About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

1 1 (October 14, 2022)

handle is hein.crs/govejay0001 and id is 1 raw text is: Congressional Research Service Informing the legislitive debate since 1914 S October 14, 2022 Overview of the 340B Drug Discount Program Congress created the 340B Drug Discount Program (340B) in 1992 through the Veteran's Health Care Act (P.L. 102- 585) to enable health care providers that serve low-income and uninsured patients to purchase drugs at lower costs. The Health Resources and Services Administration (HRSA), part of the U.S. Department of Health and Human Services (HHS), administers the Program. HRSA estimates that 340B sales constitute about 7.2% of the overall U.S. drug market and reports that in 2021, total program sales reached approximately $44 billion, an almost 15% increase over 2020. The authorizing statute-Section 340B of the Public Health Service Act (42 U.S.C. § 256b)-requires drug manufacturers that participate in the Medicaid Program to offer certain outpatient drugs to covered entities at discounted prices. Statutory Requirements The 340B statute requires the Secretary of HHS to enter into purchase price agreements (PPAs) with drug manufacturers that participate in the Medicaid Program. The terms of these PPAs require manufacturers to sell certain covered outpatient drugs at a ceiling price, which is calculated based on a statutory formula. Manufacturers may not charge covered entities more than the ceiling price if they sell the drug to any other entity at any price. Providers may pass the drug discounts on to patients, but the statute does not require them to do so. The statute provides a list of covered entities that may purchase drugs from manufacturers at discounted prices. Covered entities include Federally Qualified Health Centers, Native Hawaiian Health Centers, Tribal and Urban Indian Organizations, children's hospitals, and other providers that care for rural and underserved populations. According to HRSA, more than 75% of FY2021 340B covered entity purchases were made by disproportionate share hospitals (DSHs). DSHs are statutorily defined in Section 1886(d)(5)(F) of the Social Security Act; they serve a disproportionate number of low-income patients who qualify for Medicare and Medicaid. To qualify for 340B, a DSH must be owned or operated by a state or local government; be a public or private nonprofit corporation that is granted governmental powers by a state or local government; or be a private nonprofit hospital that contracts with a state or local government to provide care for low- income patients who do not qualify for Medicare and Medicaid. The DSH's percentage of low-income patients must also be above certain statutorily defined percentages in order to qualify for 340B. The 340B statute places limitations on covered entities. Covered entities are prohibited from receiving duplicate discounts on 340B drugs from Medicaid rebates and from dispensing or selling covered drugs to non-patients. The statute permits HRSA and manufacturers to audit covered entities to ensure they meet the requirements for 340B pricing. It also requires HRSA to ensure that both covered entities and manufacturers comply with Program requirements. Participants who are noncompliant may be subject to civil monetary penalties (CMPs). HRSA also promulgated regulations that govern alternative dispute resolution (ADR) proceedings. Both manufacturers and covered entities may use ADR to resolve disputes related to pricing overcharges and covered entity eligibility. Changes to the 340B Statute Congress has changed the 340B Program on a number of occasions, most recently via the Consolidated Appropriations Act of 2022 (P.L. 117-103). The 2022 Act allows certain covered entities that were terminated from the 340B Program during the COVID-19 pandemic to be reinstated through December 31, 2022. During the pandemic, DSH percentages changed for some hospitals as patients delayed care and hospitals postponed elective procedures to divert more resources to caring for patients with COVID-19. Qualifying facilities under the 2022 Act include hospitals that were eligible covered entities prior to the COVID-19 pandemic, but lost their eligibility due to a decrease in their DSH patient percentage. The temporary eligibility change allows hospitals that would otherwise be disqualified from 340B pricing to remain eligible through the end of 2022. (More information about this waiver and which entities qualify may be found on HRSA's website, https://www.hrsa.gov/.) Congress also made substantial changes to the 340B Program in 2010 via the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), which expanded the list of covered entities to include children's hospitals, cancer treatment facilities, critical access hospitals, rural referral centers, and sole community hospitals that have a certain DSH percentage. Hospital participation in the 340B Program has tripled from the time before the ACA's enactment. There are currently more than 53,000 registered 340B sites, which is almost double the number of registered sites in 2014 (28,272). The ACA further authorized HRSA to improve Program integrity by ensuring manufacturer compliance with ceiling price sales by allowing HRSA to issue regulations regarding the imposition of CMPs for manufacturer and covered entity noncompliance. The ACA also established the ADR process by which manufacturers and covered entities could settle disputes regarding 340B purchases. G AO F ind ings an d Recommendations In recent years, the Government Accountability Office (GAO) has undertaken investigations and audits of the

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Already a HeinOnline Subscriber?

Log In

profiles profiles most