The 340B Drug Pricing Program is a federal initiative designed to assist sure well being care suppliers, referred to as “coated entities,” stretch their assets to raised serve susceptible and underserved affected person populations. Established in 1992, this system requires pharmaceutical producers to promote outpatient drugs at considerably lowered costs (usually 25% to 50% off) to eligible hospitals, clinics, and well being facilities that serve giant numbers of uninsured and low-income sufferers. These coated entities can then use the financial savings from these discounted drug purchases to offer expanded providers, attain extra eligible sufferers, and provide extra applications that enhance affected person care and entry of their communities. Proponents of the 340B program argue that it improves entry to look after underserved populations with out utilizing taxpayer {dollars} (since all funding comes from necessary rebates from drug producers).

Though the 340B program was centered on coated entities treating underserved populations, the scale of this system has grown lately. In response to a report by Masia (2024), the variety of hospitals collaborating in 340B has elevated by 31% over the previous decade. Whereas this will look like a big quantity, every beneficiary is extra prone to increase its attain by working plenty of sub-locations or sub-beneficiaries. Utilizing this definition, hospital areas elevated by 126% over the previous decade (beneficiary areas elevated by 61%). There are actually almost 200,000 340B contract pharmacies within the U.S.

Masia then examines the affect of 340B on Medicaid prices:

Our regression estimates counsel that the rise in 340B hospital and subsidy participation from 2014 to 2021 elevated complete Medicaid spending by $391 per enrollee, or greater than $32 billion per 12 months. This means that 340B-driven spending might account for about 10% of complete Medicaid spending, considerably rising the price of this system for taxpayers.

Why would 340B improve prices? The writer argues that 340B-driven market consolidation, alternative of care location, alternative of remedy can all have an effect on outcomes. For instance, 340B hospitals want to prescribe brand-name medicine over generic medicine underneath 340B as a result of the income they make on brand-name medicine are a lot larger. Whereas 340B-covered entities obtain reductions for these medicine, payers reimburse coated entities at full value.

You’ll be able to learn the complete article by Neal Masia right here.