340B hospitals and for-profit pharmacies generating significant revenue from program meant to help needy patients

The 340B program – a safety-net federal drug program meant to help vulnerable Americans – has become dominated by many large hospitals and for-profit corporations with no clear evidence they are always helping needy patients. At a time when too many Americans struggle to access the medicines and care they need, it is alarming to see 340B being taken so far off course from what Congress intended as the program’s goal.

• Milliman released an analysis showing 340B hospitals are reimbursed on average three times what they pay for physician-administered medicines. Meaning, 340B hospitals pay, on average, $1,591 per claim for a brand medicine, then submit a claim to a commercial insurer and receive $4,673 as reimbursement. That’s a difference of $3,082 between what they paid and what they are reimbursed that the 340B hospital retains – with no requirement they report how they are using that money to help their communities.

• The Berkeley Research Group released an analysis that found the average profit margin is 72% for 340B covered entities and their contract pharmacies on 340B medicines commonly dispensed through contract pharmacies – three times more than the margin of 22% for non-340B medicines dispensed through independent pharmacies. These fresh data demonstrate that misaligned incentives in the program have enabled 340B hospitals and contract pharmacies to profit with no requirement that they show how they are using the program to help patients. The same analysis also found more than half of 340B profits retained by contract pharmacies are retained by just four corporations – Walgreens, Walmart, CVS Health and Cigna’s Accredo specialty pharmacy. This is alarming considering “contract pharmacies” where never included in the original 340B statute; and the program was created to support non-profit safety-net entities and impoverished patients.

Policymakers should take a step back and ask themselves: Is the 340B program currently helping vulnerable patients benefit as was intended when this program was created? Evidence suggests a safety-net program built to help patients has fallen short, and instead been led astray by for-profit entities with little program accountability.

To learn more about how to fix the 340B program, visit PhRMA.org/340B.