The Health Services Committee of the University of California convened on May 11, 2025, to discuss the impact and operational details of the 340B Drug Pricing Program, a federal initiative aimed at reducing pharmaceutical costs for healthcare providers serving vulnerable populations.

The meeting began with an overview of the 340B program's origins, tracing back to the introduction of the Medicare drug rebate program in 1990, which aimed to address rising pharmaceutical expenditures. The 340B program was established in 1992 to further curb these costs, allowing covered entities to stretch limited federal resources by repurposing savings from drug purchases to enhance community services.

At UCHealth, 18 covered entities participate in the 340B program, including 11 disproportionate share hospitals and various treatment centers. The program has enabled UCHealth to provide significant community benefits, including financial assistance for uninsured and underinsured patients, subsidized medical services, and discounted medications through in-house pharmacies. For the fiscal year 2022-2023, UCHealth reported over $5.3 billion in net community benefits, highlighting the program's role in supporting uncompensated care for Medicare and Medi-Cal enrollees.

The discussion then shifted to the mechanics of the 340B program, illustrating how UCHealth purchases drugs at significantly reduced prices—sometimes as low as 50% to 75% off retail costs. This cost-saving mechanism allows the organization to maintain essential services and extend its reach through partnerships with community pharmacies, which dispense medications on behalf of UCHealth.

The committee also addressed compliance and oversight of the 340B program, noting that the Health Resources and Services Administration (HRSA) conducts regular audits to ensure adherence to program regulations. UCHealth has implemented robust internal controls and self-audits to prepare for these evaluations, emphasizing the importance of maintaining program integrity to avoid potential penalties.

In conclusion, the 340B program is crucial for UCHealth, enabling the organization to offset high healthcare costs and serve more patients facing financial and social barriers. The meeting underscored the program's significance in enhancing access to specialty care and public health initiatives, particularly in underserved communities across California. The committee plans to continue discussions on the program's implications and operational strategies in future meetings.