ESP in 340B: How It Works, Why It Matters, and What Covered Entities Need to Do

Introduction

The 340B Drug Pricing Program is essential for covered entities, helping them access discounted medications to serve vulnerable patients. However, recent manufacturer-imposed restrictions have made compliance more complex, particularly with the introduction of the ESP. Many covered entities now must submit data through ESP to retain 340B pricing at contract pharmacies.

How ESP Works:

1. Covered entities register on the ESP platform and upload claims data related to 340B contract pharmacy transactions.
2. The platform validates the data and cross-references it with manufacturer rebate systems.
3. Manufacturers review submissions to ensure no duplicate discounts have occurred.
4. 340B pricing is reinstated for covered entities that comply with manufacturer reporting requirements.

Since 2020, over 21 pharmaceutical manufacturers have required covered entities to use ESP to retain 340B pricing for contract pharmacies.

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Why ESP Matters for Covered Entities

1. Ensures Continued Access to 340B Pricing

Many manufacturers have imposed contract pharmacy restrictions—limiting access to 340B pricing unless covered entities comply with ESP. If a covered entity does not submit data, they risk losing 340B pricing at contract pharmacies.

2. Prevents Duplicate Discounts & Compliance Risks

ESP provides manufacturers with visibility into contract pharmacy claims data, ensuring that a single prescription does not receive both a 340B discount and a Medicaid rebate. Failing to comply with ESP could lead to:

• Loss of manufacturer discounts
• Increased scrutiny from HRSA or manufacturers
• Potential repayment requests if duplicate discounts are found

3. Financial Implications: Millions in Lost Savings

Without ESP compliance, covered entities may lose access to 340B discounts, forcing them to purchase medications at full price. This directly impacts profit margins, operational budgets, and the ability to provide care to underserved populations.

Here are some situations we have witnessed:

• A hospital that lost 340B pricing on specialty medications due to ESP non-compliance saw millions in additional drug costs.
• A health center that complied with ESP restored $1.3 million in lost 340B savings 

What Covered Entities Need to Do to Stay Compliant

1. Register and Maintain an Active ESP Account

Covered entities should register on the ESP platform and stay informed about submission deadlines and policy updates from manufacturers.

2. Develop a Data Submission Strategy

Each manufacturer has specific reporting timelines and requirements, typically requiring data uploads twice per month.

Best Practices:

• Work with a dedicated team to manage ESP submissions.
• Utilize TPAs to automate claims extraction and minimize errors.
• Regularly review manufacturer policies to avoid missing submission deadlines.

3. Validate and Monitor ESP Submissions

ESP data submissions must be accurate and timely. Errors or incomplete submissions can lead to pricing delays or denials.

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4. Stay Updated on Policy Changes

The ESP landscape is constantly evolving, with manufacturers refining policies and adding new data requirements. Covered entities should:

• Subscribe to our Industry Updates
• Attend ESP training webinars and manufacturer-specific compliance meetings.
• Engage with legal and compliance teams to interpret new restrictions and adjust workflows.

Why ESP Compliance is a Necessity

ESP is no longer optional for many covered entities—it is a mandatory compliance requirement for retaining 340B pricing at contract pharmacies. Healthcare organizations that fail to comply risk losing millions in savings, reduced patient access to affordable medications, and potential regulatory penalties.

If your organization needs assistance navigating ESP compliance, our 340B consulting experts are here to help. Contact us today to ensure your 340B program remains financially optimized and audit-ready!

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