Overview
The 340B drug pricing program was created by Congress in 1992 to provide significant discounts on prescription drugs for certain health care providers. Its purpose is to help reduce costs and fill revenue gaps for those providers. The program allows eligible hospitals, clinics, pharmacies, nursing homes, home healthcare agencies, hospices, dialysis centers and long-term acute care facilities (among others) to replenish prescription inventories at prices far below common acquisition costs.
In other words, the 340B program allows eligible providers to purchase medications at significantly reduced pricing, and bill normal market rates — creating higher margins on those drugs, as a means of filling revenue gaps that are inherent to their business models.
That said, the ultimate goal of the 340B program is to enable those eligible entities to extend the mission of providing healthcare to the communities they serve — particularly among their communities’ most financially-vulnerable patients — while supporting their efforts to enhance the quality of healthcare to all patients.
That’s exactly how the health systems we serve use their 340B savings. If they didn’t, to put it bluntly, they wouldn’t be our clients. In a post profiling two of those clients, Conway Medical Center’s Director Of Pharmacy noted, “Our relationship with VytlOne has allowed us to expand into areas of medicine we never thought we could offer. We’ve added a cancer center, a pain clinic as part of our orthopedic practice, a dermatology clinic, and a women’s center. We’re expanding our footprint, and we’re treating so many more patients than we used-to. Without VytlOne and 340B, that wouldn’t have been possible.”
Who qualifies for 340B?
To qualify for the 340B program, you need to meet the following criteria:
- You are a hospital, clinic, physician practice group, skilled nursing facility, community mental health center, public health agency, federally qualified health center, Federally Insured Health Center or Indian Health Service.
- You are non-profit.
- You serve low-income populations.
To determine if your health system is 340B eligible, refer to this article on our blog, or visit this page on HRSA’s website.
How much can I save by taking advantage of my 340B eligibility?
The 340B program includes thousands of discounted drugs. Many hospitals taking full advantage of the program’s discounts save millions of dollars a year on prescription costs. For instance, a single refill of a common Antirheumatic prescribed and not applied for 340B reimbursement will cost an eligible hospital roughly $1200 more than it can, and should, legally pay.
VytlOne launched its 340B Support Services division in 2019. Since then, we’ve supported the 340B programs of more than 100 health systems and health centers. Altogether, we’ve generated over $1 billion in 340B savings and revenue for our clients — $300 million in 2025 alone.
How does the 340B program work?
When a patient receives an eligible prescription from an eligible entity location, the entity is reimbursed for the full market price of the drugs, but pays only a fraction of the drugs’ cost — by purchasing the medication on the 340B catalog.
Who pays the 340B costs?
Manufacturers bear the burden of the cost. They reimburse wholesalers for 340B discounts on 340B purchased medications.
That said, since the 2020 advent of the 340B ESP website, manufacturers have increasingly implemented barriers to health systems seeking the 340B savings to which they’re legally entitled. Barriers so seemingly insurmountable that many health systems have abandoned their 340B programs altogether. Which is particularly unfortunate, given that — despite all the manufacturer restrictions thrown our way — every health system whose 340B program we manage has enjoyed increased savings and revenue.
To learn how your health system can successfully navigate manufacturer restrictions, refer to this resource on our blog: 7 Steps For Overcoming 340B ESP & Other Pricing Restrictions.
How does the 340B payment process work?
As a covered entity, you send your encounter (visit) data to your TPA , and your pharmacy sends the prescription data. The TPA matches when it determines that 340B qualification criteria has been met, and the pharmacy orders from the covered entity’s 340B account to replenish the drugs.
However, as we pointed-out in another post, not all TPAs are created equally. Moreover, a TPAs’ ability to accurately qualify 340B claims is only as reliable as the information / data transmission provided by its covered entity. Their systems simply aren’t configured to monitor, and spot, provider / entity data mismatches. Moreover, by law, covered entities are ultimately responsible for the information provided to TPAs, which is why minimizing data mismatches at the source is so critical to maximizing 340B savings. To learn more about how and why TPAs often mismatch 340B submissions, refer to our article on the topic.
Using our proprietary software system, VytlOne monitors every prescription your organization fills, and identifies every eligible prescription generating sufficient savings to justify the time and effort. This extra layer of monitoring improves compliance, while ferreting-out hidden opportunities for more 340B savings.
VytlOne will work with you to determine how aggressively you want to pursue 340B savings, then maintain comprehensive records on every prescription applied for — always assuring you of complete compliance.
How to Ensure 340B Program Compliance?
OPTION ONE (In-House Operation)
Keep 340B OPAIS information accurate and up to date. Register new outpatient facilities and contract pharmacies as they are added. Subtract them when they are no longer eligible. Edit location data for clinics and pharmacies, as needed.
Recertify eligibility every year.
Prevent diversion to ineligible patients. Covered entities must not resell or otherwise transfer 340B drugs to ineligible patients. To learn more about the qualifications for 340B patient eligibility, click here.
Duplicate Discount Prohibition Manufacturers are protected from providing a discounted 340B price and a Medicaid drug rebate for the same drug. Covered entities must accurately report how they bill Medicaid fee-for-service drugs on the Medicaid Exclusion File, as mandated by 42 USC 256b(a)(5)(A)(i).
Prepare for program audits. Maintain auditable records documenting compliance with 340B Program requirements. Covered entities are subject to audit by manufacturers or the federal government. Any covered entity that fails to comply with 340B Program requirements may be liable to manufacturers for refunds of the discounts obtained.
To learn more, refer to The Definitive 340B Compliance Checklist For 2025.
OPTION TWO (VytlOne-Managed Program)
VytlOne’s team will manage all the necessary efforts to ensure your 340B program’s compliance at all times. Again, VytlOne has supported the 340B programs of more than 100 health systems. And yet, not once has a client of ours ever been fined for a 340B violation.
VytlOne is here to help, if you have questions.
There are so many ways to optimize your 340B drug program savings & benefits, and overcome manufacturer restrictions — while still minimizing the likelihood of noncompliance. For more information, contact Howard Hall. C: 214.808.2700 | [email protected]