We think the 340B program will remain in place, with improvements, at least over the next several years.  In order for the drug discount program to be completely eliminated, Congress would have to revoke or rewrite the existing legislation.  Even a complete overturn of the Affordable Care Act would eliminate several eligibility categories that the legislation created, but would leave Disproportionate Share Hospitals, family planning clinics, STD clinics, and most of the others.  And even in that case, the Supreme Court has not undertaken any cases for which it’s addressing the 340B aspects of the ACA.

There are several pressures for the elimination of the program.  To our view, all the arguments we’ve heard can be distilled to the two questions: “is the program meeting its purpose?” and “who is paying the bill?”

Trade groups who argue that the program is not meeting its purpose conflate the stated purpose of the program: “to stretch scarce Federal resources” with the perceived purpose, which is to directly benefit indigent and vulnerable populations.  This argument is not without merit, since the law doesn’t require covered entities to share or even account for how the savings has been applied to improving health care, and most hospitals don’t.  It’s also true that pharmacy chains and vendors have taken what could be perceived as more than a reasonable share of the hospitals’ savings as fees.  Improved specificity in regulatory guidance would be beneficial in publicizing outcomes, even if a hospital’s use of 340B savings is just to keep their doors open.

Possibly the most compelling argument that the 340B program at large is not at risk is the structure of the funding and the nature of the recipients of the discounts.  Congress, in creating the program, has effectively taxed drug manufacturers, with a huge percentage of the funds going directly to not-for-profit clinics and hospitals.  Removing the program would immediately cost billions of current savings to these hospitals, and replacing the program would likely require subsidies at the taxpayers’ expense.