The Impact from Overlaps Between 340B and the IRA

In June of this year, Pharmaceutical Executive reported on Eli Lilly’s efforts to cut off 340B discounts to hospitals that the pharma company says have not submitted claims data. In response, the American Hospital Association (AHA) requested that the federal government take action.

At the time, this was the latest chapter in the ongoing effort to implement the 340B Drug Pricing Program, which has seen the AHA face off against the various pharma companies whose drugs were included in the government’s list of covered products back in October, 2025.

Pharmaceutical Executive recently spoke with Tyler Seville, associate director of market access policy strategy at ADVI, about the ongoing 340B issues. He primarily focused on a recent study from ADVI that looked into policy concerns and operational challenges. He also discussed how 340B appears to be interacting with other drug pricing programs, such as the Inflation Reduction Act (IRA).

Pharmaceutical Executive: What is the impact of overlap between 340B and the IRA?
Tyler Seville: With the Inflation Reduction Act, there are two major policies that intersect with 340B.

The first is Medicare drug price negotiation. For certain drugs subject to a maximum fair price, manufacturers are required to offer the lower of either the 340B price or the maximum fair price. That obligation sits on top of the existing 340B discount — creating a compounding discount structure that manufacturers must navigate simultaneously.

The second area is inflationary rebates. Under the IRA, if a drug price increases faster than the rate of inflation, manufacturers are penalized with a rebate back to Medicare. The challenge is that 340B units are supposed to be excluded from that price calculation — but manufacturers don't have the data they need to make that exclusion accurately. Covered entities have the data: they know which drugs they purchased at the 340B price and who reimbursed them. Manufacturers don't. So you have a situation where manufacturers are trying to comply with federal law without access to the information that compliance requires. That is one of the core areas where the industry is pushing for reform.

Compounding this is an oversight problem. HRSA, the agency responsible for administering the 340B program, audits only a fraction of the covered entities participating in it — a finding our own research at ADVI has documented over the years. The federal government has watched this program grow to over $100 billion annually without building the oversight infrastructure to match that scale.

The data gap extends into Medicare as well. For Medicare Part B drugs, covered entities are required to include a claims modifier indicating that a drug was purchased at the 340B price. That same requirement does not exist for Part D drugs. Our research has found a meaningful lack of claims data with the modifier that would allow anyone — manufacturers, payers, or regulators — to determine which drugs were appropriately reimbursed under Medicare versus purchased at the 340B discount price. Without that data, meaningful oversight and accurate compliance are both extremely difficult.