340B Drug Pricing Program

The soaring cost of prescription drugs strains patients, providers, and government budgets. The 340B Drug Pricing Program provides relief by making drug discounts available to essential hospitals, which use the savings to provide and expand services to vulnerable patients.

States can protect this key source of support for the nation’s health care safety net is by ensuring providers can use 340B-purchased drugs for Medicaid beneficiaries. Under Health Resources and Services Administration rules, hospitals and other covered entities may choose to purchase covered outpatient drugs for Medicaid beneficiaries at 340B discounts (“carve in”) or not (“carve out”). States have begun to exercise this authority, through Medicaid state plan amendments or legislation, to dictate whether covered entities can make this choice.

States are pursuing several trends related to 340B, including carve-out policies, duplicate discounts, rebate policies, and more.


Contact us at state@essentialhospitals.org or 202.585.0100.

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