Has the 340B Drug Pricing Program Been an Abysmal Failure?

Bring up the 340B Drug Pricing Program among a group of healthcare workers and you had better be prepared for strong opinions. Some people love it while others despise it. Not only that, but emotions can also run rather high on both sides. But what does the data say? Is there any evidence suggesting the program has been a huge success? What about an abysmal failure?

Unfortunately for program proponents, a growing body of evidence suggests that the 340B program is no longer fulfilling its intended mission. Whether or not you consider it an abysmal failure is a matter of personal preference. The one thing we can say is this: any government program not achieving its intended goals is a waste of taxpayer money.

What It Used to Be

The 340B Drug Pricing Program used to be a tool whereby safety-net healthcare providers could stretch federal dollars further so as to increase access to healthcare services among those in need. Another way to say it is that 340B is supposed to help safety-net providers grow their nets to serve more people. But have they done so?

Congress created the program in 1992. But rather than simply handing cash to safety-net providers, also known as covered entities, they mandated deep discounts on a long list of outpatient medications. Pharmaceutical companies wanting to sell medications under the Medicare and Medicaid programs would have offered the discounts.

Drug discounts would ostensibly help covered entities stretch federal dollars further. The savings they achieved through the program could either be passed on to patients through lower prescription drug prices at the counter or put into developing new programs and initiatives to cover more people. But again, we need to ask the question of whether that is actually happening in 2023.

Some Studies Say It is Not

An advocacy group known as PhRMA claims that the 340B program is no longer living up to its original ideals. In fairness, the group is made up largely of representatives from the pharmaceutical industry. Nonetheless, they cite two studies that seem to indicate the program is currently failing.

The first study was published in the New England Journal of Medicine. It found no evidence that 340B covered entities were channeling their savings into safety-net programs. The second study, published in the Journal of the American Medical Association produced similar results. Researchers from that study claim that their work adds to a growing body of evidence suggesting that 340B is not doing much to help vulnerable populations.

PrHMA goes so far as to cite a 2022 New York Times piece highlighting how a Virginia healthcare provider used the program to generate millions in profits without putting any of the savings back into safety-net care. Incidentally, the Times piece has resulted in a Congressional investigation of that company.

Another Side of the Story

In fairness, there is another side to this story. Covered entities and healthcare industry representatives counter that big pharma is trying to help bury 340B so as to avoid having to continue offering discounted drugs. Then there is the issue of covered entities having to rely on 340B consulting services, like Ravin Consultants, just to keep up with 340B compliance. Covered entities insist that there is plenty of blame to go around. They are not wrong.

Has the 340B Drug Pricing Program been an abysmal failure? It is probably not fair to go that far. But it certainly has strayed from its original intent and implementation. Something needs to give if 340B is to survive in the long term. Right now, things are not looking good.

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