340B program remains second largest federal drug program, yet little solid evidence of benefits to patient

Over the three decades since Congress created the 340B drug pricing program, we’ve seen massive growth in its size. As a program meant to serve vulnerable patients, this sounds great, right? The problem is we’ve seen little to no evidence patients are benefiting from this growth or even the program itself. Instead, large hospital systems, for-profit pharmacies and other middlemen have co-opted 340B – a program meant to help patients – and turned it into a profit center. At the same time, the program creates incentives that drive up costs for all of us.

So how big is 340B? According to a new report from the Berkeley Research Group (BRG), the 340B program is currently the second largest federal prescription drug program, behind only Medicare Part D. Even when measured at significantly discounted prices, the 340B program is larger than Medicaid, Medicare Part B and TRICARE/Department of Defense medicine spending.

According to data HRSA provided to Drug Channels in response to a FOIA request, sales of 340B medicines at the discounted 340B price hit $38 billion in 2020. It is important context, however, to recognize that $38 billion does not adequately represent the true size of the 340B program. This is because medicines purchased through the 340B program have, on average, a 59% discount and the discounted price of some 340B medicines can be as little as one penny. To better understand the full size of the program, BRG calculated total 340B sales in terms of medicines’ list price or “wholesale acquisition cost” price as opposed to the discounted price and found 340B sales reached $93.6 billion in 2020 when measured at this undiscounted price.

Today, 340B represents nearly one in every five brand outpatient medicines purchased in the United States.

340B grows and grows while report after report raises questions about whether 340B is helping patients as intended. Just this month, the Journal of the American Medical Association released a study that found contract pharmacy growth from 2011 to 2019 was concentrated in affluent and predominately white communities, as opposed to socioeconomically disadvantaged communities that 340B is intended to help. JAMA concluded: “Nonetheless, our work adds to a growing body of evidence questioning the degree to which 340B program growth serves vulnerable communities.”

Without steps to revisit the fundamentals of the 340B program to get it back on track and working for patients, the program will continue to grow uncontrollably while failing to benefit patients. Read the full BRG report here and learn more about 340B here.