The 340B Drug Pricing Program is 30 years old this year, but as The New York Times recently spelled out, the program has become a profit engine for large health systems over the years instead of a program that helps vulnerable, low-income patients. Powerful hospitals have twisted the program to boost their bottom line.
Here are some of the ways the 340B program is failing patients:
1. 340B is reducing access to needed care. Abuse of the 340B program is making it harder — not easier — for patients in traditionally underserved areas to access care. Bon Secours, the hospital chain at the center of the New York Times expose, “has been slashing services” at its facility in a poorer, predominantly Black part of Richmond “while investing in the city’s wealthier, white neighborhoods.” Additionally, 340B hospitals are gobbling up competitors in a way that consolidates health care providers. From the first quarter of 2016 through the first quarter of this year, 340B facilities were responsible for roughly 75% of hospital acquisitions, according to data collected by the Centers for Medicare and Medicaid Services. This consolidation creates powerful, large hospital systems that raise costs for patients and insurers, creating a financial barrier for patients trying to access medicines.
2. 340B is contributing to health inequities. This program has devolved from one intended to make health care more equitable to one that drives disparities in how certain populations access care. A study published in Health Affairs found 340B hospitals were expanding into more affluent areas to generate higher profits. “[H]ospital-affiliated clinics that registered for the 340B program in 2004 or later served communities that were wealthier and had higher rates of health insurance compared to communities served by hospitals and clinics that registered for the program before 2004,” the study found. These hospitals often establish outpatient satellite facilities, known as “child sites,” in different zip codes than the primary 340B hospital, according to an Avalere study. Nearly half of those satellite sites are in areas where the median income is at least 30% higher than the main 340B hospital.
3. 340B is driving up health care costs nationwide. As the New York Times explained, “The program … allows hospitals to buy drugs from manufacturers at a discount — roughly half the average sales price. The hospitals are then allowed to charge patients’ insurers a much higher price for the same drugs.” This ability to profit from the 340B “spread” creates incentives for hospitals to prescribe more expensive medicines and likely contributed to the pattern found in a recent Milliman analysis. The cost per outpatient prescription filled at 340B hospitals was, on average, more than 150% higher than the cost of outpatient prescriptions filled at non-340B hospitals, according to Milliman. According to another study, hospitals in the program charge commercial insurers nearly five times what they paid to acquire oncology medicines. And IQVIA did an in-depth analysis of claims for brand medicines distributed at 340B contract pharmacies and found that the vast majority of patients received “zero or close to zero” discount on the cost of their medicines. In other words, patients are paying more than the cost of the medicine.
The New York Times piece focused on a single hospital in a single state, but this pattern of abuse goes much deeper and touches countless communities across the country. In terms of access, equity and cost, today’s 340B program is having the exact opposite impact of what Congress intended. Learn more at PhRMA.org/340B.