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May 18, 2022

Federal 340B Drug Pricing Program – An Industry Update and Mitigation Strategies Relative to Recent Challenges

Jeff Spencer
Senior Director, 340B Sales and Account Management, Omnicell

Since its inception 30 years ago, the 340B Drug Pricing Program has helped non-profit healthcare organizations expand services for their communities. In addition to the recent reimbursement cuts, a host of harmful actions by pharmaceutical manufacturers are causing issues. Covered entities now have to make tough decisions regarding navigating these new program complexities.

Omnicell partners with 340B hospitals and clinics to provide software-enabled solutions that optimize and provide maximum 340B program value to mitigate the financial impact of these challenges on providers, their communities, and their patients. Omnicell recently joined other 340B industry experts to get an insider's view of the current state of the 340B program at a recent Scottsdale Institute Webinar.

The 340B program was enacted by Congress and signed into law in 1992. Under the program, outpatient drugs are offered to covered entities at significantly reduced prices. Hospitals and clinics are eligible based on defined criteria. These providers have used the savings to expand access to care, especially in rural and other underserved areas.

Recently, the 340B program has come under fire from some pharmaceutical manufacturers, including most recently withdrawing discounts at 340B contract pharmacies. In 2021, a 340B Health Survey found that: 

  • Non-critical access hospitals have lost 23 percent of their community and specialty contract pharmacy savings
  • Critical access hospitals have lost 39 percent of their community and specialty contract pharmacy savings

Another challenge that the 340B program is facing is discriminatory reimbursement. Some Pharmacy Benefit Managers (PBMs) and other third-party payers are attempting to limit the benefit of the 340B drug discount programs by offering covered entities lower reimbursement rates than those provided to non-340B organizations. There are now 20 states that have enacted or are considering state laws to limit discriminatory reimbursement.

Another challenge 340B covered entities are facing is additional Medicare reimbursement cuts. The Centers for Medicare and Medicaid Services (CMS) continues to provide reduced payments to 340B hospitals. Before 2018, the reimbursement level was Average Sales Price (ASP) was more than plus 6 percent. From 2018 to the present, the reimbursement has been ASP minus 22.5 percent.

Drug manufacturers have partnered with a third-party solution called 340B ESP to address concerns around a compliance concern involving duplicate discounts, which is a situation where the manufacturer provides a 340B discount and a Medicaid rebate on the same prescription.

So, how does 340B ESP work? 340B hospitals and clinics submit encrypted 340B claims data to 340B ESP. This claims data is then transferred to the manufacturer by 340B ESP. The pharmaceutical company notifies the hospital's drug supplier to resume supplying at a 340B discount. The supplier of the hospital restores the price of 340B drugs. 

Omnicell provides solutions for 340B ESP and helps clients recover savings with:

  • Data submission efficiencies
  • Encrypted data transmission to manufacturers
  • Minimum necessary data
  • Pricing validation and savings recapture

In addition to 340B ESP, with Omnicell, you may run your whole 340B program through a complete 340B solution with a proven track record of delivering best-in-class support. We provide superior outcomes for 340B savings and compliance by utilizing industry-leading software, deep program knowledge, and exceptional service.

View the full Scottsdale Institute presentation to hear about the latest impacting 340B.

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The views and opinions expressed in this blog are those of the authors and do not necessarily reflect the official policy or position of any other agency, organization, employer, or company. Assumptions made in the analysis are not reflective of the position of any entity other than the author(s). These views are always subject to change, revision, and rethinking at any time and may not be held in perpetuity.