A new report from Healthsperien, prepared for the American Hospital Association, found that while the 340B program is still a minor portion of the drug industry revenue, its growth has provided significant benefits to a large number of underserved U.S. patients and communities.
Under the 340B program, pharmaceutical manufacturers participating in Medicaid are required to provide discounted pricing for specific outpatient drugs to covered healthcare organizations that provide care to uninsured and low-income populations.
Here are six findings from the report:
1. An estimated $46.5 billion in discounts from drug companies were provided to 340B hospitals in 2022. This accounted for 3.1% of global drug company revenue and 7% of U.S. revenues.
2. Drug company revenue grew by an estimated $347 billion, with the U.S. drug market growing by $331 billion, from 2017 to 2022. The 340B hospital discounts grew $30 billion in that same time frame. "The scale at which the discounts drug companies are providing to 340B hospitals pales in comparison to their revenue growth and the growth of the U.S. drug market," the report said.
3. The number of 340B hospitals has expanded due to congressional action. There are 2,600 340B hospitals, with around 60% of the hospitals located in rural areas and more than 1,200 listed as critical access hospitals.
4. The program's direct impacts include legislation, which expanded program eligibility of hospital types like rural providers and critical access hospitals. Program indirect impacts include policy decisions that alter care delivery from inpatient to outpatient settings and changes to drug company patent and extended exclusivity policies. Forces also molding the 340B program include increased drug use, including specialty drugs and drug-based medical advances, and a sharp spike in drug prices.
5. The estimated increases in the amount of community benefits from 340B hospitals have outpaced the 340B discounts growth, providing increased care access for underserved patients and communities — indicating the program is working as intended.
6. "Despite the program's growth, it remains a small share of drug company revenues, illustrating the outsized impact it provides to patients while costing taxpayers no money," the report said. "Moreover, this growth, largely driven by pricing dynamics and trends in the introduction of new therapies, means more patients can access high-quality care, delivering on its promise to Americans nationwide."