Skip to Main Content

Amid ongoing controversy over a federal drug discount program for safety-net hospitals, a new survey finds a dozen state Medicaid programs rely on an arguably inadequate method to avoid receiving duplicate rebates, which could provide a boost for taxpayers but hurt the pharmaceutical industry’s bottom line.

At issue is the interplay between Medicaid and the so-called 340B program, which was created in 1992 and requires drug makers to offer discounts of up to 50% on all outpatient drugs — for everything from AIDS to diabetes — to hospitals and clinics that serve indigent populations. There are approximately 12,400 so-called covered entities participating in the program, according to the U.S. Health Resources and Services Administration.


The pharmaceutical industry and 340B hospitals have sparred for the past few years over various issues, such as the number of entities that are eligible to participate in the program, the size of the payments made by drug makers to the hospitals, and requirements that drug companies disclose ceiling prices.

Unlock this article by subscribing to STAT+ and enjoy your first 30 days free!