The 340B Drug Pricing Program is a federal initiative designed to assist sure healthcare suppliers, referred to as “coated entities,” stretch their sources to higher serve susceptible and underserved affected person populations. Created in 1992, this system requires pharmaceutical producers to promote outpatient medication at considerably discounted costs (usually 25% to 50% off) to eligible hospitals, clinics, and well being facilities that take care of a lot of uninsured and low-income sufferers. These coated entities can then use the financial savings from these discounted drug purchases to supply extra complete providers, attain extra eligible sufferers, and supply extra packages that improve affected person care and entry of their communities. Proponents of the 340B program declare that it improves entry to take care of underserved populations with out utilizing taxpayer cash (since all funding comes from obligatory reductions from drug producers).
Whereas the 340B program was focused to coated entities treating underserved populations, lately the scale of this system has grown. In line with a report by Masia (2024), the variety of hospitals taking part in 340B has elevated by 31% within the final decade. Whereas this may increasingly appear to be a big quantity, every grantee now’s extra more likely to increase their attain by working various sub-sites or sub-grantees. Utilizing this definition, hospital websites elevated by 126% (grantee website elevated by 61%) during the last decade. There at the moment are practically 200,000 340B contract pharmacies within the US.
Masia then examines the affect of 340B on Medicaid value:
Our regression estimates counsel that the rise in 340B hospital and grantee participation from 2014 to 2021 elevated general Medicaid spending by $391 per enrollee, or over $32 billion per yr. This implies that 340B-driven spending might account for roughly 10% of general Medicaid spending, considerably rising the price of this system to taxpayers.
Why would 340B improve value? The creator posits that 340B-driven market consolidation, website of care alternative, alternative of remedy may all be impacting the outcomes. For example, 340B hospitals might want to prescribe branded as in comparison with generic drugs underneath 340B for the reason that revenue they make off branded medication is far bigger. Whereas 340B coated entities get reductions for these medication, payers reimburse the coated entities at full value.
You possibly can learn Neal Masia’s full paper right here.
