Section 340B of the Public Health Service Act requires pharmaceutical manufacturers participating in Medicaid to sell outpatient drugs at discounted prices to health care organizations that care for many uninsured and low-income patients. These organizations include community health centers, children’s hospitals, hemophilia treatment centers, critical access hospitals (CAHs), sole community hospitals (SCHs), rural referral centers (RRCs), and public and nonprofit disproportionate share hospitals (DSH) that serve low-income and indigent populations. While most patients never know about the program, they are at the center of how it works.

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Under the law, drugmakers who want their drugs covered by Medicaid and Medicare Part B must sell them at a discount in the 340B program. According to pharmaceutical manufacturers, large hospital systems, for-profit pharmacies and other middlemen have co-opted a program meant to help patients and turned it into one that boosts their bottom lines. Click here to learn more about the 340b program.