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.
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.