Discounted prescription drugs purchased wholesale under the 340B program grew 22.3% to $53.7 billion from 2021 to 2022, according to data published by the Health Resources and Services Administration (HRSA).
The embattled program, in which roughly a third of the nation’s hospitals participate, requires manufacturer discounts on most drugs administered in the outpatient setting to help safety-net providers.
Drugmakers have amplified their arguments that providers have been taking advantage of the program more and more over the years, spurring a wave of manufacturer restrictions (PDF), back-and-forth legal challenges and lobbying efforts in recent months.
Per HRSA’s data (reported earlier this week by industry blog Drug Channels following a Freedom of Information Act request), disproportionate share hospitals made up the bulk of 2022’s spending with $41.8 billion in total purchases (77.9%).
Health center programs and children’s hospitals were the next largest buckets and accounted for $2.8 billion (5.2%) and $1.7 billion (3.1%), respectively. Hospitals of any type comprised 87% of the program’s total purchases.
The $53.7 billion total reflects indirect sales made through the 340B Prime Vendor Program, which is managed by Apexus and handles price negotiation, distribution facilitation and other supportive activities. In other words, the reported totals “do not capture the entire universe of 340B Program purchases,” HRSA wrote on its website.
Likely of interest to those with skin in the 340B debate was a note from HRSA estimating that at least $470 million of the $53.7 billion total was comprised of purchases above the upper limit of discounted pricing. That number reflects the savings lost by participating providers due to the restrictions imposed by at least 250 drugmakers amid the legal challenges.
The administration’s tallies land as congressional scrutiny into the savings program has ramped up.
Earlier this week, Senate Health, Education, Labor and Pensions Committee Ranking Member Bill Cassidy, M.D., R-Louisiana, kicked off an investigation into “how certain hospital systems” may be spending the funds saved through the program. The senator’s announcement cited profits recorded by Bon Secours-owned Richmond Community Hospital and the participation of Cleveland Clinic’s flagship hospital in a program intended to support leaner safety-net facilities.
“[The Government Accountability Office (GAO)] has identified the troubling recent pattern of 340B covered entities increasingly serving wealthier communities with higher rates of insurance, which is far afield from the program’s intent,” Cassidy said this week in a release outlining the probe. “Additionally, GAO has found that covered entities often do not share 340B discounts directly with their patients.”
The Alliance to Save America’s 340B Program—a recently launched group comprised of community health centers, pharmaceutical industry group PhRMA and others—applauded Cassidy’s announcement.
“The 340B program was intended to help true safety-net providers increase access to affordable health care services and medications,” the group’s executive director, Thomas Johnson, said in a statement that also cited HRSA’s report. “However, some entities that participate in the program, have generated substantial profits without assurances the savings have been used to improve care and reduce costs for underserved patients.”
Cassidy’s investigation follows a request for information from program stakeholders issued back in June by six bipartisan senators. Replies to that call from hospital lobbying groups like the American Hospital Association outlined the program’s importance for hospital finances in light of “rising drug prices and chronic underpayments from Medicare and Medicaid.”