The Trump Administration and the Effect on the 340B Drug Program

Innova 340B SolutionsThe 340B Drug Program may experience some changes due to the new administration and Republican congress. Some anticipate that drug manufacturers interests will be addressed rather than the concerns of health plans or providers. Whether this is true has yet to be revealed. Prior to the new administration’s transition into office, the 340B mega-guidance was submitted for review under the current administration. Due to the change in power, analysts are waiting to see if this guidance will be repealed or upheld.

In addition, questions are being posed about HRSA’s authority to govern the guidance apart from congressional oversight. Historically, PhRMA has filed suit against them and court rulings have conflicted in separate cases. The 340B drug program could potentially see a number or legal challenges as the administration takes form. New requirements could be introduced but it is unclear at this time.

Provider Eligibility Increase

Originally, the 340B Drug Program provided outpatient drug discounts from drug manufacturers to a host of providers and programs. In 1992, 340B covered almost 800 hospital outpatient facilities around the country. As time has gone by, the number of eligible providers has jumped to over 28,000. This was due in part to the ACA, which extended the program to a number of hospitals and locations.

Among Republicans, the 340B Program is believed to have grown larger than it was originally designed to be. Ideas to reduce its size are evident within the CURES Act. For instance, critics are saying that 340B eligibility should return to its original criteria from 1992, which defined eligibility as a safety net provider serving large numbers of uninsured and underinsured patients. This provision was removed due to push back from 340B eligible providers in their districts.

Patient Eligibility

In addition to provider eligibility, the patient eligibility for discount drugs has also been a topic of discussion. The 340B statute determines that a covered entity shall not resell or otherwise transfer a drug to a person who is not a patient of the entity. Where things get difficult is in regards to what qualifies as a patient of an entity. Some believe that the 340B program was designed for all patients regardless of their health coverage and others believe it was limited to those who do not have the ability to pay.

Congress could attempt to change eligibility in a number of ways. It could be proposed that providers can only claim a drug discount if the covered entity writes the prescription at the time of the patient’s visit to a qualified hospital. Alternatively, proposals could limit eligible prescribers employed by covered entities or an “eligible patient criteria” would require multiple interactions or visits to an eligible provider. Regardless of the legislation, regulation, or guidance, most Republicans are focused on making the drug discounts available exclusively to indigent patients of a 340B covered entity.

Child Site Eligibility

The new administration may also limit the number of Child Sites. As of 2015, CMS is required to reimburse a number of hospital off-site outpatient services at the physician fee schedule rate. They proposed that in order to do this reimbursement, services would be classified as physician services, not as hospital outpatient services. However, due to regulations, off-campus outpatient services were still eligible for 340B discounts. This could be another aspect repealed by Congress or the new administration.

Contract Pharmacies

Contract pharmacies are pharmacies under contract with 340B Covered Entities to dispense 340B program covered drugs. Since 1992, the number of 340B program contract pharmacies has grown by 770%. The Office of the Inspector General found that contract pharmacy arrangements have led to 340B drug discounts being claimed for patients or prescriptions that were not eligible in some circumstances. Many critics of contract pharmacies, including Members of Congress, believe that contract pharmacies take some portion of the financial benefit of the 340B program discount inappropriately. It is very possible that the new administration and/or Congress will seek to limit the role of contract pharmacies by, for example, returning to HRSA’s initial guidance related to contract pharmacies that limited the number of contract pharmacies and imposed geographic limitations.

Duplicate Discounts – 340B Drug Program and Medicaid

When a 340B covered entity claims a discount on a prescription and the state also claims a Medicaid rebate for the same prescription, drug manufacturers are providing duplicate discounts on the same medication. In addition, CMS has required States to claim Medicaid rebates for all prescriptions dispensed to Medicaid patients, which saves the Government. The duplicate discounts are very difficult to track. It is expected that manufacturers and Congress will highlight this problem to scaling back or eliminating the 340B Drug Discount Program.


The future of the 340B Drug Program is uncertain as it continues to be evaluated and the new administration transitions into office. Critics are divided and believe that it may be repealed or scaled back. It will surely be interesting to watch as the discussion continues to evolve.

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