To understand the section 340b program, one must look back at 1990 when Congress first created a Medicaid rebate program, which lowered the cost of all pharmaceuticals reimbursed by Medicaid agencies. Drug companies are required by this program to enter an agreement with the Secretary of the Department of Health and Human Services, also known as HHS, as a precondition of coverage for drugs. This agreement specifies, for each brand name drug covered with Medicaid for outpatients, the drug manufacturer must pay the rebate to Medicaid, which is based partially on the manufacturer's "best price".
As a result of the rebate law, several pharmaceutical companies showed disincentives to continue with the huge discounts on drugs, as it meant that they would be paying larger rebates if they gave larger discounts for the non-Medicaid market. Once the manufacturers began to raise their prices, the savings achieved for Medicaid from the program was offset from increased government spending towards drugs purchased from many other federal or state-supported providers.
To correct the situation, in November 1992, Congress enacted the Section 340b program of the Public Health Service Act, which requires any pharmaceutical manufacturer participating with Medicaid to enter another agreement called the pharmaceutical pricing agreement, or PPA. With the PPA, manufacturers agree to provide front-end discounts toward all covered outpatient drugs that are purchased by certain government-supported facilities, or "covered entities," which serve our nation's vulnerable patient population.
Eligibility To Participate In The 340b Program:
The definition of the term "covered entities" includes six different categories of hospitals. These categories are disproportionate share hospitals, sole community hospitals, children's hospitals, cancer hospitals, which are exempt from Medicare's prospective payment system, critical access hospitals, and rural referral centers.
The requirements of these hospitals are that they must be non-profit, operated or owned by the state or local government, or at least under a contract with them, and meet the payer-mix criteria that are related to Medicare's DSH program, with CAHs being the exception. Also, there are 11 categories for non-hospital covered entities that are eligible through receiving federal funding.
These include federal qualified health centers, also refereed to as FQHCs, any FQHC "look-alike", all state-operated drug assistance programs for AIDS, Part A, B, and C of the Ryan White CARE Act programs, black lung, tuberculosis, clinics for sexually transmitted diseases and family planning, primary care clinics for public housing, hemophilia treatment centers, homeless and Urban Indian clinics, and any health centers for Native Hawaiian's. More than 16,000 covered entity sites and 900 pharmaceuticals participate in the 340b program.
To read more about CaptureRx, 340b software, and the History of Section 340b, visit our blog at CaptureRx.com.
As a result of the rebate law, several pharmaceutical companies showed disincentives to continue with the huge discounts on drugs, as it meant that they would be paying larger rebates if they gave larger discounts for the non-Medicaid market. Once the manufacturers began to raise their prices, the savings achieved for Medicaid from the program was offset from increased government spending towards drugs purchased from many other federal or state-supported providers.
To correct the situation, in November 1992, Congress enacted the Section 340b program of the Public Health Service Act, which requires any pharmaceutical manufacturer participating with Medicaid to enter another agreement called the pharmaceutical pricing agreement, or PPA. With the PPA, manufacturers agree to provide front-end discounts toward all covered outpatient drugs that are purchased by certain government-supported facilities, or "covered entities," which serve our nation's vulnerable patient population.
Eligibility To Participate In The 340b Program:
The definition of the term "covered entities" includes six different categories of hospitals. These categories are disproportionate share hospitals, sole community hospitals, children's hospitals, cancer hospitals, which are exempt from Medicare's prospective payment system, critical access hospitals, and rural referral centers.
The requirements of these hospitals are that they must be non-profit, operated or owned by the state or local government, or at least under a contract with them, and meet the payer-mix criteria that are related to Medicare's DSH program, with CAHs being the exception. Also, there are 11 categories for non-hospital covered entities that are eligible through receiving federal funding.
These include federal qualified health centers, also refereed to as FQHCs, any FQHC "look-alike", all state-operated drug assistance programs for AIDS, Part A, B, and C of the Ryan White CARE Act programs, black lung, tuberculosis, clinics for sexually transmitted diseases and family planning, primary care clinics for public housing, hemophilia treatment centers, homeless and Urban Indian clinics, and any health centers for Native Hawaiian's. More than 16,000 covered entity sites and 900 pharmaceuticals participate in the 340b program.
To read more about CaptureRx, 340b software, and the History of Section 340b, visit our blog at CaptureRx.com.
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