I. Introduction
This
document provides basic information about the Public Health Service
Section 340B Drug Pricing Program. Intentionally written in basic
language, this article presents introductory information about the
program and its purpose, background, and
benefits. The Section 340B Drug Pricing Program has
been beneficial for health care and pharmacy services. The intent
of this article is to simplify the understanding the basic program.
II. Program Background
In
1992, Section 340B of the Public Health Service Act was enacted.
Section 340B requires drug manufacturers to provide outpatient drugs to
eligible health care centers, clinics, and hospitals (termed "covered
entities") at a reduced price. The 340B price is a "ceiling
price", meaning it is the highest price the covered entity would have
to pay for select outpatient and over-the-counter drugs and minimum
savings the manufacturer must provide. The 340B price is at least
as low as the price that state Medicaid agencies currently pay.
After notifying the Pharmacy Affairs Branch (PAB) of their intent to
participate in the Section 340B program, covered entities can begin
taking advantage of these low prices at the start of the next
quarter. Each covered entity then determines how it will order
and receive the low-priced drugs. They can do so by either
contacting drug manufacturers directly or working with a
wholesaler. Most entities find that working with a wholesaler not
only simplifies the process, but also saves time and allows personnel
to work on other projects.
To
further simplify the process for obtaining the 340B drugs, the original
legislation contained a special requirement that mandated the
establishment of a "prime vendor". A prime vendor is a single
"preferred" wholesaler that specializes in serving covered entities in
the 340B program. Benefits of the prime vendor program include:
- Familiarity with subtleties of the Section 340B program
- Value-added services
- Sub-340B prices, due to negotiations with drug manufacturers
using the collective purchasing volume of covered entities.
As a result, the Prime Vendor is able to provide high quality services and low drug prices for the benefit
of the covered entities and their patients
III. Program Benefits
Participating
entities have reported savings that range between 25-50% for covered
outpatient drugs as a result of the low 340B prices. Using the
prime vendor to receive prices even lower than the 340B ceiling
price will further increase these savings. Covered entities
currently using these programs indicate that they have improved
healthcare delivery in their communities by using the savings to:
- Reduce the price of medications for patients
- Expand the number of drugs on formularies
- Increase the number of indigent patients served
- Expand other services offered to patients by the entity
