The 340B Drug Pricing Program, established by Congress in 1992, was designed to enable eligible healthcare organizations to stretch scarce federal resources, reaching more eligible patients and providing more comprehensive services. Over the years, this program has evolved into a powerful tool that can significantly enhance a hospital’s ability to improve patient outcomes, and ensure its own financial sustainability.
“There are so many components to an optimized 340B program that a health system can use to extend its mission of impacting the community — particularly for patients least able to afford the healthcare they need,” says Maxor Senior VP Howard Hall. “Our approach emphasizes integrating 340B throughout the continuum of care — from retail and specialty pharmacy to readmission reduction.
“Since we launched our 340B Support division, we’ve managed the 340B programs of 21 hospitals. If there’s one thing we’ve learned, it’s this: Health systems simply do not have the in-house bandwidth to manage all of their programs’ potential savings and revenue opportunities. Typically, their focus is limited to the basics.
“Managing a successful 340B program isn’t just a matter of hospitals maintaining compliance, or driving prescription savings to their pharmacies. In the most literal sense, 340B is not a quote-unquote ‘charity care program.’ The purpose of 340B is to generate revenue for non-profit hospitals. Revenue they can then use to support their missions in the community, which includes charity care.”
In a 2022 post we published on our blog, Southwest Mississippi Regional Medical Center’s Tiffany Poole noted, “Congress started 340B to increase access to healthcare for everyone, and expand eligible hospitals’ scarce resources in their most underserved communities. Our relationship with ProxsysRx has allowed us to spread those scarce resources further than we ever could have on our own.”
Andrew Wright, DOP at South Carolina’s Conway Medical Center, countered, “It’s 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 ProxsysRx and 340B, that wouldn’t have been possible.”
“There’s a reason drug manufacturers want to pigeonhole 340B as charity care,” Hall continues. “They do it so they can point, accusingly, to anything done with 340B revenue that isn’t literally charity care. They’re trying to apply a For-Profit Hospital narrative to 340B.
“Charity care is what for-profit hospitals do with their profits. That simply doesn’t apply to 340B. The vast majority non-profit hospitals operate on little to no margins, often negative margins. 340B functions to help fill the gaps caused by uncompensated or under-compensated care. The mission of non-profit hospitals is to steward their revenues and resources to make people healthy — whether they can pay for the healthcare they need or not. That’s exactly what the health systems we serve are doing with the 340B revenue we generate for them. There are no shareholders measuring outcomes financially, just communities measuring outcomes by the way they’re treated and cared for.”
Understanding the 340B program’s potential
At its core, the 340B program allows eligible healthcare providers to purchase outpatient drugs at discounted prices. The savings generated can then be reinvested into patient care services, expanding access and improving quality. However, the true potential of the 340B program extends beyond mere prescription cost savings.
In ProxsysRx / Maxor’s approach, the program serves as the central hub of a multi-faceted strategy that enhances both revenue and patient care. By integrating pharmacy services throughout the continuum of care, hospitals can leverage the 340B program to address critical inefficiencies in the healthcare system, particularly those related to prescription drug access and affordability.
2025’s most promising new development for 340B hospitals
The MaxorPlus PBM is specifically designed to benefit the patients and employees of 340B hospitals. MaxorPlus offers 340B health system pharmacies (retail and specialty) prescription drugs on a pricing basis that’s similar to the cost-plus model.
Which means, for starters, that your health system is no longer in the clutches of the industry’s largest PBMs. Now, you’ll have the ability to design your own formularies and networks. You determine the margins your on-campus retail and specialty pharmacies generate on prescriptions, ensuring that they operate on a positive-revenue basis — while, at the same time, enabling you to drive the lowest possible costs for prescriptions (including high priced specialty drugs).
340B hospitals get full transparency plus control over pricing & patient-care.
When ProxsysRx manages your hospital’s 340B program, your pharmacy has the visibility and ability to choose — on a per-prescription basis — whether it’s most appropriate to take the rebate price of a drug or the discounted 340B price on each 340B-eligible prescription. So not only will your health system, your patients and your employees benefit from lower pricing, you’ll also benefit from the full transparency we offer you on every prescription.
With full access to comparative-medication pricing information, your pharmacists can work with your physicians, and our 340B team, to select the ideal prescription option for each patient you treat. In short: Maximum clinical benefit for your patients, maximum financial benefit for your hospital, and maximum transparency on your medication costs, maximum effectiveness for everyone.
Extend the savings to your employees.
With the prescription drug savings we offer, your health system can absorb the copay cost of every employee prescription filled in your pharmacies — and still meet financial goals. Which means you can also invest even more in the mission of caring for your community’s most vulnerable patients.
Think of the impact Zero Copays could have on your employees’ sense of well-being, not to mention their job satisfaction and performance. Think about employee retention, and remember: Your employees are also patients. Think of the impact all that could have on your patients’ wellbeing.
How to build a comprehensive 340B strategy
To transform your 340B program into a community health engine, your hospital should consider the following strategic steps:
1. Use a dedicated 340B management team
It goes without saying that effective management of the 340B program requires specialized knowledge and continuous oversight. Hospitals like Conway Medical Center and Southwest Mississippi Regional Medical Center have found success by allowing our dedicated 340B Program Specialists to manage their programs’ daily activities while navigating their policy issues and ensuring their programs’ compliance. This approach allows the hospitals’ staffs to focus on their own critical responsibilities.
“The health systems we serve who’ve benefited the most from our relationship,” says Maxor / ProxsysRx VP Heather Brooks, “are the ones with a proactive 340B culture. They understand the benefits of collaborating with our team, and they’ve learned that they can trust us. Every 340B program we manage is a partnership. We do most of the hands-on work, but we also need their support — particularly in responding to our data requests. Interestingly, our software analytics have been extremely helpful in inspiring that kind of culture, and here’s why: When health systems can see their ‘340B story,’ it opens their eyes to just how much we can do for them.”
2. Expand pharmacy services while improving pharmacy margins
As we’ve noted in multiple posts, integrating 340B savings with on-campus retail and specialty pharmacies can significantly enhance not only the breadth and quality of your hospital’s service offerings (through improved patient access to specialized care), but your 340B revenue potential as well.
From a clinical care perspective, the number one benefit of on-campus pharmacies is keeping as much patient care as possible within your health system. At the same time, from a financial perspective, when your own pharmacies can match or beat the best pricing available from external pharmacies, why wouldn’t you want to keep that revenue within your system?
For Further Reading:
How Can Your 340B Hospital Pay For Its Own Specialty Pharmacy?
Best Practices For A Successful 340B Specialty Pharmacy
3. Optimize your revenue cycle
Pharmacy services should play an integral role in your hospital’s revenue cycle. By maximizing the use of 340B discounts and ensuring that every eligible prescription is filled and submitted (whenever possible, through your in-house pharmacies), 340B hospitals can leverage value and workflows created in their pharmacies to enhance both patient care and the patient experience, while positively impacting their bottom lines.
Again, the MaxorPlus PBM exemplifies this approach, enabling your hospital to access drugs on a pricing basis similar to the cost-plus model. Which, in turn, enables you to improve your pharmacies’ margins. For one California community hospital, we identified $1.6 million in potential savings they could achieve simply by redirecting employee prescriptions to their own pharmacies.
4. Overcome manufacturer restrictions
Navigating drug manufacturer restrictions and compliance hurdles is essential for maintaining a successful 340B program. Despite all the barriers drug manufacturers have thrown our way, ProxsysRx’s 340B team has generated more than $500 million in 340B savings and revenue for the hospitals we serve. To date, we’ve helped 21 health systems minimize the manufacturer restrictions and websites like 340B ESP.
For Further Reading:
Seven Steps For Overcoming 340B ESP and Other Manufacturer Restrictions on 340B Pricing
Leveraging Partnerships With Drug Manufacturers To Overcome 340B Restrictions on Specialty Drugs
Expanding 340B’s Community Impact
Beyond internal operations, hospitals can extend the benefits of the 340B program to the broader community:
Extending employee health benefits to other employers
We’ve already discussed the MaxorPlus PBM’s potential for enabling your health system to reduce employee copays, or eliminate them altogether. You can even offer the program to other local self-insured employers, further supporting employee health and well-being in your community.
Developing a strategic clinical and financial plan
Below are just a few of the ways ProxsysRx helps the 340B health systems we serve to take full advantage of the opportunities 340B offers to support their mission in the community:
- We dig deep to understand where their prescriptions are going.
- We analyze their community’s areas of need, and identify 340B program opportunities to better serve those needs.
- We help hospitals establish and implement sound 340B policies and procedures, ensuring they optimize savings and patient care, while maintaining complete compliance…
- We manage all aspects of their 340B retail pharmacies — from construction, staffing, stocking, Meds To Beds, to post-discharge patient follow-up monitoring / consultation and charity care / financial support for patients in need.
- We help health systems develop a financial “glide path” to help fund their own specialty pharmacies — then provide the leadership and support needed to 1) navigate the accreditation process and 2) implement the best practices that ensure the pharmacies’ success (both clinically and financially).
- We also offer a readmission reduction program which has already generated exceptional results for Conway Medical Center.
Conclusion
The 340B program offers more than just discounted drug pricing; it presents an opportunity for hospitals to enhance their service offerings, improve patient outcomes, and strengthen financial sustainability. By adopting a comprehensive strategy that includes dedicated management, integration with pharmacy services, revenue optimization and community partnerships, your hospital can transform its 340B program into a powerful engine for community health.
As healthcare continues to evolve, embracing the full potential of the 340B program will be essential for hospitals committed to serving their communities effectively and sustainably.
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
