05 Sep Medium: What’s the deal with 340B?
“In 2014, 65.1 million people were insured by Medicaid, and the government program spent approximately $42 billion on prescription drugs. With that much money flying around, it’s not surprising that nearly 550 drug manufacturers are participating in the rebate program, given that it is a prerequisite to have their drug covered by Medicaid. After the $42 billion has been spent, the MDRP ensured the government received $20 billion in rebates, bringing the total net cost for Medicaid outpatient prescription drugs to $22 billion (Statista).
This program was such a success, that “in 1992, Congress extended to safety-net providers the same kind of relief from high drug costs” that it provided to Medicaid with the rebate program (340BHealth.org). Section 340B of the Public Health Service Act became law, and required pharmaceutical manufacturers to enter a pharmaceutical pricing agreement (PPA), with the HHS secretary. “Under the PPA, the manufacturer agrees to provide front-end discounts on covered outpatient drugs purchased by specified providers, called ‘covered entities’, that serve the nation’s most vulnerable patient populations” (340BHealth.org). Now these “covered entities” could receive the same rebates as the government insurance program.”