What is the 340B Drug Pricing Program?

As healthcare policy continues to change and become more unpredictable, it’s crucial for hospitals to have a strong understanding of the 340B Drug Pricing Program. This federal initiative allows eligible hospitals and clinics to purchase outpatient drugs at discounted prices. These savings help providers expand resources, deliver comprehensive services, and support care for low-income, underinsured, and uninsured patients.

Understanding the fundamentals of 340B is essential for transforming savings into sustainable impact. Here’s what you need to know.

340B Explained: Understanding a Cornerstone of Care Access

What is the 340B Drug Pricing Program?

Established in 1992, the 340B program was designed to support hospitals and providers that serve a disproportionate share of vulnerable populations. By reducing drug prices, the program enables covered entities to reinvest savings into services that directly benefit patients (without increasing federal spending).

Administered by the Health Resources and Services Administration (HRSA), the program allows eligible entities to purchase outpatient drugs at reduced rates from manufacturers that participate in Medicaid.

“Behind the scenes, it always comes back to the patient. The 340B program helps ensure they have access to care and medications they might not otherwise afford,” explains Tracy Smith, Senior Consultant at Visante.

The 340B Drug Pricing Program extends beyond medication discounts. It enables providers to generate savings that support services such as behavioral health, medication therapy management, chronic disease care coordination, transportation assistance, extended clinic hours, and pharmacy support for high-cost specialty medications.

What is a 340B Pharmacy?

A 340B pharmacy dispenses medications purchased through the 340B program to eligible patients. This can include in-house pharmacies or external contract pharmacies that partner with covered entities to improve medication access, especially in underserved communities.

Who Qualifies for the 340B Program?

To participate in the 340B program, an organization must be classified as a covered entity under HRSA guidelines. Common types include:

• Disproportionate Share Hospitals (DSHs)
• Federally Qualified Health Centers (FQHCs)
• Children’s Hospitals
• Critical Access Hospitals
• Sole Community Hospitals
• Ryan White Program grantees
• Rural Referral Centers
• Urban Indian Organizations

Qualification often hinges on a provider’s DSH percentage. A DSH percentage is a metric reflecting how many patients are on Medicaid or receive Supplemental Security Income (SSI). For example, some entities, such as Sole Community Hospitals and Rural Referral Centers, require a DSH percentage of 8% or greater. Others, such as a DSH Hospital, require a DSH percentage greater than 11.75%.

A Guide to 340B Participation

For a hospital to participate in the 340B program, they must work across four core pillars:

1. Registration with HRSA

To participate, the hospital must register with HRSA during designated enrollment periods. This step includes identifying all 340B-eligible locations and outpatient services. Once approved, the organization is listed in the official 340B database and assigned a unique 340B ID, which manufacturers and wholesalers use to validate discount eligibility.

2. Outpatient Drug Purchasing

After enrollment, covered entities are able to purchase outpatient drugs from participating manufacturers at discounted 340B prices. These discounts are not applied at the point of sale but are built into the purchasing agreement, which requires coordination among the entity’s formulary, National Drug Code (NDC) crosswalks, and purchasing workflows.

3. Dispensing Through In-House or Contract Pharmacies

Drugs purchased under 340B can be dispensed through an internal pharmacy or a contract pharmacy network. Contract pharmacy arrangements can expand access—especially for rural or low-income patients—but they also increase complexity. Covered entities must maintain auditable records and track claim eligibility for every medication dispensed to ensure that only eligible patients receive 340B medications.

4. Compliance and Continuous Oversight

To maintain eligibility, providers must adhere to stringent requirements and be prepared for potential HRSA audits. Key compliance areas include:

• Avoiding duplicate discounts with the Medicaid Drug Rebate Program
• Maintaining current and accurate provider, location, and NDC data
• Documenting patient eligibility and prescription traceability
• Coordinating across pharmacy, finance, IT, and compliance teams
• Submitting annual recertification and responding to audit findings

Compliance is essential to preserving access to critical funding and preventing disqualification. That’s why many hospitals choose to partner with Visante. We provide comprehensive support through system audits, process validation, and development of Corrective Action Plans (CAPs) when needed.

“By setting clear policies and regularly reviewing them, you create a foundation that helps everyone in the organization understand their role in compliance,” says Tracy. “This proactive approach prevents potential issues before they arise.”

Partnership is Key: How Visante Helps Optimize 340B Programs

Visante acts as an extension of your pharmacy, finance, and compliance teams. We deliver strategic expertise and provide operational support to protect eligibility and maximize program value.

Our 340B solutions include:

• Audit preparation and CAP response support
• Split-billing software optimization
• Contract pharmacy performance evaluations
• WAC spend reduction strategies
• Medicaid carve-in implementation support
• TPA data mapping and reconciliation
• ESP reporting and dashboard support

We stay ahead of national trends, from cyberattacks to EMR transitions, helping our clients adapt quickly and protect 340B savings.

“Working with a partner like Visante gives you the peace of mind that your 340B program is fully optimized and compliant,” shares Sean Hall, Senior Program Director at Visante. “We handle the complexities so healthcare providers can focus on what truly matters: delivering exceptional care to their patients.”

The 340B Drug Pricing Program is a Sustainability Tool

An effectively-managed 340B program drives patient equity, strengthens operational resilience, and supports long-term financial sustainability. For covered entities, every dollar saved directly contributes to greater access to care, safer medication practices, and broader service reach for vulnerable patients. Partner with Visante to bring clarity, compliance and confidence to your 340B program.