What Is the 340B Drug Pricing Program?
Congress created the 340B Drug Pricing Program in 1992 to help safety-net healthcare providers stretch scarce federal resources. The law requires drug manufacturers that participate in Medicaid to sell outpatient prescription drugs to eligible healthcare organizations at prices at or below a "ceiling price" calculated using a formula similar to the Medicaid rebate.
In plain terms: if a drug's average wholesale price is $100, a 340B covered entity might buy it for $50–$80. The program is administered by the Health Resources and Services Administration (HRSA), part of the U.S. Department of Health and Human Services. In 2026, covered entities purchased over $100 billion in outpatient drugs through the program.
The program's original intent was straightforward: hospitals and clinics treating large numbers of underserved patients should pay less for pharmaceuticals so they can reinvest savings into patient services — expanded pharmacy operations, specialty clinics, transportation assistance, and community health programs.
Who Qualifies as a 340B Patient?
This is the single most misunderstood aspect of the 340B program. 340B eligibility is not based on income, insurance status, or Medicare enrollment. It is based entirely on your relationship with a covered entity.
To be considered a 340B-eligible patient, you generally must meet all three of these criteria:
- The covered entity maintains health records for you. This can be electronic or paper records documenting your care at the facility.
- Your healthcare provider is employed by or under contract with the covered entity, and the entity maintains responsibility for your care.
- You receive healthcare services from the covered entity beyond just dispensing medication. A one-time visit to pick up a prescription written by an outside doctor typically does not qualify.
Example that qualifies: You receive primary care at an FQHC, your FQHC doctor prescribes metformin, and you fill it at the FQHC's pharmacy or its contract pharmacy.
Example that does NOT qualify: Your private-practice endocrinologist writes a prescription and sends it to a CVS that happens to be a 340B contract pharmacy, but you have no care relationship with the covered entity that contracts with that CVS.
Proposed changes in Congress: Both House and Senate bills introduced in 2026 propose tightening the patient definition. The House bill would require an outpatient service within the prior 24 months and create auditable health records. The Senate draft adds financial eligibility criteria similar to other federal safety-net programs. As of August 2026, these are proposals — not law.
Which Healthcare Facilities Are 340B Covered Entities?
Covered entities fall into two broad categories: hospitals and federal grantees. If you receive care at any of the following, you may be a 340B patient:
| Category | Examples |
|---|---|
| Federally Qualified Health Centers (FQHCs) | Community health centers, migrant health centers, homeless health centers, school-based clinics |
| FQHC Look-Alikes | Health centers that meet all FQHC requirements but do not receive federal grant funding |
| Ryan White HIV/AIDS Program | Clinics and state AIDS Drug Assistance Programs (ADAPs) |
| Disproportionate Share Hospitals (DSHs) | Hospitals that serve a high percentage of low-income Medicare and Medicaid patients |
| Critical Access Hospitals | Small rural hospitals with 25 or fewer beds |
| Sole Community Hospitals & Rural Referral Centers | Rural hospitals that are the sole source of inpatient care in their area |
| Children's Hospitals & Cancer Hospitals | Free-standing children's hospitals and certain cancer hospitals exempt from Medicare PPS |
| Specialized Clinics | Black Lung clinics, Title X family planning clinics, STD clinics, tuberculosis clinics, hemophilia treatment centers, Urban Indian and Native Hawaiian health centers |
How Much Can Patients Actually Save?
Covered entities purchase 340B drugs at discounts ranging from 20% to 50% below average wholesale price. But what you pay at the pharmacy counter depends on how the entity chooses to use those savings.
| Patient Type | Typical Cost | How the Savings Are Used |
|---|---|---|
| Uninsured at an FQHC | Sliding-fee scale (often $0–$15) | Entity passes discount directly to patient; uses remainder to fund community health programs |
| Insured at a contract pharmacy | Standard copay or deductible | Entity keeps the spread between 340B price and insurance reimbursement to fund services |
| Medicare at a 340B hospital | Standard Medicare cost-sharing | Hospital uses savings to offset uncompensated care and expand services |
| Medicaid at an FQHC | Typically $0–$4 | FQHC receives enhanced Medicaid reimbursement; 340B savings support operations |
Bottom line for patients: If you are uninsured and receive care at an FQHC, you are most likely to see direct savings at the pharmacy counter. If you are insured, the program still benefits you indirectly by keeping your safety-net provider financially viable and expanding the services they can offer.
How to Find a 340B Pharmacy Near You
There is no single public directory of "all 340B pharmacies" because the program operates through covered entities, not standalone pharmacies. The most reliable path is to find a covered entity first, then ask about their pharmacy arrangement.
Find a covered entity near you
Use HRSA's Find a Health Center tool at findahealthcenter.hrsa.gov to locate FQHCs in your ZIP code. For hospitals, search your local hospital's website for "340B program" or call their patient financial services department.
Ask about their pharmacy
Call the covered entity and ask: "Do you have an in-house pharmacy? If not, which retail pharmacies do you contract with for 340B pricing?" Many FQHCs operate their own pharmacies. Those that don't typically contract with major chains.
Confirm you're an established patient
Before your first 340B fill, make sure the entity has you on record as a patient and that your prescribing provider is employed by or contracted with the entity. If you're new to the clinic, you may need to establish care before 340B pricing applies.
Shortcut: See our dedicated guide on how to find a 340B pharmacy near you for a state-by-state breakdown of FQHC locators and contract pharmacy networks.
Contract Pharmacies: How They Work
Most covered entities don't dispense medications themselves. Instead, they contract with retail, mail-order, or specialty pharmacies to dispense 340B-priced drugs to their patients. As of 2026, nearly two-thirds of the entire US pharmacy industry participates as a 340B contract pharmacy.
| Company | Market Position |
|---|---|
| CVS Health | ~90% of retail locations have at least one 340B contract |
| Walgreens | ~98% of retail locations serve as 340B contract pharmacies |
| Walmart | Major presence, especially in rural areas |
| UnitedHealth Group / Optum Rx | Growing mail-order and specialty pharmacy share |
| Cigna / Express Scripts | Significant mail-order and specialty presence |
| Albertsons, Kroger, Publix | Smaller but meaningful retail footprints |
The contract pharmacy market is consolidating. The five largest companies now control 77% of all 340B contract pharmacy relationships, up from 57% in 2017. Meanwhile, the total number of unique contract pharmacy locations has declined for three consecutive years due to retail pharmacy closures and manufacturer restrictions on where 340B drugs can be shipped.
Important: Just because a CVS or Walgreens is a 340B contract pharmacy does not mean every prescription filled there gets 340B pricing. The pharmacy must verify that you are an eligible patient of the specific covered entity it contracts with. If you fill a prescription from an outside doctor with no covered-entity relationship, you pay standard retail price.
What Changed in 2026: The Rebate Model
The biggest policy story in 340B this year is the Rebate Model Pilot Program — and its collapse.
HRSA originally announced a pilot that would allow drug manufacturers to provide 340B discounts as post-sale rebates rather than upfront price reductions for 10 drugs selected for Medicare price negotiation. The pilot was set to launch January 1, 2026. But on December 29, 2025, a federal judge blocked it, ruling that HRSA had failed to follow proper administrative procedures and did not adequately consider the impact on covered entities that rely on upfront discounts to maintain cash flow.
On February 10, 2026, the court vacated the pilot entirely. Rather than relaunch immediately, HRSA issued a Request for Information and began rebuilding the program. Then, on July 31, 2026, HRSA posted a revised Rebate Model Pilot Program in the Federal Register. Key details:
- Manufacturer applications are due by August 24, 2026
- If approved, rebate plans become effective January 1, 2027
- The revised pilot is limited to a select group of drugs
- HRSA emphasized the pilot will improve claims-level transparency and prevent duplicate discounts
What this means for patients: As of August 2026, nothing has changed at the pharmacy counter. Covered entities still receive upfront 340B discounts. The rebate model, if it takes effect in 2027, would primarily affect how hospitals and clinics manage their drug purchasing — not what you pay as a patient. However, if your covered entity participates in the pilot, it may need to submit additional claims data to manufacturers.
Manufacturer Restrictions Patients Should Know
Starting in 2020, several drug manufacturers began restricting how 340B-priced drugs are distributed to contract pharmacies. As of 2026, these restrictions have expanded and now affect patient access in tangible ways.
| Manufacturer | Policy | Patient Impact |
|---|---|---|
| Eli Lilly | Requires claim-level dispensing data submission for 340B pricing | Some contract pharmacies may deny 340B pricing if data systems aren't compatible; patients may be charged standard price temporarily |
| Novo Nordisk | Conditions 340B pricing on submission of in-house claim-level data | May delay 340B pricing at some contract pharmacies until data systems are updated; patients should confirm pricing before filling |
| AstraZeneca | Ships 340B-priced drugs only to covered entity's own pharmacy or a single designated contract pharmacy | Patients using multiple contract pharmacies may need to consolidate fills to one location to receive 340B price |
| Sanofi | Limits 340B pricing to entity-owned pharmacies and one contract pharmacy per covered entity | Similar to AstraZeneca; patients may need to use a specific pharmacy designated by their covered entity |
| United Therapeutics | Requires covered entities to register all contract pharmacy locations and submit dispensing data | Delays possible for newly registered contract pharmacies; established patients generally unaffected |
| Novartis | Requires contract pharmacy claims data submission for 340B pricing eligibility | Temporary pricing disruptions possible if data exchange is not yet configured between pharmacy and entity |
As of August 2026, 22 drug manufacturers have implemented some form of restriction on 340B contract pharmacy pricing. HRSA has stated it lacks the statutory authority to prohibit these policies, though several covered entities have challenged them in court. For patients, the practical takeaway is simple: always confirm with your pharmacy that 340B pricing was applied before paying.
What to do if your pharmacy charges full price: Ask the pharmacist to verify whether the prescription was billed under your covered entity's 340B account. If it was not, ask them to rebill it. If the pharmacy says the manufacturer no longer honors 340B pricing at that location, contact your covered entity's patient advocate or 340B coordinator — they may be able to transfer your prescription to an in-house pharmacy or an unrestricted contract pharmacy.
Common Myths About 340B
"340B is only for uninsured or low-income patients."
False. Eligibility is based on your care relationship with a covered entity, not your income or insurance status. Insured Medicare, Medicaid, and commercially insured patients all qualify if they meet the patient definition.
"Any pharmacy can give me the 340B discount."
False. Only pharmacies under contract with a specific covered entity can dispense 340B-priced drugs for that entity's patients. A random CVS or Walgreens location is not a 340B pharmacy unless it has an active contract with your covered entity.
"340B drugs are lower quality or different medications."
False. 340B drugs are the exact same FDA-approved medications sold at retail pharmacies. The only difference is the price the covered entity pays to the manufacturer. The pill in the bottle is identical.
"The 340B program is ending in 2026."
False. The program is not ending. The Rebate Model Pilot was blocked by courts, but the core 340B statute remains intact. Congress has proposed reforms, but no legislation to repeal the program has advanced beyond committee.
"I need to apply for 340B or carry a special card."
False. There is no 340B application for patients and no membership card. If you are an established patient at a covered entity, your provider and pharmacy handle 340B eligibility behind the scenes.
Frequently Asked Questions
The 340B Drug Pricing Program is a federal program created by Congress in 1992 that requires drug manufacturers to sell outpatient prescription drugs at discounted prices — typically 20% to 50% below average wholesale price — to eligible safety-net healthcare providers. These providers include federally qualified health centers (FQHCs), Ryan White HIV/AIDS clinics, disproportionate share hospitals, children's hospitals, rural referral centers, and other facilities that serve large numbers of low-income, uninsured, or medically underserved patients.
340B eligibility is based on your relationship with a covered entity, not your income or insurance status. To qualify, you generally must: (1) have health records maintained by the covered entity, (2) receive healthcare services from a provider employed by or under contract with the entity, and (3) have an ongoing clinical relationship with the entity beyond just picking up a prescription. You do not need to be uninsured or low-income to receive 340B-priced drugs.
Covered entities purchase 340B drugs at discounts ranging from 20% to 50% below average wholesale price. What you pay as a patient depends on the entity's policy. Some FQHCs and clinics pass the full discount to uninsured patients through sliding-fee scales, while others charge insured patients their standard copay and use the savings to fund community health programs. Uninsured patients at FQHCs often see the deepest discounts.
The most reliable way is to find a federally qualified health center (FQHC), Ryan White clinic, or qualifying hospital in your area first, then ask about their pharmacy arrangement. Many covered entities operate their own pharmacies; others contract with retail pharmacies like CVS, Walgreens, Walmart, or Kroger to dispense 340B-priced drugs. You can also search HRSA's Health Center locator at findahealthcenter.hrsa.gov.
Yes. The 340B program does not restrict eligibility based on insurance status. Insured patients can receive 340B-priced drugs, though your cost at the pharmacy counter may still be your standard copay or deductible depending on how the covered entity structures its pricing. The entity uses the difference between the 340B discount and your insurance reimbursement to fund patient services.
In 2026, several major developments affected the 340B program: (1) HRSA's Rebate Model Pilot, originally set for January 1, 2026, was blocked by federal courts and replaced with a revised pilot announced July 31, 2026, effective January 1, 2027; (2) Eli Lilly and Novo Nordisk implemented policies requiring claim-level data submission for 340B pricing; (3) The contract pharmacy market continued consolidating, with five major chains now controlling 77% of all 340B contract pharmacy relationships.
Both. The statute requires covered entities to use 340B savings to "stretch scarce federal resources" and expand services for their patient populations. For uninsured patients at FQHCs, this often means deep discounts at the pharmacy counter. For insured patients, the entity may retain the savings to fund community health programs, dental clinics, behavioral health services, transportation assistance, and charity care. There is no federal requirement that every dollar of savings be passed directly to the patient at the point of sale.
Yes, if the drug is an outpatient prescription and you are a 340B-eligible patient of a covered entity. Many covered entities, especially hospitals and cancer centers, use 340B pricing for oncology, rheumatology, and other specialty medications. Infused drugs administered in a hospital outpatient department are also eligible if they meet 340B program requirements. However, manufacturer restrictions may limit which pharmacies can dispense certain specialty 340B drugs.