Rural Hospital Participation in the 340B Drug Discount Program

The 340B drug pricing program enables certain types of safety net organizations to obtain deeply discounted medications, at prices below the "best price" typically offered to Medicaid agencies. In the past, few rural hospitals qualified for the 340B program, but the 2003 Medicare Modernization Act has revised eligibility criteria, thereby allowing many rural hospitals to participate. This study relied on two surveys - one of pharmacy directors at rural hospitals currently buying discounted outpatient drugs through the 340B program and the other of pharmacy directors at rural hospitals eligible but not yet participating in the program. The purpose of this study was to understand the perspectives of pharmacy directors at participating and nonparticipating hospitals to understand their reasons for participation or non-participations, the challenges faced,, the financial impact of the program, and which specific program features present barriers to its broader implementation.

Despite widespread efforts at dissemination about the program, over half of the responding pharmacy directors at non-participating hospitals (56%) were not aware their hospitals were eligible to participate in the program. While comprehensive information on the 340B Drug Pricing Program is available from federal agencies, most notably the Office of Pharmacy Affairs, which administers the program, respondents relied instead on peers from other hospitals or staff within their own hospital to learn more about the program. Based on the level of outstanding technical assistance needs, eligible rural hospitals do not seem to acquire all of the information they need to understand, evaluate, and implement the program.

The proportion of eligible hospitals participating in the 340B program appears to rise with revenue, from 28 percent of hospitals with less than $50 million participating in the program, to 61 percent of hospitals with over $100 million in annual revenue. The distribution of eligible rural hospitals is also quite skewed geographically, with a disproportionate share in the South. The average monthly savings for rural participating hospitals is approximately $19,700 on total outpatient drugs; some hospitals reported saving an average of 24 percent of the pharmacy budget. About 96 percent of all respondents stated that they were satisfied with the discount they received. Study results will be presented in the form of two working papers.

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