University of California pharmacy leaders gave the Health Services Committee a detailed briefing on the federal 340B drug discount program, explaining how the program generates savings UCHealth directs to community services and pharmacy access.

Amar Shamra, identified as System Manager for UCHealth’s 340B program, explained that 340B is a federal drug‑discount program created by Congress in 1992 under the Public Health Service Act and overseen by the Health Resources and Services Administration (HRSA). "It requires manufacturers to provide a discount on outpatient drugs," Shamra said, and UCHealth uses the savings to fund prescription assistance, subsidize specialty care and expand access at in‑house and contract pharmacies.

Shamra told the committee that UCHealth operates 18 covered entities eligible for 340B: 11 disproportionate‑share hospitals, three hemophilia treatment centers, two federally qualified health centers, one children's hospital and one Ryan White clinic. He described the mechanics: UCHealth or its wholesalers purchase outpatient drugs at discounted 340B prices, and UCHealth may arrange dispensing through contract pharmacies to reach patients in communities without UC‑operated pharmacies.

Committee members asked how the payment and margin example on the slide applied to different payers. Shamra clarified the hypothetical showed commercial and Medicare payers as the reimbursement example and said contract pharmacies accept a dispensing fee while UCHealth retains margin that can be reinvested in community services.

Debate on federal policy followed. The presenters said HRSA audits have occurred and another audit was scheduled in June; UCHealth reported regular internal and independent audits and about 30 FTE working on 340B compliance. Committee discussion raised the possibility that recent executive actions on drug pricing or congressional reconciliation proposals could reduce 340B discounts. UC leadership said such changes could have a material impact: in the meeting UCHealth representatives estimated roughly $1 billion in annual savings systemwide are generated through the 340B program and that a significant federal intervention could remove that source of funds.

Regents and an alumni regent who represents a contract pharmacy discussed "double discount" concerns in the marketplace, where manufacturers can face duplicate discounts if payers and covered entities are not correctly identified in claims. Brian Komodo, introduced as an alumni regent and contract pharmacy representative, described how those identification failures can create the appearance of duplicate discounts and complicate compliance.

Presenters emphasized compliance and program integrity. Shamra noted the program is voluntarily administered by manufacturers but subject to HRSA oversight and that HRSA or manufacturers may audit covered entities and contract pharmacy arrangements. "If there's noncompliance that's identified, HRSA audits can trigger significant repayments," he said, and UCHealth conducts self‑audits and maintains internal legal and risk controls to withstand audits.

The committee did not take formal action on 340B at the meeting; presenters said they would continue monitoring federal policy developments and report back as needed.