The 340B Drug Pricing Program was founded in 1992 and allows hospitals and clinics to purchase outpatient prescription drugs at a discounted price for hospitals and clinics that treat large numbers of low-income and uninsured patients.
It aims to support secure network providers and help them expand their financial resources to serve more vulnerable patients. But since its humble beginnings, the plan has grown exponentially. Between 2000 and 2020, the number of covered physical sites participating in the program increased from 8,100 to 50,000. In 2023, the program purchased $66.3 billion in outpatient drugs through the program, compared with $2.4 billion in 2005.
Pharmaceutical companies with well-documented problems with Plan 340B. The Health Resources and Services Administration rejected their proposed 340B model, which would provide a review of the hospital rather than an upfront discount on drugs, with several prosecuting the government, including Johnson and Johnson, Sanofi, Eli Lily, Bristol Myers Spib and Nova. The judge ruled on the pharmaceutical company in these efforts.
Some lawmakers are also targeting the plan, including Senator Bill Cassidy (R-Louisiana), who released a stern report on the 340B plan in April. The report raises concerns about whether the program actually benefits low-income and uninsured patients.
But there is another stakeholder – perhaps not all the headlines – that thinks the plan needs to be changed: employers.
Several employer advocacy groups, including the National Healthcare Buyers Alliance, believe that the 340B Plan allows hospitals to “buy high prices at low prices”, allowing them to buy drugs at large discounts and charge insurance at full prices.
Employers believe that while they agree with the original intention of the plan, changes are needed.
“I have no problem with the 340B,” Shawn Gremminger, president and CEO of the National Healthcare Buyers Alliance, said in an interview. “We have no problem with the fact that employers’ money is effectively entering these institutions. Rural hospitals… need money. I think it’s very big, very profitable, abuse of tax-free agencies, and I think it needs to change,” a special call for systems like Cedars Sinai and Cleveland Clinic.
How 340B affects employers
Gremminger said there are several ways in which the 340B program has negative impacts on employers. One is that when filling the drug through the 340B channel instead of through the employer’s PBM, the employer loses the discount (although the discount system is so poor that the large PBMS is held with such poor light).
“We think the rebate is stupid, and we know PBM sticks to a lot of people. But, in the end, we’re going to pay the discount price, no matter what the negotiated price is,” he said. “Within 340B, that won’t happen because our PBMs don’t run into it. Patients went to the contract pharmacy, filled out the script, paid, just like they were anywhere else, but then went back to the hospital. The hospital was able to lower the discount of 340B as income and we were paying the full price for the drug.”
According to the alliance, employers lose about $6.6 billion a year due to the loss of rebates.
Gremminger’s comment on the 340B plan was responded by Bret Jackson, president and CEO of the Michigan Economic Union.
“For years of the program, it has been working as expected, and I think in recent years, the company’s healthcare has figured out how to really maximize it and take advantage of it. … They are basically able to buy drugs at low cost, I really have no problems, I really have no problems. Making huge profits from it,” Jackson said.
In addition, the 340B program encourages hospital mergers, the league’s Gremminger noted. Private practitioners are unable to participate in 340B.
“Once you are purchased by a hospital, they can get a 340B discount on your drugs,” he said. “Especially in the field of oncology, where drug prices form an important part of revenue, hospitals have a deep motivation to buy oncology practices, and the incentives for oncology practices are very strong, because doctors get a portion of some hospitals [revenue] Too. ”
In fact, from 2016 to 2024, more than 70% of hospitals acquire entities with 340B coverage, according to consulting firm Avalere Health.
Greenmins announced that there is also a “twisted prescription pattern” in the 340b. “You are now motivated to buy the most expensive medication because you get the biggest discount, prescribe more medications and mark them more,” he said. “All the evidence shows that this is exactly what is happening.”
A health matter report found that 340B hospitals prescribe biosimilars (cheaper than biologics) are 23 percentage points less than non-340B hospitals.
Together, Gremminger created a program that “lost billions of dollars and does not benefit employers.” “What’s worse is that morally, limited evidence is only morally, that the program actually operates the way it is expected,” he added.
Beverly Hills is a wealthy neighborhood in Los Angeles with a median household income of $127,979.
Both Jackson and Gremminger mentioned the latest report from Senator Cassidy, which found that both Bon Secour Secour Health and Cleveland Clinic had 340B coverage, generating hundreds of millions of dollars in revenues of 340B and did not pass the discount directly to patients.
The Cleveland Clinic told Medcity News that the 340B program could help organizations save resources on purchasing medications, but could be used to provide care.
“In addition, the 340B Program allows us to continue to care for patients who are unable to pay for services, invest in our local communities, retain critically subsidized health services, provide ongoing services to pharmacies, and provide pharmacy-related benefits to our patients,” a spokesperson said. “The Cleveland Clinic is Ohio’s leading provider of Medicaid, charitable care, and mental health services, serving a large number of rural patients and patients with very limited resources.”
Hospital ideas
The American Hospital Association (AHA) told Medcity News that the 340B program is the “lifeline” for eligible hospitals, allowing them to expand their opportunities for health care.
The organization attributes planned growth to external factors.
These include “The decision made by pharmaceutical companies to continuously raise drug prices and bring new drugs to the market at record prices, with some critical drugs causing millions of dollars in costs. In addition, measures taken beforehand to allow actions taken by Congress to allow rural hospitals (e.g., critical visiting hospitals), such as participating in other policies, thus enabling the special clinics of internal medicine services to be trained in special circumstances, thus making them special drugs a special model, thus occupies a high-level model in sports, and promotes good scope for businesses to promote advanced clinical practice, and can master advanced typical areas in the system. AHA Policy Director Bharath Krishnamurthy said in an email.
Krishnamurthy added that pharmaceutical companies are spreading misunderstandings about the program to strengthen their bottom line and provide examples of the 340B rebate model promoted by pharmaceutical companies. For example, last year, Johnson and Johnson & Johnson said it would stop offering upfront discounts to attend stock hospitals participating in the 340B plaque psoriasis drug Stelara and blood thinner Xarelto program. Instead, hospitals will have to buy the medication at full price and then submit the data to J&J for kickbacks later. AHA urges HHS to reject the effort.
When it comes to the impact of the 340B program on employers, 340B Health argued in a recent news call that without 340B, employers will pay the same amount as they are now. 340B Health is a nonprofit organization representing hospitals and health systems that participate in similar naming drug discount programs.
What they mean is that because hospitals get discounts on 340B, they should get discounts verbatim. If not, then the employer will pay more than it should. So what we are saying is, this is exactly the point of 340B. …So, if you want to spend money, that’s an accurate statement because it’s an accurate payment because they pay 340B and they pay, that’s the price they pay,” 340B Health President and CEO.
Gremminger objected to the fact that it was not.
“I want to stipulate that we are not going to say what shouldn’t be said, but if the 340b doesn’t exist, we will pay the negotiated price through PBM,” he said. “Again, PBM has another issue, and the fact that they are dealing with things, but there is no doubt that the negotiated price we’ve obtained after Rabert is lower than the list price we have to pay now because of the 340B.”
Reports from the National Healthcare Buyers Alliance It was also found that the commercial price of large 340B hospitals is about 7% higher than that of large non-340B hospitals.
Reforms that employers want
The alliance hopes to see several reforms at the 340B, but for the most part, the organization wants better transparency.
“How much money did I lose on my employer? Where did that money go? Who made it? … In my opinion, frankly, we need fewer hospitals in the plan. The Cleveland Clinic doesn’t need to be in 340b. Cedar Sinai doesn’t need to be in 340b, in 340b,” Gremminger said.
He added that the scope of the program is really limited to safety net providers, community health centers, rural hospitals, and people with a disproportionate share of low-income low-income patients.
Jackson of the Michigan Economic Union added that he hopes the plan returns to its intended purpose.
“I don’t think they should be low-key and high-selling…. [They should] “There is no way to use the 340B income to buy more service lines to go out and expand its footprint. I think it should be used for patient care,” he said. He added that income should also be used for labor shortages and paying more money to providers.
Photo: Cagkansayin, Getty Images
