340B Insight

As specialty drugs play an increasingly important role in patient care, 340B hospitals need to be planning for how to obtain these high-cost medications when they come online and how best to support their patients once they start using these treatments. Tina Do is associate director of clinical strategy and business development at Yale New Haven Health. She discusses the ways her health system has achieved success in connecting patients with some of the most complex and costly specialty drugs and what other hospitals can learn from those examples. 

Why Specialty Drugs Are Key for 340B Hospitals

Do says specialty drugs are becoming more important to the 340B world for much the same reason they are becoming more important in the health care system. More than 70% of drugs in development are specialty drugs, including numerous therapies that are considered ultra-specialty drugs. That makes it imperative for 340B hospitals to be considering the projected costs of these drugs and the often-substantial amount of patient support that is necessary for people who need these complex therapies.

Hospitals Must Anticipate Upcoming Drug Therapies

Do argues that hospitals need to be monitoring medications coming down the pharmaceutical pipeline because of all the strategic conversations that need to happen within and outside of a pharmacy. Hospitals might need to acquire certain equipment or technology to support these therapies and make plans for the financial impact of new treatments on both the health system and the patients.

What Hospitals Need to Figure Out Ahead of Time

Before new treatments come online, Do says health systems need to ask numerous questions about accessing and administering them. Is a specialty medication going to be a limited distribution drug? Will the medication be part of payer contracts? How many patients and prescribers are affiliated with a particular health service and might be interested in receiving or prescribing the medication? How can the hospital help patients stay on this complex therapy and access financial assistance when necessary? Figuring out the answers to these questions well ahead of time will go a long way in setting up the hospital and its patients for success.

The popular belief that pharmacy technicians are solely focused on dispensing drugs is a common misconception, especially when these techs are working for 340B hospitals. We speak about the increasingly important role pharmacy techs are playing in the 340B world with Dartmouth Health Senior 340B Analyst Kayla Ciampi. 

Getting Into the 340B World

After having limited experiences with 340B earlier in her career, Ciampi said things became “340B on steroids” once she moved to Dartmouth Health. Now much of her day-to-day responsibilities revolve around 340B purchasing and compliance issues, involving significant amount of time working with Excel, third-party administrators, and 340B claims auditing. She said what keeps her coming back are the challenges she tackles and the satisfaction she gets from finding solutions after hours of research.

The Changing 340B Roles of Pharmacy Techs

Ciampi says pharmacy techs are working hard figuring out when to purchase drugs on 340B accounts, ordering for contract pharmacies, and keeping track of increasing drugmakers restrictions. Techs are doing much of the analytical work behind the scenes to make sure 340B claims are eligible, making them a key part of the compliance infrastructure at hospitals.

Advice for Other Techs

As the 340B world picks up speed, Ciampi said being a pharmacy tech in that field can feel like being on a fast-moving freight train and trying to see what’s happening outside. Because of how rapidly that landscape is changing, she says attention to detail, a willingness to adapt, and a desire to learn are the keys to 340B success for techs.

Resources

1. 340B Health Urges CMS To Abandon Proposed Medicare Cuts to 340B Hospitals

A key dimension to navigating 340B involves data, because the way hospitals and their pharmacies crunch numbers can be key to avoiding compliance issues and finding new opportunities to improve savings and patient access to care. Saint Francis Health System’s 340B Program Manager Ted Houston tells us how his health system is getting the most value out of all the data.

Compliance and Savings Opportunities

Houston says his health system has put in a lot of work with its enterprise and data analytics team to align what the electronic health record system is exporting to what drug companies are demanding in order to improve compliance. But he said improving reports also led to additional savings for his system, as some claims were miscategorized within third-party administrator systems. 

Data Consolidation, Better Workflows

Houston said health systems can improve their data monitoring by reducing individual data sources — for example, by using a standardized data extract from a third-party administrator and using tools to scan for certain types of claims. Saint Francis found success with improving oncology medication workflows, finding tens of thousands of dollars’ worth of eligible savings on certain oncology medicines.

Investing in Better Data Quality, Not Volume

To improve data collection, Houston said self-education — both about different analytical resources and what use cases would have the biggest impact — is critical to optimizing data. Those tools may cost money, but it is important to concisely communicate the value proposition for compliance or savings when investing in new tools to improve how hospitals gather and process data.

Resources:

1. Episode 140: What Illinois 340B Advocates Did To Succeed on 340B Protections
2. Illinois Governor Signs 340B Contract Pharmacy Protections as Drugmakers File Lawsuits

Mid-August to mid-September marks the time every year when hospitals need to recertify for 340B. Failure to recertify in time could cost a hospital its ability to participate in 340B. 340B Health Associate Director of Policy and Compliance Rebecca Swartz joins us to walk listeners through the process.

Why recertification is “exceptionally important”

Swartz says annual recertification is not just important, it’s also one of the central tenets of 340B compliance. All hospital types except critical access hospitals need to make sure they’re meeting the minimum disproportionate share percentage threshold. Hospitals also need to affirm that they are nonprofit facilities and that all their registered parent and child sites continue to have reimbursable outpatient costs and charges on their Medicare cost reports.

The cost of losing eligibility is high

Failure to recertify 340B eligibility in a timely manner can lock hospitals out of their access to 340B pricing for a year or more. That could deprive a hospital of crucial resources to provide the care and support its patients need.

Tips for a smooth recertification

Swartz says a key to making the process go smoothly is to start early and make sure hospital officials have the necessary worksheets and other documentation before the recertification process begins. Authorized officials (AOs) and primary contacts (PCs) should be on the lookout for returned tasks from the Health Resources & Services Administration (HRSA) and other messages to ensure their recertification process is complete. Taking screenshots of each step of the process also can help identify and fix discrepancies that might arise.

Resources

1. Hospital Recertification Begins Aug. 10, Prepare Now!
2. 340B Health Registration and Recertification Resource Page
3. 340B Health Webinars

With hospitals facing increasing drug company restrictions on access to 340B savings and other challenges, some might be considering opening their own retail pharmacies to serve their patients. We speak with Sherstin Willyerd, director of pharmacy operations at Montgomery County Memorial Hospital in Iowa, to learn about how her hospital went this route and what others want to consider before doing the same. 

Buying Existing Pharmacies Can Be a Solution 

Willyerd said her hospital was able to purchase two independent pharmacies whose owners were retiring, providing an existing dispensing infrastructure and patient base from which to start. While the hospital still has some contract pharmacy partnerships, the in-house locations can serve patients and generate 340B savings that are less prone to drugmaker restrictions.

A Retail Pharmacy Can Give Better Insight into Patient Struggles

Operating a retail pharmacy allowed Willyerd’s hospital to see more clearly which patients were struggling with prescription drug costs and medication adherence and to provide more assistance to them. She noted that capturing more 340B savings makes it easier to pass along more discounts to patients who otherwise would not be able to afford their drugs.

An Independent Insurance Plan Means Even More Assistance

Montgomery County Memorial Hospital also partnered with a pharmacy benefit manager (PBM) to create a primary and secondary prescription drug insurance plan that it offers to certain patients with low incomes and hospital employees. Willyerd noted that this plan can mean hundreds of dollars in savings per month for uninsured patients and those whose coverage comes with high cost sharing.

Resources:

1. HRSA Releases 340B Purchase Data for 2025

After years of lobbying and advocacy work by 340B covered entities, the Illinois state legislature approved major 340B legislation earlier this year that protects 340B contract pharmacy access and prohibits drugmaker claims on data demands. Thomas Yu, system director of ambulatory pharmacy services at Sinai Chicago, discusses the campaign that made this legislative victory possible and what covered entities in other states can learn from this success.

Joint Events Showed Unity Among Safety-Net Providers

Yu says two “340B Saves Lives” days of action in Chicago helped drive support for the legislative effort. Under the leadership of an association representing community health centers, the events brought together covered entities, patients, lawmakers, and others to show a united front on the issue of protecting 340B.

The Story of 340B Resonated With Lawmakers, Not Numbers Alone

Yu reiterates that statistics and data can be helpful in making the case for 340B but that the story of 340B is what can swing votes. Focusing on community impact and how covered entities use their savings to benefit patients was much more effective at imparting the importance of legislation to protect access to those savings.

Illinois Legislation Was a Compromise 

The legislation package in Illinois contains 340B reporting requirements for covered entities in the state. Yu argues that this compromise was necessary as the contract pharmacy and claims data provisions would have been a “nonstarter” without that addition. However, because the numbers go to the state for a one-time report and because drugmakers also must report data, he says the overall legislative package still makes for a big win for covered entities and patients in the state.

Resources

1. Illinois Legislature Delivers Contract Pharmacy Victory for 340B Hospitals
2. Proposed Medicare Pay Cut for 340B Drugs Would Be Much Deeper Than 2018-2022 Reductions

With scores of pending lawsuits involving drugmaker and covered entity challenges of how federal and state governments regulate 340B, the courts have become an important arena in the national 340B debate. 340B Health’s Vice President of Legal and Policy Amanda Nagrotsky unpacks some of the cases and what they might mean for 340B’s future.

Courts Wrestle With Issues of Federal and State Authority

Drug companies have filed about 80 lawsuits challenging state contract pharmacy protection laws. Nagrotsky says drugmakers are arguing these state laws conflict with federal oversight, but most courts so far have ruled that contract pharmacy protection laws fall within a state’s ability to regulate drug distribution and delivery. A recent decision from a federal judge in Mississippi was a major win for covered entities because it completely dismissed a drugmaker’s challenge to the state’s law rather than just ruling on whether to pause enforcement of the law. 

AbbVie Challenges 340B Patient Definition

Drugmaker AbbVie is suing the Health Resources & Services Administration (HRSA) directly, arguing that the definition of whom the agency considers a 340B-eligible patient is too broad. AbbVie’s own, narrower patient definition would require drug companies to discount far fewer drugs and thus would limit hospital access to 340B savings significantly. The government is asking the court to dismiss the lawsuit on procedural grounds, and 340B Health along with two member hospitals are asking the court to allow them to intervene as defendants and provide additional arguments for why it should throw out the case.

Uncertainty Remains Despite GPO, Child Site Rulings

Federal district court decisions found that HRSA failed to explain why it adopted a 2013 policy barring certain 340B hospitals’ use of group purchasing organizations (GPOs) to make initial purchases for their virtual inventory systems and a 1994 policy establishing registration prerequisites for new 340B hospital outpatient facilities. Although the government opted against appealing the ruling striking down the GPO policy, the underlying prohibition remains in effect, leaving hospitals in limbo as to how HRSA will interpret the law. The government has appealed the child site ruling, and a final decision on that case will have a major impact on how quickly hospitals can use 340B drugs at new child sites.

Hospitals already have felt some of the effects of the Inflation Reduction Act on 340B savings, but with the IRA set to expand to more drugs in 2027, hospitals also are starting to project how it might affect their bottom lines next year. 340B Vice President of Pharmacy Services and Education Steven Miller joins us to explain how hospitals can be making those projections now.

The IRA Will Expand to Another 15 Drugs

Next year, an additional 15 drugs will be subject to Medicare price caps under Medicare Part D on top of the 10 drugs that saw caps this year. Steve says this will cut into 340B savings and overall margins even more — with some 340B discounts possibly dropping to their statutory minimums. These reductions also will translate to commercial and cash-pay dispenses, changing the overall financial outlook for hospitals.

Hospitals Cannot Rely on Current 340B Savings Levels for 2027

Steve says the 2027 changes are key for future budgeting. If hospitals do not adjust how they are budgeting for 340B drugs subject to Medicare price caps, they are likely to be short on their budget projections. He strongly recommends 340B teams have important conversations with finance teams now about how the IRA will affect their hospital or health system next year.

Hospitals Can Be Planning Now

For the rest of 2026, Steve recommends hospitals monitor list pricing and 340B ceiling pricing regularly and to increase monitoring of purchases overall, given how drugmaker pricing behavior affects future 340B prices and savings. As the IRA continues to broaden over the next several years, including to Medicare Part B dispenses, he also recommends hospitals consider securing funding or support from other areas for any 340B-funded services that might see negative IRA impacts.

Resources:

1. Prepare Your Leadership for 340B Changes From 2027 Medicare Drug Price Caps

Drug companies often initiate good-faith inquiries of covered entities (CEs) to learn more about certain purchase patterns or volumes, but how should hospitals navigate these requests? Bibi Wishart, director of pharmacy at Atrium Health, describes what she’s learned being on the receiving end of these inquiries.

Why Do Good-Faith Inquiries Happen?

Bibi says the recent rise in good-faith inquiries is tied in part to drug companies gaining access to more varied data sources and expressing a goal of ensuring the information they collect is in line with what they are expecting. She says a variety of different factors could trigger this type of inquiry, including new providers purchasing certain drugs, concerns about duplicate discounts, or confusion around whether a drug is being used in an inpatient or outpatient setting. Hospitals are very complicated, so responding to an inquiry often can be more about educating drug companies about how hospitals dispense drugs.

How Should a Hospital Respond?

If her hospital receives a communication from a drug company through its authorized official and primary contact, Bibi says she prefers to respond within one or two business days just to confirm she has received the inquiry. She says that while it may take several days or weeks to respond with the requested data, that initial response establishes a cooperative tone and ultimately might prevent escalation to a formal audit process. That also gives the 340B team time to pull in the correct departments and hospital data to provide a full response.

Ways To Prevent the Need for Inquiries

Due to the sheer complexity of dispensing drugs — including reconciling data feeds from third-party administrators, vendors, and electronic medical records — regular internal audits are one of the best ways to identify discrepancies before drugmakers launch inquiries about them. Bibi recommends using internal auditing to catch these issues and having clear procedures in place for how to resolve any potential errors.

340B lately has had a news cycle that seems to change by the hour, and 340B Health President and CEO Maureen Testoni joins us to break down some of the biggest news happening in Washington, D.C., and in courthouses around the country.

HRSA Seeks Feedback on Reviving Rebates 

After courts halted the rebate pilot that was set to go into effect in January, Maureen notes that the Health Resources & Services Administration is seeking more information on a possible revival of its rebate plans. Hospitals are responding with their objections, as are lawmakers on Capitol Hill. Nearly 100 members of the House of Representatives wrote a letter to the committee in charge of funding HRSA urging it to block federal spending for any HRSA rebate model.

Huge Rulings on the GPO Prohibition, Child Site Registration

The past several months have seen big 340B rulings from federal courts. One decision vacated HRSA guidance that had blocked certain 340B hospitals’ use of GPOs for their initial drug inventory, finding that HRSA failed to properly explain the reasons for that restriction. The other decision found that HRSA similarly failed to explain a rationale for restricting 340B eligibility for child sites for up to 23 months after the sites come online. Maureen notes that HRSA could appeal the rulings or seek to issue new guidance.

Federal Government Weighs in on State Contract Pharmacy Lawsuits

For the first time, the federal government has filed briefs in support of drug companies in several lawsuits over state contract pharmacy protection laws. In these briefs, Maureen says the government effectively is telling judges it does not believe states have the right to protect contract pharmacy because federal 340B law preempts such actions. With the federal government weighing in on the matter and a recent split among appeals courts over the issue of preemption, it is possible this issue might be appealed at some point to the U.S. Supreme Court.

Resources

1. Use Our Letter Template Today To Oppose Development of a New 340B Rebate Program
2. Nearly 100 Members of Congress Urge Funding Block for 340B Rebate Model
3. Please Help Advocate for Enforcement Actions Against Drugmakers’ In-House Claims Data Demands
4. Federal Court Vacates HRSA’s 2013 GPO Prohibition Policy
5. Federal Court Decides HRSA Child Site Eligibility Restrictions Are Unlawful
6. Federal Government Backs Drug Companies in Litigation Over State Contract Pharmacy Laws
7. Appeals Court Blocks West Virginia 340B Contract Pharmacy Law, Creating Potential Split with Other Circuits
8. 340B Health Impact Profile Guidebook and Template