DRUGMAKERS THREATENING $8.4 BILLION OF 340B HOSPITAL FUNDING THROUGH RESTRICTIONS
Figure Expected To Grow as More Pharmaceutical Manufacturers Impose or Tighten Restrictive Policies on Community and Specialty Pharmacy Partnerships
WASHINGTON, D.C.— Restrictions by more than 20 drug companies on hospital access to 340B savings through pharmacy partners are stripping critical resources from the nation’s health care safety net, according to a new study from 340B Health. Data reveal these maneuvers by drugmakers are harming patient care and placing significant financial strain on safety-net hospitals even as they face severe labor shortages and lingering effects from the pandemic.
340B Health, the leading advocate for hospitals participating in the 340B drug pricing program, has obtained sales data through a Freedom of Information Act (FOIA) request from the Health Resources & Services Administration (HRSA). Combined with member hospital data on 340B savings at the national drug code (NDC) level, we estimate the total amount of 340B savings at risk from drug companies’ 340B restrictions on community and specialty pharmacies. The data point to substantial harm from drug company actions:
- $8.4 billion at stake for the hospital safety net: The 21 drug companies that had restrictions in place as of June 1, 2023, are responsible for annual 340B savings to hospitals of $8.4 billion through community and specialty pharmacy partnerships. This entire amount is at risk, as virtually none of these savings will remain if the strictest of these restrictions become permanent.
- Impending catastrophe for the health care safety net, patients, and communities: If these actions are not stopped, the rapid loss of this scale would have devastating outcomes for the health care safety net and the patients it serves. Safety-net hospitals already have been forced to reduce programs and services, and many patients are unable to access discounted drugs.
- Billions more at risk: If all drug companies follow the lead of the more than 20 drugmakers with restrictions, 340B safety-net hospitals could face billions more in reduced 340B savings, taking an immense toll on patients, particularly the nearly 50% of individuals enrolled in Medicare and Medicaid, people with low incomes, and those living in rural communities.
- Higher drug prices on the horizon: $4.6 billion of the at-risk 340B savings results from drugmakers using their restrictions to evade penalties for excessive price increases. Previous research estimates that 340B inflation penalties have restrained drug price hikes, reducing Medicare Part D pharmacy expenditures by $7 billion between 2013 and 2017.
- Severe limitations on access to specialty drugs: Restrictions block access to discounts on specialty drugs. Specialty drugs sold by companies with restrictive policies account for $5.3 billion of hospital savings through pharmacy partners, mainly due to their high prices and penalties associated with price increases. A small number of specialty drugs account for more than half of the associated contract pharmacy savings. With the rising demand for specialty drugs, which now constitute 52% of the prescription drug market, the limited access restricts hospitals' ability to make these medications affordable for patients and invest 340B savings into additional safety-net care.
“These harmful drug company actions do not just deplete safety-net resources but also hinder essential care from 340B hospitals for low-income patients, perpetuate existing disparities, and disrupt access in underserved rural communities,” said Maureen Testoni, president and CEO of 340B Health. “As we await decisions from two federal appeals courts, we remain steadfast in our commitment to continue to advocate for the protection of 340B and urge the Biden administration to vigorously defend its interpretation of the 340B law. We also urge lawmakers to commit to the future of the health care safety net by safeguarding the integrity of 340B. Bipartisan legislation is coming to protect patients relying on these 340B providers, and Congress should approve it.”
Read the full report to learn more.
Contact: Jon Tilton at jon.tilton@340bhealth.org or 202-536-2285