HLTH5453 Module 3 policy power map example

Who Can Actually Change 340B? A Map of the Agencies, Committees, Courts and Interests That Hold Real Power Over the Program

Student Name

American College of Education

HLTH5453: Health Policy Evaluation and Development

Module 3 Assignment

Instructor Name

November 15, 2027

Authority and Influence

A power map is useful only if it separates two kinds of power. Formal authority is the legal power to make, change, interpret or enforce a policy: the power of a legislature to amend a statute, an agency to issue guidance, a court to rule or a state to regulate within its jurisdiction. Influence is the capacity to shape what those with authority decide, through lobbying, money, information, litigation or public pressure. Many actors in health policy have great influence and no authority; a few have authority and use it rarely. Bardach and Patashnik (2020) treat political acceptability as a criterion that depends on the positions of those who must approve a policy and those who can block it, which is exactly what a power map is designed to reveal.

For the 340B Drug Pricing Program, the distinction is especially important, because the actors with the most visible influence, hospitals and drug manufacturers, have no formal authority over the program's rules, while the agency that administers it has less authority than its role suggests. A map that treats every stakeholder as a decision maker will send a reform proposal to the wrong door.

Congress

Congress holds the greatest formal authority over 340B, because the program exists in statute, and most significant changes to eligibility, reporting or the definition of eligible patients would require legislation. Jurisdiction lies principally with the Senate HELP Committee (Health, Education, Labor, and Pensions) and the House Committee on Energy and Commerce, which oversee the Public Health Service Act. Both committees have held hearings on the program, and members of both parties have raised concerns about transparency and growth while also defending the program's value to safety-net hospitals in their states.

Congressional authority is large but difficult to exercise. The program has defenders in nearly every district, because hospitals in rural and urban areas alike participate, and changes that reduce hospital revenue face strong resistance. Legislation that adds reporting requirements without cutting benefits is more likely to find support than legislation that narrows eligibility, which shapes what kind of reform is realistic.

The Administering Agency and the Payment Agency

The Health Resources and Services Administration, through its Office of Pharmacy Affairs, administers the program: it registers covered entities, publishes guidance and conducts audits. Its authority is narrower than its role. Courts have limited its ability to issue binding rules on many aspects of the program, so much of its policy takes the form of guidance, which carries less legal force. Federal auditors have found weaknesses in its oversight of contract pharmacies, including limits on its ability to ensure that covered entities comply with rules against duplicate discounts and diversion of drugs to ineligible patients (U.S. Government Accountability Office [GAO], 2018). The agency can influence practice through audits and guidance, but it cannot by itself impose the kind of reporting that the previous module found missing.

The Centers for Medicare and Medicaid Services has no authority over 340B itself but controls something nearly as important: how much Medicare pays hospitals for 340B drugs. When the agency cut payment rates for drugs acquired through the program in 2018, it effectively reduced the program's value to hospitals. The Supreme Court later ruled unanimously that the agency had not followed the statutory process required to set different payment rates for these hospitals, and the cuts were reversed (American Hospital Association v. Becerra, 2022). The episode shows that payment policy is a powerful lever over 340B, and that it is constrained by procedural requirements in Medicare law. The most effective change to 340B in its history came not from the agency that runs it but from the agency that pays for its drugs, and the courts undid it.

Courts and States

Courts have repeatedly decided what the program means in practice, through litigation over agency rules, payment policy and, more recently, manufacturers' decisions to restrict 340B pricing for drugs dispensed through contract pharmacies. Because the statute is short and leaves many questions unaddressed, judges interpreting it have become a central source of 340B policy. For a reformer, the courts are not a door to knock on but a constraint to anticipate: any new rule is likely to be challenged by the side it disadvantages.

States have entered the map more recently. Several states have passed laws limiting manufacturers' ability to restrict 340B pricing at contract pharmacies, and those laws have themselves been challenged in court. States cannot change the federal program's eligibility or pricing rules, but they can regulate the conduct of manufacturers and pharmacies within their borders, and they are now a significant arena for the program's conflicts.

Organized Interests

Five groups of organized interests shape the program without formal authority. Hospital associations and a membership organization of 340B hospitals defend the program's scope and oppose new reporting requirements that they argue would be burdensome. Community health centers and other federal grantees, whose participation is less controversial, generally support the program and sometimes differ from hospitals on reform. Drug manufacturers and their trade association argue that the program has grown beyond its intent and have acted unilaterally by limiting contract pharmacy arrangements. Large pharmacy chains and pharmacy benefit administrators, which manage contract pharmacy arrangements and share in their revenue, have financial interests of their own. Patients, the intended beneficiaries, have almost no organized voice specific to 340B.

Conti and Bach (2014) documented the program's expansion into more affluent communities, and findings like theirs have become part of the information contest among these interests, cited by manufacturers seeking limits and disputed by hospitals defending the program. The absence of an organized patient voice matters: in debates framed as hospitals against manufacturers, the question of whether low-income patients benefit is argued mostly by parties whose own revenue depends on the answer.

What the Map Means for Reform

The map points to a clear sequence for any reform aimed at the accountability gap identified in the previous module. A reporting requirement on how covered entities use 340B savings would need Congress, because the administering agency lacks the authority to impose it, and it would need to be designed to survive legal challenge. It would need the support, or at least the neutrality, of community health centers and some hospital groups, which is more likely if it adds transparency without cutting benefits. And it would benefit from an organized patient or consumer voice, which does not currently exist, so building one, perhaps through patient advocacy organizations for conditions heavily treated with 340B drugs, would be part of the strategy. The next modules turn that analysis into a proposal and test it.

Conclusion

Power over the 340B program is distributed unevenly. Congress holds the authority to change it and finds that authority hard to use; the administering agency has responsibility with limited power; the payment agency holds a strong lever constrained by law; the courts shape the program through litigation; states regulate at its edges; and organized interests with large financial stakes shape every decision while patients remain largely absent. A reform that ignored this map would be addressed to the wrong actors. One that follows it knows which doors to open, in what order, and which allies it will need.

References

American Hospital Association v. Becerra, 596 U.S. 724 (2022).

Bardach, E., & Patashnik, E. M. (2020). A practical guide for policy analysis: The eightfold path to more effective problem solving (6th ed.). CQ Press.

Conti, R. M., & Bach, P. B. (2014). The 340B drug discount program: Hospitals generate profits by expanding to reach more affluent communities. Health Affairs, 33(10), 1786-1792. https://doi.org/10.1377/hlthaff.2014.0540

U.S. Government Accountability Office. (2018). Drug discount program: Federal oversight of compliance at 340B contract pharmacies needs improvement (GAO-18-480).