340B Drug Pricing Program Undermined by Restrictions

In recent years, the 340B Drug Pricing program has experienced discount restrictions that undermine its intention of providing financial help to hospitals serving vulnerable communities to manage rising prescription drug costs.

A recent survey of hospitals participating in the 340B program suggests recent restrictions on drug discounts are costing these safety net hospitals hundreds of thousands to millions of dollars in savings.

Critical access hospitals (CAHs) report losing an average of 39% of the contract pharmacy savings they would have seen from the program, or $220,000 dollars per CAH. Ten percent of those smaller rural hospitals have lost at least $700,000 due to the drugmakers’ new policies.

Larger 340B hospitals, such as disproportionate share hospitals, sole community hospitals and rural referral centers, reported a loss of 23% of their community pharmacy savings—with a median reported loss of $1 million and the top 10% losing $9 million or more.

This has prompted hospital administrators to reduce or eliminate health care programs, services and support that are vital to the health of patients and communities. For rural hospitals, a loss of 340B savings can lead to the closure of facilities that are often the only source of care for many people in rural areas.

Covered 340B safety net hospitals and community health centers rely on contract pharmacies to dispense discounted products to patients. But drugmakers and other opponents of the program have argued that the use of such facilities has expanded too far, with the benefits of the discounts not reaching the patient level.

The Department of Health and Human Services (HHS) has announced plans to fine drugmakers for what they view as illegal restrictions.