The 340B Drug Pricing Program, designed to provide affordable medications to underserved populations, has come under increasing scrutiny due to concerns about hospital markups and lack of transparency in cancer care delivery. Industry experts are calling for reform of the program, which has grown from approximately 1,000 covered entities in 1992 to over 50,000 in 2021.
Program Growth and Financial Impact
According to Dr. Aaron Ambrad, a radiation oncologist at Ironwood Cancer & Research Centers and Community Oncology Alliance (COA) board member, the program has potential savings of up to $84 billion. The program offers participating hospitals discounts of 20% to 50% on drug prices, but recent studies indicate these savings may not be reaching patients as intended.
A cross-sectional study revealed that hospital revenue from Medicare through the 340B program increased from $2.1 billion in 2013 to $3.7 billion in 2016. By 2019, the program was generating more than $40 billion in total profits for covered entities, contract pharmacies, and potentially patients through reduced drug prices.
Markup Concerns in Oncology
A 2022 COA study exposed significant markups on cancer medications by 340B hospitals. The analysis found:
- Oncology drugs were priced at a median of 4.9 times higher than acquisition costs
- Markups ranged from 3.2 times for tisagenlecleucel to 11.3 times for fulvestrant
- Biosimilars and reference products showed approximately 5.5 times markup
Healthcare Consolidation Impact
The program has contributed to significant healthcare consolidation, with research showing that 81.6% of hospitals acquiring other facilities between 2016 and 2022 were 340B-covered entities. This consolidation trend has raised concerns about increased healthcare costs, as hospital-based care typically involves higher fees compared to community practices.
"Our biggest contention is that [health care center] consolidation is what happened with 340B. Over the past 10 years, [340B] hospitals started buying up rural programs," explains Dr. Ambrad. He notes that this shift often results in higher costs without additional benefits for patients.
Legislative Reform Efforts
In response to these challenges, the 340B ACCESS Act has been introduced by Representatives Earl L. "Buddy" Carter, Larry Bucshon, and Diana Harshbarger. The legislation aims to:
- Establish patient affordability requirements
- Codify patient definition
- Recognize contract pharmacies
- Impose hospital eligibility criteria
- Establish child site eligibility
- Restrict pharmacy benefit managers and for-profit entities
The bill represents a bipartisan effort to address transparency issues and ensure the program operates as originally intended, focusing on providing affordable medications to underserved populations while maintaining proper oversight of participating institutions.
