Policy Statement on the 340B Drug Pricing Program by the American Society of Clinical Oncology.

Congress established Section 340B of the Public Health Service Act—commonly referred to as the 340B Drug Pricing Program—in 1992.1 The 340B Drug Pricing Program requires manufacturers to provide substantial discounts for sales of covered drugs to covered entities as a prerequisite to qualifying for Medicaid reimbursement. Covered hospitals and other covered entities must limit the use of discounted drugs to the outpatient care of individuals who meet the program’s definition of a “patient,” among other requirements. The 340B Drug Pricing Program is administered by the Office of Pharmacy Affairs within the Health Resources and Services Administration (HRSA) of the US Department of Health and Human Services.2 Currently, there are six types of hospitals that can qualify as covered entities under the 340B Drug Pricing Program on the basis of the hospital’s disproportionate share hospital (DSH) adjustment percentage and other factors.3 The DSH adjustment factor is a federal parameter established under Medicare as a proxy to identify hospitals with high levels of uncompensated care. In addition, there are 12 categories of nonhospital providers that can qualify for the 340B program on the basis of their eligibility for federal funding, such as federally qualified health centers.3 The financial implications of the 340B discount can be significant for a health care institution. The discount can substantially reduce the burden on covered entities that provide uncompensated or undercompensated care. In addition, drugs purchased by the covered entity at a discount can be sold to all individuals who meet the program’s definition of a “patient.” For purposes of the 340B program, a patient is an individual who is treated by a covered entity, regardless of their insurance status, not necessarily an individual who lacks adequate health care coverage. As a practical matter for eligible beneficiaries, this means that for patients who are covered by private insurance or Medicare, a covered entity participating in the 340B Drug Pricing Program can benefit financially from the difference between the discounted cost of the drug and the amount reimbursed by the patient’s insurance program. This difference, commonly referred to as the “spread,” can be quite significant when aggregated over a large number of patients. The impacts of the 340B Drug Pricing Program are especially significant in the area of oncology, given the integral role that drug therapies play in the treatment of individuals with cancer. ASCO members deliver oncology care to patients in substantial numbers both inside and outside of 340B settings. In this policy statement, ASCO provides a summary of issues and recommendations related to the 340B program for policymakers to consider from the perspective of professionals dedicated to the prevention, diagnosis and treatment of cancer.