Maximizing pharmacy’s role in your hospital’s revenue cycle
The 340B landscape continues to evolve rapidly, with ongoing manufacturer restrictions, new compliance hurdles, and increasing financial pressures on covered entities.
The average 340B-eligible hospital loses a substantial amount of money due to drug manufacturer restrictions on the program. Recent estimates indicate that hospitals and clinics collectively lose around $3.2 billion annually because of these restrictions, as drug companies limit 340B discounts on medications purchased through contract pharmacies. Additionally, up to $8.4 billion in 340B savings is at risk, due to increasing limitations imposed by pharmaceutical manufacturers — which could further strain the healthcare safety net and patient care services.
These financial losses have forced many safety-net hospitals to cut back on services, making it even harder for underserved patients and communities to access affordable medications and critical healthcare programs. The situation may worsen if more drug companies follow suit in restricting 340B savings.
As we enter 2025 Q2, the sad truth is that most 340B hospitals are struggling to protect their programs from further prescription-savings erosion. This reality is particularly unfortunate, given the fact that hospitals taking full advantage of ongoing advances in overcoming manufacturer restrictions and other 340B challenges are asking themselves how they can further optimize their 340B savings.
All of which is why the ultimate question for a 340B-eligible entity might be: Which group is your hospital in: The former, or the latter?
Regardless of your answer, there’s no question the 340B Drug Pricing Program remains a critical resource for eligible healthcare providers, enabling them to stretch scarce federal resources to provide essential services to underserved communities. Aside from manufacturer restrictions, entering 2025 Q2 the 340B program faces additional new challenges — and opportunities — driven by legislative updates, market dynamics and emerging technologies.
The single most promising new development for 340B hospitals
Simply stated, it’s the PBM that benefits 340B hospital patients and their employees.
It’s no secret that the nation’s largest PBMs have developed a system that routinely puts patients and providers last — particularly when it comes to making prescribing decisions for 340B patients. With the Maxor+ PBM, ProxsysRx now offers 340B health system pharmacies (retail and specialty) prescription drugs on a pricing basis that’s similar to the cost-plus model.
No longer at the mercy of the largest PBMs, the hospitals we serve now have the ability to design their own formularies and networks. Which means they determine the margins their on-campus pharmacies generate on prescriptions, ensuring that those pharmacies operate on a positive-revenue basis — while, at the same time, enabling them to drive the lowest possible costs for prescriptions (including high priced specialty drugs), and pass-along lower prescription costs to their employees.
Full transparency plus pricing, patient-care control for 340B hospitals.
When ProxsysRx manages your health system’s 340B program, your providers (working with your 340B team and ours) can choose — on a per-prescription basis — whether to take the associated rebate price of a drug or the discounted 340B price on each 340B-eligible prescription. So not only will your health system benefit from lower pricing, you and your patients will benefit from the full transparency we offer you on every prescription.
By having access to comparative-medication pricing information, your pharmacists can work with your physicians to select prescriptions that best serve each patient individually.Think about that: You can ensure maximum clinical benefit for your patients, and maximum financial benefit for your 340B health system, while maintaining complete transparency on your medication costs.
Savings you can extend to your employees.
With the potential prescription drug savings, your 340B hospital could cover the copay of literally every employee prescription filled, and still generate higher margins in your own pharmacies. Moreover, with the additional remaining margins, you can further invest in the mission of caring for your community’s most vulnerable patients.
Imagine the positive impact your 340B health system could have on employee well-being, job satisfaction and overall performance by covering 100% of their prescription copays. Imagine the positive impact that could have on your patients.
Understanding the current 340B landscape
The 340B program has been subject to increasing scrutiny and regulatory oversight in recent years. Key changes anticipated or already implemented for 2025 include:
Heightened 340B audits and oversight
The Health Resources and Services Administration (HRSA) has signaled its intention to increase the number and complexity of 340B program audits it conducts. Covered entities should prepare for more frequent and detailed reviews of compliance with program requirements, including eligibility, duplicate discounts and diversion prevention.
A new drug manufacturer ploy to undermine 340B
Manufacturers continue to challenge virtually every aspect of the 340B program, from drug pricing to contract pharmacy arrangements. One of the latest ploys they’ve pulled out of their bag of tricks is a so-called “Rebate Model” for 340B pricing.
“In a nutshell,” says says ProxsysRx VP Heather Brooks, “the CE would have to pay retail prices first, to allow for replenishment, and THEN submit documentation the way they do for 340B ESP (this time with even more claims info). Then the manufacturer will approve a ‘rebate’ and send money back to the CE for the difference in the 340B and retail prices.
“This is beyond a mere adjustment in tactics. It effectively turns the entire 340B process on its head. Manufacturers are now asking already-starved nonprofit hospitals to pay significantly more upfront, with only the hope of receiving timely rebate payments.
“The good news here is that the Department of Health and Human Services (HHS) has put its foot down to stop this outrageous gambit. While many of its past responses to 340B manufacturer restrictions have been overly light, their response to this scheme has been appropriately severe. The manufacturers who’ve tried it — including Johnson & Johnson, Bristol Myers Squibb, Lilly and Sanofi — have all placed the maneuver on hold.”
Adding insult to injury: Dirty tricks —
As if the tactics above weren’t enough, someone is authoring false reports and smear campaigns to undermine the 340B program in the court of public opinion. Arguably the most outrageous lie being spread was reported by The Kentucky Lantern, an independent, nonpartisan, free news service.
In an article published February 3, the Lantern reported the activities of a dark money group which calls itself Building America’s Future: “In a recent news release, [the group] claimed the 340B program is being used to ‘subsidize health care for illegal immigrants and pay for gender transition for kids’” — an obvious ploy to marshal political opposition to 340B.
The second, and far more plausible-sounding lie being spread about the 340B program is that the money supporting it comes out of taxpayers’ pockets. “How do you get people to oppose a government-sponsored program?” Brooks asks. “Tell them they’re paying for it. 340B is operated by private payers, and not one penny has ever come from taxpayers.”
340B legislative updates: States opposing manufacturer restrictions
Recent legislative proposals aim to redefine program parameters, such as expanding eligible patient definitions and revisiting covered entity eligibility criteria. Keeping up with these changes will be crucial for planning your own 340B program, moving forward.
Legislatively, we’re happy to report that more states are enacting 340B protection bills. During the month of March, at least ten more states passed bills pushing the manufacturers to reverse course.
As of 2024, at least eight states had passed laws protecting 340B contract pharmacies from drug manufacturer restrictions. Leading the charge were Arkansas and Louisiana, which successfully pressured over a dozen drug manufacturers to lift their 340B price restrictions. Additionally, in 2024, six more states — Kansas, Maryland, Minnesota, Mississippi, Missouri and West Virginia — enacted similar protection laws. Meanwhile, three other states (Delaware, Kentucky, and Rhode Island) passed similar legislation in at least one chamber of their state legislatures, and 15 more states have introduced similar bills.
Few manufacturers have officially abandoned their restrictive practices completely, but now the states have firepower to answer them. “These state-level laws,” Brooks continues, “are truly beneficial for the 340B covered entities we serve. In states where the laws have been in place the longest, we’re seeing significantly more savings generated for their programs. For one of our clients, we were able to increase one pharmacy chain’s monthly 340B reimbursements from less than $10,000 to more than $100,000 a month.
“Think about that: A single health system increasing its annual 340B revenue by more than a million dollars at a single pharmacy chain. Imagine if the manufacturers had never implemented their unlawful 340B restrictions. How much more could hospitals have done to serve their communities — particularly the most financially vulnerable patients; the very people the 340B program was created to protect?”
340B Pharmacy Network Adjustments
Restrictions on contract pharmacy participation remains a hot-button issue, not to mention a central focus of unlawful manufacturer 340B program restrictions. Based on our experience managing the 340B programs of 21 health systems, here is a claim we can make with 100% certainty: Your hospital’s 340B contract pharmacy network is not what it should be. To learn what you can do to expand and optimize it, click here.
Key Strategies for 340B Compliance
Strengthen your internal policies and procedures
- Conduct regular 340B compliance training for staff.
- Update your policy manuals to reflect the latest 340B program requirements.
- Perform self-audits to proactively identify and address your 340B program gaps.
Enhance your documentation practices
- Maintain meticulous records of 340B patient eligibility and drug dispensing, to minimize risks during HRSA audits.
- Automate your 340B program with customized software streamlining documentation and reporting.
Engage in proactive communications with 340B program stakeholders
- Foster transparent relationships with drug manufacturers and wholesalers.
- Advocate for your organization’s interests through industry associations and legislative outreach.
The Expanding Challenges of 340B in 2025
1. Manufacturer restrictions: The fight continues
In spite of everything, many drug manufacturers have doubled down on restrictive policies that limit covered entities’ ability to access 340B pricing. Some have implemented exclusions for specialty pharmacies located outside arbitrarily-determined distances (typically 40 miles) from 340B entity campuses, significantly reducing savings opportunities. Others continue to push for excessive reporting requirements that make compliance unnecessarily burdensome and, in some cases, nearly impossible for smaller health systems.
2. HRSA enforcement: Limited but persistent
HRSA has acknowledged its limited ability to enforce 340B rules against manufacturers imposing restrictions. While HRSA has attempted to push back, the reality is that covered entities must take proactive measures to secure their savings. This makes it even more critical to work with an experienced 340B partner that can navigate these barriers.
3. TPAs and contract pharmacy networks: The need for optimization
Every 340B hospital needs Third-Party Administrators (TPAs) to match their 340B prescriptions. What far too few 340B hospitals realize is that not all TPAs are created equal. For tips on selecting the right TPAs for your 340B program, click here.
That said, as mentioned above, very few covered entities have optimal contract pharmacy networks, with opportunities for expansion going unnoticed. A well-optimized contract pharmacy network can literally mean the difference between a struggling 340B program and a thriving one.
How 340B Entities Can Optimize Their Program Benefits
1. Advanced 340B software & automated analytics
With manufacturer restrictions and compliance requirements in constant flux, tracking your health system’s 340B prescriptions is simply not humanly possible. ProxsysRx’s proprietary analytics software automates data tracking, ensuring that covered entities can efficiently manage their savings opportunities while maintaining strict 340B program compliance.
2. Full-time, expert 340B program management
Far too many health systems rely on part-time staff, with no outside support, to manage their 340B programs. That’s never worked, and it never will. A part-time staff can work well with sufficient outside support. However, in our experience, a full-time in-house staff alone is too expensive — and lacks the depth and breadth of 340B problem-solving experience that comes with a company serving multiple health systems.
3. Overcoming manufacturer restrictions with proven strategies
Clearly, this is much more easily said than done. The challenge of overcoming manufacturer restrictions is constantly evolving, and requires a combination of analytics and human insight. To learn more about striking the right balance between the two, click here.
4. Getting the most from your contract pharmacies
Earlier we discussed expanding your health system’s 340B contract pharmacy network. For more information on evaluating your existing contract pharmacies, click here.
5. Build your own retail & specialty pharmacies
Operating an in-house retail or specialty pharmacy can dramatically enhance your hospital’s 340B savings. On average, ProxsysRx-managed hospital retail pharmacies generate $750 to $1,000 in net profit per hospital bed, per month. For most 340B health systems, specialty pharmacies offer even greater 340B savings opportunities, with revenue potential as much as 600% more than traditional retail pharmacy 340B prescriptions.
More importantly, owning in-house retail and specialty pharmacies ensures that your 340B hospital’s care for 340B patients, and your employees, stays local — within your system, in your own community — which is where it should be.
To learn how your health system can fund and manage successful on-campus pharmacies, click here.
6. Use your 340B savings to expand patient services
So many of the health systems we serve have used savings generated from their 340B programs to broaden access to care, by opening new service lines and providing more comprehensive community outreach. To learn more about how two of those systems have done just that, click here.
ProxsysRx is here to help.
To learn how ProxsysRx can help your health system succeed in an ever-changing 340B environment, contact Howard Hall. howard.hall@proxsysrx.com | 214.808.2700
