The 340B Drug Pricing Program is a federal initiative designed to assist sure healthcare suppliers, generally known as “coated entities,” stretch their sources to raised serve susceptible and underserved affected person populations. Created in 1992, this system requires pharmaceutical producers to promote outpatient medicine at considerably discounted costs (usually 25% to 50% off) to eligible hospitals, clinics, and well being facilities that look after a lot of uninsured and low-income sufferers. These coated entities can then use the financial savings from these discounted drug purchases to offer extra complete companies, attain extra eligible sufferers, and provide further packages that improve affected person care and entry of their communities. Proponents of the 340B program declare that it improves entry to look after underserved populations with out utilizing taxpayer cash (since all funding comes from necessary 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 collaborating in 340B has elevated by 31% within the final decade. Whereas this will likely look like a big quantity, every grantee now’s extra more likely to broaden their attain by working quite a few sub-sites or sub-grantees. Utilizing this definition, hospital websites elevated by 126% (grantee web site elevated by 61%) over the past decade. There are actually practically 200,000 340B contract pharmacies within the US.
Masia then examines the affect of 340B on Medicaid price:
Our regression estimates recommend that the rise in 340B hospital and grantee participation from 2014 to 2021 elevated total Medicaid spending by $391 per enrollee, or over $32 billion per 12 months. This means that 340B-driven spending could account for roughly 10% of total Medicaid spending, considerably growing the price of this system to taxpayers.
Why would 340B enhance price? The creator posits that 340B-driven market consolidation, web site of care alternative, alternative of remedy may all be impacting the outcomes. For example, 340B hospitals could want to prescribe branded as in comparison with generic medicines beneath 340B because the revenue they make off branded medicine is way bigger. Whereas 340B coated entities get reductions for these medicine, payers reimburse the coated entities at full price.
You’ll be able to learn Neal Masia’s full paper right here.