Nothing Generic About It – Is Teva’s Exit a Turning Point for the 340B Program?

Understanding the significance of Teva’s recently imposed 340B discount restrictions.

Read time: 4 minutes

By: McKesson Health Systems Editorial Team

With 23 drug manufacturers already having restricted 340B pricing to contract pharmacies at the time, Teva’s June 2023 announcement1 that they, too, would begin imposing 340B-pricing restrictions was not altogether unprecedented – but it does set the stage for what could be a paradigm shift in the 340B exit trend. Although Teva’s 340B pricing restrictions only apply to 36 of their brand-name and specialty drugs, they remain the largest manufacturer of generic drugs globally2 – a distinction that comes with inescapable influence. As the lone generic manufacturer within the group of restrictors – now sitting at 24, with Astellas announcing restrictions on July 3 – Teva may be sending a message, albeit inadvertently, for other generic manufacturers to follow suit. Should that happen, the implications for 340B hospitals and the patients they serve could be more costly than ever.

From rebates to restrictions

Upon its adoption in 1992, the 340B program was designed to provide designated hospitals and clinics serving primarily indigent, underserved, and rural populations a much-needed means of funding critical patient services by requiring drug manufacturers whose drugs are reimbursed by Medicaid or Medicare Part B to offer outpatient prescription discounts to these hospitals, known as covered entities.3 With limited resources, many covered entities did not have the means to support an in-house pharmacy and, instead, sent 340B medication prescriptions to be filled at retail pharmacies, or contract pharmacies. As the rule regarding the number of allowed contract pharmacies changed, the number of registered contract pharmacies grew exponentially – as did the volume of drug manufacturers’ mandated discounts.1

Manufacturer-imposed restrictions began in mid-2020, when a handful of manufacturers released statements outlining their updated policies for access to 340B-priced drugs.5 For most, this meant no longer providing a 340B discount on select drugs supplied to covered entities through a contract pharmacy arrangement – a strategy that could help alleviate revenue leakage associated with duplicate discounts that may occur as a result of both 340B discounts and Medicaid rebates being claimed on the same prescription.6 With additional drug manufacturers joining the movement, the losses for 340B hospitals and other covered entities mounted. Following the restrictions established by just the first five manufacturers to do so, safety-net hospitals reported losing over $1 billion in 340B savings.7 In 2023, with two dozen drug manufacturers now limiting access to 340B discounts, safety-net hospitals stand to lose much more.

Manufacturers imposing or announcing 340B-pricing restrictions as of August 30, 2023 include:

  • AbbVie
  • Amgen
  • Astellas
  • AstraZeneca
  • Bausch Health
  • Bayer
  • Biogen
  • Boehringer Ingelheim
  • Bristol Myers Squibb
  • Eli Lilly
  • EMD Serono
  • Exelixis
  • Gilead
  • GlaxoSmithKline
  • Johnson & Johnson
  • Merck
  • Novartis
  • Novo Nordisk
  • Organon
  • Pfizer
  • Sanofi
  • Teva
  • UCB
  • United Therapeutics

Not only does Teva’s exit from the 340B-pricing agreement tee up a precarious precedent for other generic manufacturers to do the same, but it also raises the question of what may unfold in the event that such a prominent supplier of highly utilized drugs has its Medicaid coverage revoked as a result of federal non-compliance. Litigation and appeals on manufacturer-imposed 340B pricing restrictions are pending, but there is little question that covered entities and patients have already felt the impact, with some reports finding that up to a third of critical access hospitals have cut services due to lost 340B funds and 90% of covered hospitals are expecting to cut services in the face of ongoing 340B restrictions.7 According to the National Association of Community Health Centers (NACHC), an estimated 29 million patients served by 340B-covered federally qualified health centers (FQHCs) also stand to face adverse financial and clinical consequences in the face of 340B restrictions.8 In response, some states – like Louisiana – have passed bills blocking these restrictive measures.9

The road to restoration

Still, many drug manufacturers with 340B-pricing restrictions in place continue to honor 340B discounts under certain conditions that seem to point to the program’s original design, like when a covered entity (theoretically without means to support an in-house pharmacy) dispenses through a single, contract pharmacy location within a specified distance. Additionally, a minority of restricting manufacturers offer the opportunity for covered entities to have 340B pricing restored through a claims data sharing and analysis process – a responsibility falling ultimately to the covered entity or a contract pharmacy’s claims administrator.10

The mechanism for sharing and analyzing claims data is complex and at times even opaque, and each manufacturer has its own set of guidelines and stipulations for pricing restoration. At best, providers are able to submit bimonthly data via a third-party platform, which is then manually analyzed in hopes of restoring at least a portion of their pre-restriction access to 340B pricing. In many cases, however, hospitals and clinics are forced to divert resources – including patient service funding – to cover the hefty cost of this laborious and cumbersome reporting requirement, only to wait months to achieve just a partial restoration of discounts.11 A disconnect between software systems and the inability to access relevant, necessary claims data, remains an unfunded barrier to restoring 340B pricing.

Regulatory rehabilitation

A widely accepted lack of regulatory oversight, transparency, and clarity on a number of variables – including provider eligibility and the allowable role and scope of contract pharmacies – is another persistent pain point for all 340B stakeholders.12 In June 2023, the Senators’ bipartisan 340B working group solicited input from stakeholders on how to improve the “integrity and stability” of the 340B program and “further the original intent of the program, strengthening the program’s ability to support entities serving eligible patients.”13 With the insights gained from this public request, as well as the focused and featured attention brought to the issue by dominant manufacturers joining the exodus, the 340B program could be headed for additional changes.

As part of McKesson’s commitment to innovation and helping advance health outcomes for all, we are actively engaged in developing products, services, and solutions specifically designed to simplify and automate the process of 340B pricing restoration. You can learn more about 340B contract pricing restoration here.

For additional assistance in navigating your 340B needs, contact one of our experts to learn more about our comprehensive suite of 340B consulting services and how we can help your health system achieve more.

1Rainey, Thomas. (June 8, 2023). [Letter from Teva Pharmaceuticals announcing plans to alter its 340B pricing discount plan]. Retrieved from
2Top 10 Generic Companies in the World in 2021 by Revenues. Global Data. Last accessed June 26, 2023.
3340B Drug Pricing Program. Health Resources & Services Administration (HRSA). Last reviewed June 2023.
4Mulligan, Karen PhD. “The 340B Drug Pricing Program: Background, Ongoing Challenges and Recent Developments.” University of Southern California (USC) Leonard D. Schaeffer Center for Health Policy & Economics. October 14, 2021.
5Overview of the 340B Drug Discount Program. Congressional Research Service. October 14, 2022.
6Hardaway J. “340B Program Puts Manufacturers At Risk of Duplicate Drug Discounts.” National Library of Medicine. P T. 2016 Jan;41(1):38. PMID: 26766889; PMCID: PMC4699484.
7Report: Drug Companies Stripping Billions of Dollars from Health Care Safety Net to Avoid 340B Penalties and Specialty Drug Discounts. 340B Health News Releases. 340B Health. March 23, 2023.
8340B: A Critical Program for Health Centers. National Association of Community Health Centers. June 13, 2022.
9Louisiana enacts model protections for 340B contract pharmacy arrangements. American Hospital Association (AHA). June 20, 2023.
10Novartis to Collect Contract Pharmacy Claims Data Through 340B ESP. Ryan White Clinics 340B. Last accessed June 26, 2023.
11The Frustrating Realities of 340B ESP Data Submission. 340B Report. July 26, 2022.
12Winegarden, Wayne. “A Bipartisan Regulatory Reform Opportunity: 340B.” Forbes. May 23, 2023.
13Thune, John, et al. (June 16, 2023). [Letter from Senators’ Bipartisan 340B working group soliciting input on strengthening the ability of the 340B program to serve eligible patients]. Retrieved from

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