In 2022, the Inflation Reduction Act (IRA) was signed into law, introducing sweeping changes to drug pricing in the U.S. While much of the conversation has centered on its Medicare reforms, the ripple effects of the IRA extend into other areas of the healthcare landscape — including the 340B Drug Pricing Program.

This blog explores what the IRA entails and how it may impact 340B-covered entities, both through observable trends and anticipated responses. While the IRA doesn’t directly modify the 340B statute, it sets off a chain of events that many in the industry are watching closely.

A Quick Overview: What is the Inflation Reduction Act?

The Inflation Reduction Act is a comprehensive federal law aimed at reducing inflation, promoting clean energy, and lowering costs, including healthcare. On the drug pricing front, it grants Medicare new authority to negotiate drug prices, implements rebate penalties for price increases above inflation, and caps out-of-pocket costs for Medicare beneficiaries.

Key drug pricing provisions include:

• Medicare Drug Price Negotiation: CMS can negotiate prices for select high-cost drugs covered under Medicare Part B and D.
• Inflationary Rebates: Drug manufacturers must pay rebates to Medicare if they increase prices faster than inflation.
• Out-of-Pocket Caps: Medicare beneficiaries will see a $2,000 annual cap on Part D out-of-pocket drug spending starting in 2025.

Where 340B Comes Into Play

While the IRA doesn’t directly amend the 340B statute, it introduces dynamics that could indirectly impact how the 340B program functions, especially for covered entities serving Medicare populations.

Here are three key areas to watch:

1. Drug Selection for Negotiation May Overlap with 340B Inventory

The drugs selected for price negotiation under the IRA tend to be high-expenditure therapies, many of which are also common in 340B contract pharmacy arrangements or used in hospital outpatient settings. If Medicare pays less for these drugs, it could:

• Decrease margin opportunities on Medicare-reimbursed 340B claims
• Influence manufacturer behavior regarding 340B participation or pricing
• Create confusion around ceiling price compliance if negotiated prices differ from 340B pricing benchmarks

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2. Manufacturer Reactions Could Shift the 340B Landscape

As manufacturers navigate the IRA's pricing controls, many are closely examining where their biggest margins are eroding — and how to recoup losses elsewhere. In some cases, this has led to:

• More restrictive 340B contract pharmacy policies
• Tighter ESP data submission requirements
• Consolidation or restructuring of discount strategies

In essence, manufacturer compliance with IRA rules may bring unintended consequences to their 340B strategies — especially if they view 340B as an area where margins can be controlled more aggressively.

3. Pressure on Hospital Revenue Models

For hospitals heavily reliant on 340B savings, particularly Disproportionate Share Hospitals (DSHs), reduced revenue from Medicare or diminished 340B margins could force strategic shifts.

Hospitals may need to:

• Reevaluate formularies or prescribing patterns
• Improve contract pharmacy oversight and capture
• Enhance compliance infrastructure to protect existing revenue

What's Next?

As the IRA continues its phased implementation,  including the first 10 negotiated drugs set to take effect in 2026, both covered entities and manufacturers will need to stay agile. The intersection of IRA and 340B policy is likely to deepen, even if the two programs remain legally separate.

Now more than ever, clear data, proactive planning, and audit-ready workflows are essential for navigating these changes. At RxTrail, we help covered entities stay ahead of shifting policy and manufacturer behavior — from ESP compliance to audit support and contract pharmacy strategy.

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