FINANCIAL LOSSES FROM DRUG COMPANIES’ 340B RESTRICTIONS HAVE MORE THAN DOUBLED SINCE THE END OF 2021
WASHINGTON, D.C.— Unlawful drug company restrictions on 340B drug pricing program discounts are causing growing financial losses for safety-net hospitals as more companies impose such limits and increasingly target discounts on costly specialty drugs. A new 340B Health survey of more than 500 hospitals finds the estimated annual financial impact from these policies has more than doubled since the end of 2021. This is costing hospitals millions of dollars per year that should be going toward care for patients with low incomes and those living in rural areas.
When 340B Health last surveyed hospitals on the dispute in December 2021, eight drug companies had imposed restrictions on 340B discounts to hospitals for drugs dispensed at community-based and specialty pharmacy partners. When surveyed again in March 2022, the number of companies with such restrictions had risen to 14. Since then, two more companies – Johnson & Johnson and Gilead – have announced new 340B restrictions. Johnson & Johnson is the largest drugmaker in the world.
The addition of more drug companies to the list has rapidly exacerbated the problem for safety-net hospitals and the patients they serve. Larger, mostly urban hospitals estimate their median loss from the restrictions at $2.2 million a year, and 10% of them expect their losses to exceed $21 million per year. Smaller, mostly rural hospitals often operating on razor-thin margins project a median loss of $448,000 a year, with 10% expecting more than $1.3 million in annual losses. Drug companies’ increased focus on limiting discounts for costly specialty drugs that hospitals must obtain for their patients using multiple specialty pharmacy partners is helping feed the rapid growth in losses.
“These drug companies are draining vital resources from the health care safety net by blocking hospitals’ access to 340B discounts through community and specialty pharmacy partners,” said 340B Health President and CEO Maureen Testoni. “By focusing their unlawful policies on some of the costliest specialty drugs on the market, these companies are pocketing 340B savings for themselves and circumventing penalties Congress included in 340B to inhibit massive drug price hikes.”
Large percentages of hospitals that provide discounted drugs to low-income patients through community and specialty pharmacies report the drug company restrictions are leading to patient care problems that include delays in access to needed drugs (75%), financial hardships from higher bills (69%), and worsened health outcomes (41%). If these drug company restrictions become permanent, more than three-quarters of hospitals surveyed reported that they likely will need to make cuts to vital health services and patient support programs. A third of smaller, mostly rural hospitals report that the restrictions put their facilities at risk of closure.
The dispute has been going on since July 2020. Since then, a growing number of drugmakers have imposed restrictions on 340B discounts for drugs purchased by hospitals and dispensed in community and specialty pharmacies. Both the Trump and Biden administrations have called these actions unlawful and ordered the companies to restore the discounts. Several companies have gone to court to try to block the government from enforcing the law. As judges consider those cases, more drugmakers have adopted similar policies.
Read the report and see our infographic summarizing key findings.
Contact: Richard Sorian at richard.sorian@340bhealth.org or 202-536-2285.