Utilizing 340B Margin to Create a Patient Prescription Assistance Program

The nation’s safety-net hospitals and their patients will face significant changes when the new Medicaid requirements go into effect in January 2027.¹ The repercussions will impact eligible patients (those aged 19 to 64 years), particularly working adults who are enrolled through the Affordable Care Act (ACA) Medicaid expansion program.

Americans who receive Medicaid coverage through their state’s expansion under the ACA will face new eligibility requirements including demonstrating proof of work, volunteering, or attending school for 80 hours a month to maintain coverage in the insurance program. Enrollees will also be required to reapply every 6 months, rather than the current enrollment standard, which is annually. As a result, many safety net hospitals are anticipating delays in therapy and increases in care gaps as patients lose coverage or struggle to meet new requirements, creating barriers to access care such as specialty prescriptions and therapies.

Additionally, safety-net hospitals are facing challenges after several manufacturers announced claim submission requirements to maintain access to 340B pricing and even pulled 340B pricing from noncompliant health systems. Health systems are already struggling with capacity constraints to manage their program, and the additional time and personnel needed to manage claim submission is another headwind for safety-net hospitals participating in the 340B Drug Pricing Program. These 340B challenges have the potential to inflict millions of dollars in annual cost increases if manufacturers continue to pull their 340B Program pricing.

As more Medicaid patients lose health care insurance and manufacturers pull 340B Drug Pricing Program pricing, significant savings will be lost to vital hospitals, health systems and vulnerable patients. One way safety-net hospitals can begin to plan and support patients impacted by these changes while maintaining financial stability is by implementing a prescription assistance program (PAP) through their hospital-owned specialty pharmacy.

Meeting All Patients’ Needs Through a PAP

Hospital-owned specialty pharmacies can create a reliable revenue stream through 340B Program savings that can be reinvested into PAPs for underinsured or high-copay patients. In this model, under- and uninsured patients that meet established eligibility criteria receive their medication at a reduced cost. The cost of the medication—and in some cases, the patient’s copay—is funded through 340B savings allocated to the PAP.

A PAP ensures that care and access to medications is accessible to the maximum number of patients possible within the resources available at a hospital or health system, which in turn helps to improve medication adherence. An important element in a hospital’s or health system’s commitment to vulnerable populations and their community is meeting patient needs, whether they are uninsured, underinsured or simply burdened by the cost of outpatient or specialty prescription medications. Additionally, reinvesting 340B savings into a PAP reduces reliance on subsidies and external foundation support while improving access and lowering medication abandonment.

Determining the Value of a PAP

There are many safety-net hospitals that have not considered implementing a PAP. This may be because they receive funding through other means, or they misunderstand compliance issues with insurance contracts and how they can retain patients and maintain care within the health system. Another possibility is that the safety-net hospital may need to use 340B funds for essential operations and payroll.

The most effective way for hospitals to assess the value of a PAP is by tracking the financial barriers faced by uninsured or underinsured patients. Patients with high specialty medication copays or delays in treatment due to affordability challenges should be evaluated as potential candidates for assistance. Even when patients receive financial support through a PAP, hospitals often continue to benefit from the revenue and margin associated with dispensing those prescriptions. By assessing the volume and value of prescriptions that are lost due to affordability challenges, safety-net hospitals can estimate the financial and patient care impact of a PAP which can serve as a compelling business case for stakeholder engagement and help justify the resources required to establish and sustain the program

C-Suite Engagement

Early C-suite engagement is crucial for implementing a PAP. Successful safety-net hospitals align the specialty pharmacy strategy with system priorities such as financial sustainability, access and equity. Leaders must understand how the program works for both insured patients who cannot afford copays and uninsured patients who cannot afford medication costs. They must understand the value of 340B Program dollars to create a sustainable program.

The PAP is intended to be net-neutral or positive in terms of revenue and will not result in more charitable dollars from the safety-net. Many C-suite teams value learning how the program can maintain and increase revenue while reducing readmission and ER visit costs, increase medication access, reduce pharmacy leakage and ensure continuum of care within the health system

Outlined below are 4 steps for implementing a PAP:

1. Define patient criteria: Create specific requirements that determine whether a patient is eligible to participate in the program (eg, household income less than 300% poverty level, out-of-pocket prescription expenses exceeding 5% of monthly income).
2. Obtain policy approval: Policy approval demonstrates that the program is legally compliant, operationally sound, financially sustainable and aligned with the health system’s mission and obtaining this will help to earn approval by leadership and compliance committees.
3. Staff training: Staff within the hospital or health system will need to understand the program’s policies, workflows, compliance requirements and responsibilities before assisting patients.
4. Tracking program impact: The performance and value of the PAP must be tracked to demonstrate effectiveness. Measuring patient access, operational efficiency, financial impact, compliance, and clinical outcomes will be important to track to validate results.

PAP and the intent of the 340B Drug Pricing Program

A PAP supported through 340B savings demonstrates the intent of the 340B Program by reinvesting resources into the services that expand access to care for vulnerable patients. It provides a measurable example of how 340B savings are benefiting patients and the community. As policymakers, regulators and program lobbyists continue to call for greater transparency on the use of 340B savings, PAP is a clear way to show program impact.

Hospitals and health systems that implement or have a PAP should strongly consider sharing how their organization is using 340B savings to benefit patients by creating a 340B Impact Report to highlight the impact.²

From operating expense pressures and increased medication costs to a constantly changing legislative, Medicaid and 340B landscape, operating an in-house specialty pharmacy and creating a PAP is one way safety-net hospitals can help fund essential operations while expanding care to patients. Establishing and optimizing a PAP requires planning, engagement, and tracking; however, if implemented successfully, it can have a significant return on investment into the future for the hospital and its patients.

REFERENCES

1. Medicaid community engagement requirement for certain individuals interim final rule with comment period (CMS-2454-IFC). Centers for Medicare & Medicaid Services. News release. June 1, 2026. Accessed September 3, 2026. https://www.cms.gov/newsroom/fact-sheets/medicaid-community-engagement-requirement-certain-individuals-interim-final-rule-comment-period-cms

2. Protect the 340B drug discount program: Creating a 340B impact report for your health system. American Society of Health-System Pharmacists. 2026. Accessed September 3, 2026. https://www.ashp.org/-/media/assets/pharmacy-practice/resource-centers/specialty-pharmacy/Creating-a-340B-Impact-Report-for-your-Health-System.pdf