and provide more comprehensive healthcare services.”

  • Significant savings on purchasing outpatient drugs through the 340B Program
  • Savings allow money put towards increasing other areas of service; i.e. More staff, facility upgrades, investment, etc.
  • HRSA currently reports more than 29,000 CEs participating with an approximate total savings of $3.8 billion per year.

Register online for Participation

  • Enroll online at HRSA 340B Database during quarterly enrollment periods
  • Takes place during the 1st 15 days of each quarter
  • OPA conducts recertification of sites annually; must verify that all information on both hospital and outpatient clinic profiles are continuously updated
  • Registration is free
  • No risk or cost to join the program

Pricing Calculation

– Section 340B of the Public Health Service Act requires manufacturers that participate in Medicaid to sign a Pharmaceutical Pricing Agreement (PPA) with the Secretary of the Department of Health & Human Services

– 340B Ceiling Price: the manufacturer agrees to charge a price that will not exceed the statutory limit when selling covered outpatient drugs to 340B CEs

Ceiling Price = Average Manufacturer Price (AMP) – Unit Rebate Amount (URA)

AMP

  • Defined as the average unit price net of discounts paid to the manufacturer for the drug in the United States by distributors for drugs distributed to retail community pharmacies and retail community pharmacies that purchase drugs directly from manufacturers.

URA

  • Calculated by CMS using the manufacturer’s reported pricing. The rebate amount is calculated based on a percentage of this reported pricing, which is determined by specific drug classifications:
  • Brand = 23.1%
  • Generic = 13%
  • Clotting Factor = 17.1%
  • Exclusively Pediatric = 17.1%

Eligibility Overview

  1. Eligible Organizations

– Only non-profit healthcare organizations that have certain federal designations or receive funding from specific federal programs are eligible organizations

– Broadly categorized into hospitals and non-hospitals.

Hospital eligibility and compliance

– Hospitals are considered eligible on the basis of their government ownership/controlled requirements as well as their reporting’s to CMS

– Qualifying factors vary by hospital type

– ALL Hospitals must meet ONE of the following government owned/controlled requirements:

  1. Owned or operated by a state or local government
  2. A private, non-profit hospital with a valid contract with state/local government to provide healthcare services to low-income individuals who are not entitled to Medicare or eligible for state Medicaid
  3. A public or private non-profit hospital that has been formally granted governmental powers. Must provide the following:
  4. The identity of the government entity granting powers to hospital
  5. A description of the governmental powers that has been granted to the hospital and a brief description as to why the power is considered governmental
  6. A copy of an official document issued by government to hospital that reflects the formal granting of that power.

If you are a hospital administrator and are interested in learning more please feel free to send me a message. Thank you for reading. 

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