340B Drug Pricing Program
A federal program requiring drug manufacturers to sell outpatient drugs at significant discounts (25-50% off) to eligible hospitals and clinics serving low-income patients.
How It Works
The 340B program was created in 1992 to help safety-net providers stretch scarce federal resources. Eligible entities include federally qualified health centers (FQHCs), disproportionate share hospitals (DSH hospitals), children's hospitals, and certain rural and cancer hospitals. Manufacturers must offer 340B pricing as a condition of having their drugs covered by Medicaid. The program has grown enormously — 340B purchases now represent about 10% of all U.S. drug spending. Critics argue many 340B hospitals have expanded the program beyond its original intent, using the discounts to generate revenue rather than passing savings to patients. Congress has considered reforms to improve transparency and target the benefits more narrowly.
Related Terms
- Out-of-Pocket Cost — The amount a patient pays directly for a prescription drug — including copays, coinsurance, and deductible payments.
- Patient Assistance Program (PAP) — A manufacturer-sponsored program that provides free or discounted drugs to patients who meet income and insurance eligibility requirements.
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About This Definition
This definition is part of the DrugPrice Drug Pricing Glossary — 34 terms explaining how prescription drug pricing works in the United States. All definitions are written in plain language for patients, caregivers, journalists, and healthcare professionals.