Making medicines more affordable: Preserving safety-net programs like 340B

Common-sense reforms can help ensure everyone benefits from America’s engine of innovation and receives the care they need and deserve. In this series, we’re taking a closer look at PhRMA’s advocacy efforts to make medicines more affordable, part of our patient-centered agenda, which aims to lower barriers between our industry’s medical innovations and patients who need them.

It is crucially important that we protect access to care for the most vulnerable Americans. Key to this is ensuring our safety-net programs work for patients. That’s why policymakers must preserve the 340B program and put it back on solid footing.

340B was originally created to help vulnerable patients access medicines at safety-net hospitals and certain clinics. Nearly three decades later, the program no longer resembles its original mission. Just take a look at the stats. It isn’t the small program Congress originally envisioned.

• Today, it is the second-largest federal prescription program (second only to Medicare Part D).
• Discounted purchases under the program grew 27% between 2019 and 2020, reaching more than $38 billion in 2020.
• One analysis found that 340B covered entities and their contract pharmacies generated an estimated $13 billion in gross profits from 340B discounted medicines sold at those pharmacies in 2018 alone.

The program has grown significantly, but we haven’t seen commensurate growth in the amount of care provided to vulnerable patients in the form of charity care (free or discounted care provided by a hospital). This is because 340B has become a profit engine for participating hospitals, with no requirements that limit what hospitals can charge uninsured patients for 340B medicines and no requirements that revenue generated from 340B be reinvested back into serving low-income and vulnerable patients.

Instead, 340B covered entities, for-profit pharmacies and other middlemen have co-opted a program meant to help patients and turned it into one that boosts their bottom lines, generating billions in profits with little to no evidence patients benefit. In fact, study after study, like this recent piece in the American Journal of Managed Care, has found that far too many 340B covered entities are not always using the profit they generate from 340B to provide care to low-income patients.

With zero reporting requirements, lax guidance and weak government oversight, the 340B program is a black box, meaning there is little to no transparency into how covered entities use the profit they generate from 340B. This is disconcerting when you consider the biopharmaceutical companies provide discounts totaling tens of billions of dollars to the hospitals and clinics currently participating in 340B every year.

We must pursue policies that preserve 340B for patients that need it. Greater oversight and transparency will help ensure that hospitals and other entities are using the 340B discounts to serve needy patients – not siphoning resources away from them.

The biopharmaceutical industry supports the goals of the 340B program and stands ready to work with policymakers to seek fixes that put patients first, curb program abuses and prevent further manipulation. Learn more at PhRMA.org/BetterWay.