Written By: Rob Nahoopii, PharmD, MS, 340B ACE, Senior Vice President of Pharmacy Services
Earlier this week, we announced that both Turnkey Pharmacy Solutions and ELEVATE340B have joined SpendMend. Read about it here. We couldn’t be more excited by the announcement and we are confident that our ability to serve Hospitals, Clinics, Grantees, etc. will grow by a magnitude as a result of this news.
So… since the news with SpendMend went public, I’ve been meeting with a record number of people and new co-workers. Every interaction leads to a great discussion, but I am realizing I may have been in a pharmacy bubble for the last several years.
I find that although most people have a general sense of the 340B program, there are still a lot of questions. I thought it might be a good exercise to provide a high-level overview of the 340B program to help level set the discussion.
What is the 340B Program?
It’s no secret that healthcare is expensive, and many American’s can’t afford it. With costs continuing to rise, including the price of prescription drugs, policymakers in both parties have been working hard to create affordable solutions.
One positive solution, dating back to 1992, is the 340B drug pricing program. 340B helps hospitals, clinics, and health centers extend their resources to treat more patients and provide more services.
Simply put, the 340B program helps hospitals and clinics that provide care to the most vulnerable patients: the uninsured; the underinsured; people with HIV or AIDS; kids with cancer, and more, by requiring drug companies to offer medications at a discounted price.
How Does The Program Work?
340B requires drug makers participating in Medicaid to sell outpatient drugs at a discount to eligible hospitals and clinics. These savings are intended to go toward increasing and expanding healthcare services for millions of vulnerable patients.
To take part in the program, covered entities such as hospitals, clinics, health centers and the like must meet rigorous standards to be eligible to receive 340B discounts such as treating a high percentage of low-income patients or those living in rural communities.
Is This Unfair For Drug Companies?
This is a question I get all the time, and I am not sure there is a simple answer.
For drug companies, these discounts are a small percentage of the billions spent each year on medicine but for hospitals and their patients, these savings are essential as part of the healthcare safety net. The truth is, hospitals work off razor thin margins and, in some cases, were it not for the savings from the 340B program some smaller rural facilities may be forced to shut down.
Although, it’s true that the 340B program can save a hospital lots of money, it should be noted that program participation comes with complex regulatory and audit requirements that must be managed carefully to maintain compliance.
So, it’s not really a free lunch for hospitals, they work for the savings, they take on a lot of compliance risk, and they pour a lot of their savings back into underserved communities.
What Are Some Ways That Hospitals Use 340B Savings?
340B hospitals provide sixty percent of all uncompensated care in rural America. 340B savings also help hospitals remain open and in communities hard-hit by chronic illness and epidemics like opioid use.
340B allows each community to decide how best to serve its patients’ needs. Many provide free or low-cost drugs while others use 340B to operate trauma centers and provide specialty HIV care.
As I mentioned in the intro, most people are familiar enough with 340B, but if you look closely, you’ll quickly realize how complicated the program has become and how easy it is to fall out of compliance.
Today’s blog is a simple overview of the process with a few of my own opinions thrown in for color. Any covered entity contemplating how they fit into the program will likely need a much more in-depth overview and discussion… and I am happy to provide that for you.
Please feel free to reach out at anytime and I will make sure to get you the answers you need.
Meet Rob Nahoopii
Experienced as a Director of Pharmacy for a 400-bed DSH hospital, also served as a Regional Director of Pharmacy. Rob has presented at many 340B University sessions and on the topic of 340B at numerous other conferences around the country. He has provided many external 340B audits for various covered entity types and onsite support for multiple 340B HRSA audits. Rob is part of our 340B independent auditing team and also supports our maintenance clients and 340B implementation. His perspective is from front line pharmacy leadership and program compliance.