Pharmacists, regardless of practice setting, are well aware of the impact of the 340B program on pharmacy revenue. For student pharmacists and others who may not have encountered this program before, you can get a crash course on the history of the program from its origins in 1992 and how it currently operates at the Health Resources & Service Administration’s (HRSA’s) website.
One of the most important tenets of the program is the requirement that manufacturers participating in Medicaid (which is virtually all of them) must provide medications to eligible health care organizations (covered entities) at significantly reduced prices. In doing so, the covered entities then agree to provide additional community benefits to stretch those dollars, such as offering services that couldn’t have been offered without discounts. Pharmacists completely understand that the way our drug supply chain works is that pharmacies purchase drugs from wholesalers, whose bills are typically due within 30 days. Sometimes medications are purchased directly from the manufacturer; again, typically with 30-day terms to pay the bill.
On the revenue side of the equation, the hospital or community pharmacy may get paid much later than 30 days after the medicine was administered or dispensed. Because in the current system the 340B-covered medicines could be purchased at the substantially discounted price, hospitals and other covered entities could generally “float” the cash flow difference between the time of administration and the time a health plan or PBM paid the bill. Now this may change.
HRSA pitched a pilot program months ago that was stopped by the courts. Under the proposal, instead of eligible organizations receiving the 340B price when they purchase a drug, they would first pay the list price and seek the 340B discount as a rebate after the drug is dispensed. For hospitals, community health centers, and pharmacies who qualify as covered entities, the financial risk would substantially shift from the manufacturer to the ultimate end-dispenser of the medication (i.e., hospital, pharmacy, or community health center). In practical terms, the pilot would move the 340B benefit from the acquisition side of the transaction to a rebate after the patient receives the drug.
Without getting into the weeds too far, HRSA took the courts’ feedback and has now proposed a scaled-back pilot program of the same design. Manufacturers that have Medicare-negotiated drugs for 2026 or 2027 may apply by August 24, 2026, with approved pilots beginning January 1, 2027.
APhA is deeply concerned about the proposed pilot program because it destabilizes revenue for already stretched community pharmacies, community hospitals, and community health centers. These are three entities that are struggling to stay open and are already fighting against multiple attacks on revenue. HRSA’s approach is misguided and will not lead to reforms to root out abuse of the existing system. Instead, it will place a tremendous financial and administrative burden on the portions of our health care system that are least able to handle the burden. We fear this pilot program will create unintended consequences that will further worsen the primary care shortages many communities are already experiencing.
Additionally, many hospitals have over the years utilized funding through the 340B program to expand access to pharmacist-provided patient care services in outpatient clinics in a myriad of specialties, including oncology, psychiatry, general medicine, pediatrics, geriatrics, dermatology, rheumatology, gastroenterology, neurology, and many more. Additional specialists work in specialty pharmacies, including those focused on cell and gene therapies. Often these positions are funded entirely through 340B savings. These are true community benefit positions. In other words, the community would not have access to the care services of pharmacists if the 340B program did not exist. Few, if any, of the clinics, even in BPS-recognized specialties, are billing major medical insurance for the care provided by these pharmacists.
The HRSA pilot program could significantly shift and destabilize the revenue cycle around medications, so much so that hospitals may have little option but to pull back on community benefit services intended by the program. Such a pullback would result in dozens to hundreds of pharmacist positions at risk of being defunded. Patients, in turn, would no longer have access to the very best team-based care they are currently receiving.
Yes, the unintended consequences of the HRSA 340B pilot program are just too great. HRSA should pump the brakes and reapproach the issue of reinventing the program from another angle. Improving integrity in the 340B program is critical, but let’s not be the proverbial bull in the china shop. We must be careful not to damage aspects of the program that are working and delivering real community benefit.
For all of pharmacy.