The hidden bill patients don’t know they are paying

Buy low, sell high. That’s the name of the game for large hospitals participating in the 340B Drug Pricing Program – and patients end up picking up part of the tab.

Nicole LongoJune 3, 2024

The hidden bill patients don’t know they are paying.

Buy low, sell high. That’s the name of the game for large hospitals participating in the 340B Drug Pricing Program — and patients end up picking up part of the tab.

Under the program, hospitals buy 340B medicines at discounts so steep (averaging nearly 60%) that some medicines only cost them a penny. Instead of sharing the discounts with patients, large 340B hospitals bill patients and their insurers marked up prices and pocket the difference as profit.

Here’s how the potential to profit from the 340B program is influencing hospital prescribing trends and raising costs for patients:

  • 340B hospitals prescribe more expensive medicines. The average cost per prescription for a patient at 340B hospitals is more than 150% higher for patients with commercial insurance than at non-340B hospitals. And because deductibles and coinsurance are typically based on the cost of a patient’s prescriptions, the prescribing patterns of 340B hospitals can result in higher cost-sharing for patients and increase premiums for all commercially insured patients.

  • 340B hospitals are less likely to prescribe biosimilars. Biosimilar medicines can help lower out-of-pocket costs for patients with coinsurance and deductibles, but 340B hospitals often opt for the typically more expensive biologics. 340B program eligibility has been associated with a 23% reduction in biosimilar adoption, which can lead to higher costs for patients.

  • 340B creates incentives that drive provider consolidation. Large 340B hospitals were responsible for roughly 80% of all hospital acquisitions from 2016 to 2022. By acquiring smaller, non-340B hospitals and buying up independent physician practices, 340B hospitals increase the reach of the program — enabling them to generate even more profits. This kind of health care consolidation pushes patients into more costly settings and results in “higher prices and reduced quality of care,” as the Federal Trade Commission has warned.

  • 340B increases costs across the health care system. IQVIA found that self-insured employers and their workers had medicine costs that were 4.2% higher because of the 340B program increased employer and patient costs by a total of $5.2 billion.

This is a problem. It’s clear the 340B program is not working as intended, and patients are the ones paying the price. Congress needs to fix 340B and ensure that the federal government’s second-largest prescription drug program is actually working to increase access and affordability of medicines for underserved patients.

And there’s a solution. The recently introduced 340B ACCESS Act is a positive step in the right direction. As PhRMA’s President and CEO Steve Ubl noted, the bill is a “major milestone in the longstanding effort to fix the 340B program so that it works better for patients and true safety-net providers.”

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