01 Aug The Market Advantage Of The 340B Program
A select group of organizations in the health and human service field have a distinct market advantage , they are able to purchase medications for consumers at a greatly reduced price through the 340B Drug Pricing Program (340B Program). As we move towards more value-based reimbursement that rewards the “total cost” of care, this subsidy program will be even more valuable.
So how does the 340B program work? Eligible organizations are able to purchase the drugs from manufacturers at a discounted price, which is calculated using a formula based on the average manufacturer’s price (AMP) and unit rebate amount (URA). The URA is calculated using a statutory formula based on the type of drug , brand name, generic, hemophilia, and pediatric. The discount is the highest price manufacturers can charge for the drug, although organizations can negotiate lower prices. Manufacturers provide the drugs at a discounted price because participating in the 340B program is a federal requirement to participate in state Medicaid programs.
This discount can then be passed onto the consumer , or the 340B organization can charge consumers the full-price of the drugs and use the savings for other purposes. Some 340B organizations use the savings from providing discounted 340B cheap jerseys China drugs at full price to insured consumers to provide free or low-cost drugs to the uninsured or underinsured. Other organizations may use revenue generated by providing discounted drugs at full price to cover expenses for programs unrelated to providing care to the uninsured.
What organizations can participate? As of March 2016, there were over 11,000 unique provider organizations at over 34,000 sites participating in the 340B Program (see 340B Database). Eligible provider organizations include:
Federally qualified health Centers (FQHCs), FQHC look-alikes, Tribal/Urban Health Centers, Native Hawaiian Health Centers, Specialty Clinics, Black Lung Clinics, Comprehensive Hemophilia Diagnostic Treatment Centers, Title X Family Planning Clinics, Sexually Transmitted Disease Clinics, Tuberculosis Clinics, DSH Hospitals, Free Standin Cancer Hospitals, andRyan White HIV/AIDS program grantees.
The many changes in the health care landscape make participation in the 340B program a valuable strategic asset. First, there are the new medications coming on the market and their costs are rising. Â Second, there is the emergence of “vertical” or “whole person” reimbursement models in accountable care organizations (ACOs), medical homes, and special needs plans (SNPs) that reward savings on the “total spend.” Third, there is the competition for consumers and increasing consumer “price shopping” for health care.
For more on the 340B program , including a detailed breakdown of participating organizations by type and a detailed explanation of how drug discounts are calculated , check out What Provider Organizations Are Eligible For 340B Drug Pricing Benefits?: An OPEN MINDS Market Intelligence Report. wholesale jerseys The report answers a number of questions including:
What Is The 340B Drug Pricing Program?
What Provider Organizations Are Eligible To Participate In The 340B Program?
How Are Drug Discounts Calculated For The 340B Program?
How Does The 340B Program Discount Affect Consumers?
What Drugs Are Eligible For 340B Program Reimbursement?
Drug prices are becoming subject to a national debate and solutions are being proposed, but just as quickly criticized (see Candidates’ prescription drug price plans may miss the mark and CMS proposal for prescription drug reimbursement called perverse and dangerous by one opponent). The 340B program can be seen as one solution to rising drug costs, but critics are also calling for the program to be held to stricter standards. Stay tuned for our discussion of the criticisms of the 340B Program next week.