Experts Call for Stronger Transparency and Clear Patient Definitions in the 340B Program
Pharm'Up 
In an interview, Shawn Gremminger, president and CEO of the National Alliance of Healthcare Purchaser Coalitions, argues that the 340B Drug Pricing Program needs significant reforms to ensure it fulfills its intended safety-net mission. He highlights two major issues: a lack of transparency regarding how covered entities use their profits and a weak definition of what constitutes a “patient.”
The Push for Transparency
Gremminger states that policymakers, employers, and healthcare purchasers are demanding greater transparency from hospitals and other covered entities participating in the 340B program. The program, while implicitly meant to support low-income communities, has no legal requirement for participants to report on how they use the substantial revenue generated from drug discounts.
Some states have taken action. Minnesota passed legislation requiring covered entities to disclose their net revenue from 340B, and Indiana went a step further by mandating reporting on how those funds are used. Gremminger believes this type of reform is crucial to ensure the program’s benefits are truly reaching the patients and communities it was designed to serve.
The Problem of a Weak Patient Definition
According to Gremminger, the most significant challenge in the 340B program is the lack of a clear, statutory definition of a “patient.” This legal ambiguity allows covered entities to broadly interpret the term, sometimes classifying an individual as a 340B patient after a minimal interaction, even if no medication is prescribed.
This loophole leads to drug diversion, where discounted drugs are used to generate profit for the covered entity rather than to provide a direct benefit to the patient. For example, a single, brief telehealth visit can be used to classify a person as a 340B patient for up to two years. During this period, the covered entity can claim discounted 340B pricing on every prescription that patient fills, regardless of who prescribed the medication. This practice allows hospitals to make significant profits while potentially disadvantaging independent pharmacies that are not part of these 340B contracts.
Gremminger emphasizes that without a clear patient definition, the program’s intended purpose is undermined, and its benefits are not being appropriately utilized.
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