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340B Discounts

Section 340B of the Veteran's Health Care Act of 1992 requires pharmaceutical manufacturers participating in Medicaid to also agree to provide front-end discounts on outpatient drugs purchased by certain federally-funded health care provider organizations. Organizations eligible to purchase at these significant "340B" discounts include federally qualified health centers and FQHC "look alikes," state-operated AIDS drug assistance programs, certain hospitals connected with state or local government and serving a certain number of Medicaid patients, and various other kinds of "safety net" providers.

In California, Senator Jackie Speier authored two important bills whose enactment expanded 340B availability.

  • SB 340 of 2001 (pdf) specifically allows use of contract pharmacies in California.

  • SB 708 of 2005 (pdf) has facilitated expansion of 340B discounts beyond public hospitals to private nonprofit facilities that sign a standard agreement, developed by the state health department, including the hospital's agreement to continue its historic commitment to charity care.


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