Federal law provides an opportunity for discount pricing of prescription drugs through Section 340B of the Public Health Service Act. This provision provides that clinics and certain hospitals may pay prices for pharmaceuticals that are generally less than the Medicaid net price because they are able to negotiate sub-ceiling prices, and because they avoid drug mark-ups and dispensing fees. States are taking advantage of this program to increase access to clinic pharmacies in underserved rural areas and urban neighborhoods, and to reduce the pharmaceutical costs for their corrections population, and for people with HIV and other conditions requiring expensive specialty drugs.

Researching this Issue

Model laws and best practices, testimony supporting these initiatives, and background information and research materials on the pricing of prescription drugs, including reports, court decisions and news articles, are posted here. Other materials and policy options for reducing drug prices may be found on the issue pages relating to Purchasing Pools, Generics, and Medicaid & Medicare. See also the Related Links below to connect to other organizations and materials relevant to this issue. Safety Net Hospitals for Pharmaceutical Access (SNHPA) has an excellent website with a section specifically tailored to "Opportunities for Collaboration Between States and 340B Providers." The Office of Pharmacy Affairs (OPA) is the agency charged with administering the 340B program and posts the most current government information available on their website. The Pharmacy Services Support Center (PSSC) and 340B Prime Vendor Program also host helpful online guides and assorted data on the subject. NCSL in particular is a good resource; its website has detailed information on how 340B works and how states have accessed its provisions.