How can this unprecedented manufacturer restriction generate the company, OR patients, a net benefit?
It would not be an exaggeration to say that Bausch Health (BHC) sent shockwaves through much of the healthcare industry in declaring its intention to cease participation in what it deemed two “optional” Federal drug pricing programs — the Medicaid Drug Rebate Program and the 340B Drug Pricing Program — effective October 1, 2025.
In a statement published on its own website, the company claims, Bausch Health remains committed to Medicaid patients who have been prescribed our products and maintaining patient care and ensuring continuity of treatment is important.
Medicaid patients whose plans no longer provide coverage for our products may be eligible for single-source BHC pharmaceuticals through our Patient Assistance Program (PAP).
We understand that some people may face financial obstacles that keep them from obtaining prescribed treatments. The purpose of the Bausch Health Patient Assistance Program is to help those eligible patients who are prescribed certain Bausch Health Companies, Inc. products obtain those products although financial circumstances or insurance status may otherwise interfere with the ability to do so.
What about Bausch’s commitment to 340B hospitals and their patients?
As we reported in the article What Drugs Are Not Eligible For 340B Savings?, The 340B drug pricing program was created by Congress as a means of filling the often-massive revenue gaps inherent to their business models. For many of the health systems we serve, 340B savings and revenue literally means the difference between solvency and closure.
Just as importantly, every health system we serve uses its 340B revenue to further its mission in the community — including support of its community’s most vulnerable patients; many of whom lack the financial resources to pay for the care they receive.
By withdrawing its drugs from the 340B program, BHC is reducing access to a critical source of support for financially-struggling 340B hospitals, and for the patients they serve.
How is participation in the 340B program“optional?”
Legally, participating in the 340B program is optional only insofar as the company not participating forfeits the right to have its drugs covered by Medicare Part B — which represents an estimated 27% of all Medicare reimbursements. Logically, one would conclude that BHC’s accountants have done the math and determined they’ll do better without replenishing 340B prescriptions or receiving Part B reimbursements. It’s hard to imagine, since (according to numbers drawn from BHS’s own website pages) Bausch Health’s main corporate component is Salix Pharmaceuticals, which focuses on gastroenterology products — and gastrointestinal conditions are common in the senior population. For example, Bausch Health’s XIFAXAN was selected by the Centers for Medicare & Medicaid Services (CMS) for price negotiation as part of the Inflation Reduction Act, which indicates significant Medicare utilization of this drug.
What does Bausch know, or think they know?
We have to wonder if BHS’s legal team has devised what they believe is a strategy for eliminating 340B obligations while still qualifying for Medicare Part B reimbursements. Since joining the wave of restrictions on 340B reimbursements to eligible entities, Bausch Health has been among the industry’s most active manufacturers in expanding the catalog of drugs it refuses to qualify for 340B savings. In 2022, the company announced a policy that limited shipments of 340B-priced product to locations registered as a 340B covered entity or a child site (i.e., effectively restricting many contract-pharmacy deliveries).
In 2023, the company became an early adopter of the “single contract pharmacy” model, restricting reimbursements to prescriptions at just one pharmacy within 40 miles of a 340B health system’s campus. It’s a restriction they know forces hospitals to choose between either one retail or one specialty contract pharmacy, because they also know that while hospitals cover far more patients with 340B prescriptions in their retail pharmacies, many generate most of their 340B savings and revenue from expensive specialty pharmacy prescriptions.
That said, there seems to be some uncertainty about BHC’s intentions in withdrawing from the 340B program. Company verbiage indicates BHC does not intend to withdraw every single product from 340B pricing. However, the 340B law as written is clear: You’re either all-in, or all-out.
The government’s legal position on 340B manufacturer restrictions
The Pharmaceutical Pricing Agreement (PPA) is the contract between a drug manufacturer and the Secretary of Health and Human Services (HHS), and is a prerequisite for the manufacturer to participate in the Medicaid Program and the 340B Drug Discount Program. Under the PPA, manufacturers agree to provide discounted prices, or “ceiling prices,” on covered outpatient drugs purchased by eligible “covered entities” serving vulnerable populations. It’s manufacturer-specific, and covers all of an entity’s drugs. No surprise, BHS never signed the PPA.
Where does this leave 340B hospitals and patients who need Bausch drugs?
Presumably, it means many patients will be forced to go directly to Bausch to buy prescriptions without insurance. What does this do to hospitals who count-on 340B savings to help keep them solvent? Those hospitals will now be required to pay either Wholesale Acquisition Costs (WAC), the manufacturer’s list prices, or Group Purchasing Organization (GPO) prices — both which are significantly higher than 340B costs.
In both cases, the outcome is the same: Either the majority of Medicare and Medicaid patients (those not chosen by BHS for financial support) will pay far more money for their BHC prescriptions, or financially-struggling health systems will be routinely taking significant losses on the company’s prescriptions when they fill them at little to no cost for patients in need. How can the net result, which undercuts so many hospitals’ authority to effectively treat their most vulnerable patients, demonstrate what BHS calls its “commitment” to “maintaining patient care and ensuring continuity of treatment?”
Will other manufacturers follow Bausch’s lead in exiting the 340B program?
This, of course, is the most far-reaching question for, and threat to, the future of the 340B program and the health systems who depend on it.
Let’s not forget how quickly drug manufacturers followed Merck’s lead, in 2020, when it became the first manufacturer to engage the 340B ESP website’s services. At last count, there were 24 manufacturers imposing 340B restrictions — either through 340B ESP, or independently. Let’s also remember just how effective restrictions have been in been in enabling drug manufacturers to avoid their legal obligations to 340B health systems. As we first reported in 2022, in the first year of its relationship with 340B ESP, Merck alone saved $2 billion. Money which would, in most cases, have been used by eligible hospitals to better serve patient populations who are uninsured and/or financially incapable of paying for their own healthcare needs.
Arguably most discouraging of all is HRSA’s continued failure to enforce the 340B law as written — a record of failure that includes its public admission, in 2021, that for all practical purposes, it has no real power to enforce 340B program guidelines.
The good news for 340B entities
Despite the hundreds, if not thousands, of individual 340B manufacturer restrictions thrown our way, VytlOne continues to generate substantial savings and revenues for the health systems we serve. Since 2019, we’ve supported the 340B programs of 33 health systems and 38 health centers. Altogether, we’ve generated nearly $1 billion in total pharmacy-related savings for the clients we serve. What’s more, since the advent of manufacturer restrictions, every one of the health systems whose 340B programs we manage has enjoyed significant 340B-revenue increases.
Legislatively, as we reported in the article Navigating 340B Program Changes in 2025, more and more states are enacting 340B protection bills. As of 2024, at least eight states had passed laws protecting 340B contract pharmacies from drug manufacturer restrictions, six more states enacted similar protection laws, three others passed similar legislation in at least one chamber of their state legislatures, and 15 more had introduced similar bills.
All of which is why we remain optimistic that, given all the factors cited just above, not to mention the growing awareness of just how many struggling health systems — and the communities they serve — depend on 340B, the program will survive this latest attack.
VytlOne is here to help.
To learn how VytlOne can help your health system succeed in an ever-changing 340B environment, contact Howard Hall. howard.hall@VytlOne.com | 214.808.2700
