340B Drug Pricing Program: Definition and Healthcare Context
Full name: 340B Drug Pricing Program (Section 340B, Public Health Service Act)
The 340B Drug Pricing Program is a federal program established under Section 340B of the Public Health Service Act that requires pharmaceutical manufacturers participating in Medicaid to sell outpatient drugs at significantly reduced prices — up to 50% below market — to qualifying covered entities. Covered entities include Federally Qualified Health Centers, children's hospitals, Ryan White HIV/AIDS Program grantees, disproportionate-share hospitals, and other safety-net providers. In exchange, 340B entities must serve high proportions of low-income or uninsured patients. HRSA administers the 340B program and publishes the database of all registered covered entity sites. As of 2024, over 50,000 covered entity sites participate.
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How it’s used
- HRSA Uniform Data System (UDS): FQHC sites in the HRSA UDS dataset are among the primary 340B covered entities — Fonteum's FQHC research intersects with 340B eligibility geography and underserved population coverage.
- HRSA Health Professional Shortage Areas (HPSA): 340B eligibility for FQHCs requires serving Health Professional Shortage Areas or medically underserved populations — HPSA designation data is a threshold input for eligibility analysis.
- CMS NPPES NPI Registry: 340B-participating hospitals and FQHCs appear in NPPES with NPI records that Fonteum cross-references against HRSA's 340B covered entity database for access-gap research.
Frequently asked questions
- What is the 340B Drug Pricing Program?
- The 340B program requires drug manufacturers participating in Medicaid to sell outpatient drugs to qualifying safety-net health care entities at substantially reduced prices — often 25–50% below market rates.
- Who qualifies as a 340B covered entity?
- Covered entities include Federally Qualified Health Centers, children's hospitals, Ryan White grantees, disproportionate-share hospitals, and other HRSA-defined safety-net providers that serve low-income and uninsured populations.
- How large is the 340B program?
- As of 2024, over 50,000 covered entity sites participate in the 340B program, and the program covers an estimated 5–7% of all U.S. outpatient prescription drug sales by volume.