Berkeley Research Group (BRG) recently published a study on the relative size of the 340B Program, by comparing it to other federal prescription drug programs and to the overall market for brand outpatient pharmaceuticals in the United States. According to the study, the 340B Program continues to undergo significant growth – largely due to increased program participation, hospital and provider consolidation, and contract pharmacy arrangement expansions.
In 2022, 340B Program sales reached $54.6 billion (when measured at the discounted 340B price) – more than double the level of 340B sales in 217. However, that statistic alone does not adequately portray the size of the 340B program, as 340B prices were an average of 57% lower than list prices in 2022. In terms of undiscounted list price (measured as the wholesale acquisition cost (WAC)), 340B sales were a whopping $126.3 billion in 2022.
Size of 340B Compared to Other Federal Programs
According to the report, in 2022, Medicare Part D spent $148.4 billion on total outpatient net medicine spending, compared to $54.6 billion in 340B, $43.6 billion in Medicare Part B, $43.2 billion in Medicaid, and $8.3 billion in TRICARE/DoD.
Medicare Part D primarily covers medicines that patients receive from a retail or mail-order pharmacy and administer themselves while Medicare Part B primarily covers medicines that are administered by a healthcare provider in a physician office or hospital outpatient department. Medicaid – administered by CMS and state governments in a joint effort – reimburses for prescription drugs both directly to pharmacies and indirectly through managed care organizations. TRICARE is administered by the Department of Defense (DOD) and it reimburses for prescription drugs for active-duty members of the military and their dependents. The 340B program is administered by the Health Resources and Services Administration (HRSA) Office of Pharmacy Affairs (OPA) and it provides certain healthcare providers (covered entities) access to heavily discounted outpatient medications for certain qualified patients.
The report notes that HRSA OPA had a budget of $11.2 million in Fiscal Year 2022, compared to the $772.5 million budget for federal administration at CMS. Further, the data reported by HRSA OPA on the 340B program is “significantly more limited’ than what is reported for other programs. While CMS provides detailed reports on utilization and spending by drug in Medicare Parts B and D and high-level figures on Part D rebates paid by manufacturers and pharmacies, HRSA OPA released the total amount of indirect 340B sales as reported by Apexus, a figure that excludes an unknown share of sales at the 340B price. Additionally, Medicaid reports data on gross spending by drug and aggregated manufacturer rebate amounts while TRICARE reports annual drug spending by dispensing pharmacy type and certain offsets.
The report concludes that the 340B program is the second largest pharmaceutical program associated with the federal government and that while it has seen explosive growth, “comprehensive data on the program remains sparse and program guidance vague.” The study argues that the growth of the program may lead to an increase in costs to both payers and patients based on a shift in the site of care. Additionally, without solid data on the margin each covered entity receives from 340B, it is difficult to ascertain whether the program is targeting providers that treat patients in greatest need of assistance.