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WASHINGTON, D.C.— Drug company restrictions on 340B discounts for drugs dispensed at community and specialty contract pharmacies have harmed patient care by stripping billions of dollars from safety-net hospitals since 2020, according to a new report from 340B Health.

An analysis of 340B sales data from the Health Resources & Services Administration (HRSA) finds that hospitals’ 340B savings for the first five of the 21 companies to restrict discounts decreased by an estimated $1.1 billion from 2020 to 2021 alone. An accompanying survey of 600 hospitals details the care disruptions these cuts have caused to patients in need. The drug company restrictions enable them to avoid paying penalties authorized by 340B when they repeatedly increase drug prices faster than inflation, as well as avoiding paying discounts on high-cost specialty drugs, which now account for half of the drug spending in the U.S.

The five drugmakers whose restrictions were in place from 2020 to 2021 represent only 22% of the total 340B savings associated with the drugs that are restricted today. This means the current financial impact from all 21 drugmakers’ 340B cuts is substantially higher. The $1.1 billion in lost savings represents less than 1% of the net U.S. sales for the five drug companies, but the loss of these savings has been devastating to safety-net hospitals’ ability to care for their patients living with low incomes and those living in rural communities.

Other key findings from the report include:

  • Nearly one in five hospitals surveyed reported that they made cuts to health care services due to the lost 340B savings. For critical access hospitals (CAHs), which are smaller hospitals often located in remote rural communities, this figure rises to one in three hospitals.
  • Two-thirds of hospitals that provide free or discounted drugs to patients through community or specialty pharmacy partners reported patients experiencing delayed access or logistical difficulties in obtaining their medications after the restrictions took effect. Patients have experienced worsened health outcomes as a result, the survey found.
  • For 20 of the 21 companies restricting 340B discounts, at least half of the restricted drugs involve either medications with a 340B discount of at least 85%, reflecting penalties for repeated and excessive price increases, or specialty drugs, which are some of the costliest medications prescribed to patients.

“These billions of dollars’ worth of drug company 340B pricing restrictions are causing massive and increasing harm to patients who rely on safety-net hospitals for their care,” said 340B Health President and CEO Maureen Testoni. “The restrictions enable drugmakers to sidestep congressionally mandated inflation penalties on price hikes and to avoid discounts on high-priced specialty drugs. This adds billions more to drug company profit margins at the same time safety-net hospitals struggle to provide critical health services and medications to patients in need.”

Since July 2020, a growing number of drugmakers have imposed or tightened their restrictions on 340B discounts when a hospital purchases a drug and dispenses it to its patients at community or specialty pharmacies. Both the Trump and Biden administrations have determined these restrictions violate the law, but the legal challenges by drug companies have made their way to several federal appeals courts. 

The drug companies with 340B pricing restrictions are AbbVie, Amgen, AstraZeneca, Bausch Health, Bayer, Biogen, Boehringer Ingelheim, Bristol Myers Squibb, Eli Lilly, EMD Serono, Exelixis, Gilead, GlaxoSmithKline, Johnson & Johnson, Merck, Novartis, Novo Nordisk, Pfizer, Sanofi, UCB, and United Therapeutics.

Contact: David Glendinning at david.glendinning@340bhealth.org or 202-536-2289.