The 340B Drug Pricing Program is a federal initiative designed to assist sure healthcare suppliers, referred to as “lined entities,” stretch their assets to higher serve weak and underserved affected person populations. Created in 1992, this system requires pharmaceutical producers to promote outpatient medication at considerably discounted costs (sometimes 25% to 50% off) to eligible hospitals, clinics, and well being facilities that look after a lot of uninsured and low-income sufferers. These lined entities can then use the financial savings from these discounted drug purchases to offer extra complete companies, attain extra eligible sufferers, and supply further applications 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 obligatory reductions from drug producers).
Whereas the 340B program was focused to lined entities treating underserved populations, in recent times the dimensions 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 may increasingly seem to be a big quantity, every grantee now could be extra more likely to broaden their attain by working numerous sub-sites or sub-grantees. Utilizing this definition, hospital websites elevated by 126% (grantee web site elevated by 61%) during the last decade. There are actually almost 200,000 340B contract pharmacies within the US.
Masia then examines the influence 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 12 months. 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 writer posits that 340B-driven market consolidation, web site of care selection, selection of remedy might all be impacting the outcomes. For example, 340B hospitals might favor 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 lined entities get reductions for these medication, payers reimburse the lined entities at full value.
You may learn Neal Masia’s full paper right here.
