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Hospitals Fight Back to Defend 340B Program Operations

Written by: Ellyn L. Sternfield

Adhering to the axiom that the best defense is a good offense, SNHPA (Safety Net Hospitals for Pharmaceutical Access), an organization of close to 1000 hospitals participating in the 340B Drug Pricing Program, is attempting to defend its members’ 340B Program operations.  Through the 340B Program, qualified safety net providers obtain deep discounts on outpatient drugs for their patients.

In an earlier article, I discussed how the GAO and other entities have questioned whether the 340B Program is operating as a safety net program, or has become a profit center for hospitals, and whether access to 340B drugs should be limited to needy, uninsured patients.  I also posted about recent Congressional inquiries over the use of hospital revenues earned from billing government and private insurers the full price for discounted 340B drugs provided to insured beneficiaries.

SNHPA has now issued a Report entitled “Setting the Record Straight on 340B” in which it contends that the intent of the 340B Program is to enable safety net providers to use their access to deeply discounted drugs to stretch scarce resources and use resulting revenues to serve more patients.   From SNHPA’s point of view, the 340B Program is working just as intended.

SNHPA asserts that the 340B statute defines the types of entities that can qualify to purchase 340B drugs, but does not limit the types of patients that can receive the drugs.   While there is existing federal government guidance on who can qualify as a “340B “patient,” it does not state that a patient must be uninsured in order to receive a 340B drug.  SNHPA does agree with the GAO and other 340B Program critics that the government definition of a “340B patient” needs to be updated and clarified.

Nevertheless, the heart of the controversy over the 340B Program’s operations still comes down to purpose – Is the 340B Program intended to provide uninsured safety net patients with access to outpatient drugs, or is it intended to provide safety net providers with enhanced revenue to increase patient access to health services?  Until the federal government definitively answers this question, the debate will go on.

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Theresa advises clients on all aspects of the pharmaceutical supply chain, including counseling industry stakeholders on a range of business, legal, transactional, and compliance matters. She provides clients with strategic counseling and creative business modeling that considers legal restrictions and regulatory risk in light of innovation and business goals.