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The Evolution of 340B and the Challenges it Faces; is Technology the Answer?

The Evolution of 340B and the Challenges it Faces; is Technology the Answer? 

By Hannah Kanfer.

Recently, research has brought to light the evolving focus of 340B in some hospital systems. What started out as a way to provide affordable healthcare to underserved populations has turned into an integral part of our healthcare system and drug purchasing decisions. 


Before we dive into that, let’s take a step back, what is 340B? 340B is a drug pricing program enacted by Congress in 1992. This program gave underserved healthcare providers relief from high drug prices similar to the one provided through the Medicaid rebate law. 


Due to participation in 340B being dependent on the amount of Medicaid patients treated, the increased expansion of Medicaid under the ACA allowed even more hospitals to become eligible. 


Fast forward 30 years, 340B has grown to cover over 11% of the pharmaceutical sales, topping out at 80.1 billion dollars in 2020. 


340B is an essential cornerstone of the healthcare industry; covered entities can achieve an average savings of 25% to 50% in pharmaceutical purchases off of generally available market prices. 340B is vital to hospitals being able to provide care to underserved populations, and often, 340B hospitals are the only source of care for a community. 


On average, it was found 340B participants are operating on a margin almost a third lower compared to the hospital industry as a whole, making 340B vital for these safety net hospitals. 


However, 340B also comes with its own set of challenges. Manufacturers have as little as 30 days to dispute Medicare and commercial claims ;though, there is no programmatic requirement that savings realized in 340B have to be tracked down to the patients level. Though larger health systems are more likely to have staff dedicated to 340B auditing, it’s smaller, more rural hospitals that are the most vulnerable. 


So what is the solution? Partnering with a knowledgeable third-party vendor can help staff maximize their time and efficiency. CostCheck™ uses real-time market insights to help hospitals and health systems make intelligent buying decisions. Its key purchasing metrics are continually updated, allowing for fast and proactive actions on changes in GPO and WAC ratios. This can empower healthcare providers with the resources they need to care for the most vulnerable of patients. The moment an exclusion purchase is made, Insights can notify you in real-time and document a response so you can maintain audit readiness. 

If you want to learn more about 340B, you can watch our webinar here or check our infographic here to learn more.


* This article has been edited for clarity.