The American Benefits Council has released a new white paper calling for reforms to the federal 340B drug pricing program. According to the paper, the 340B program is failing to meet the needs of the patients that it was designed to help. At the same time, the program is driving up healthcare expenses for employer-sponsored health plans by $5.2 billion annually due to a loss of rebates. Furthermore, the program has led to hospital and provider consolidation growth, which further increases health cost inflation.
Congress enacted the 340B program in 1992 to make healthcare costs and treatment at specific facilities more affordable for vulnerable patients. Under the 340B program, drug manufacturers must provide discounted prices for prescription drugs to eligible patients receiving them on an outpatient basis at particular "covered entities."
Since 2010, the 340B program has grown exponentially. The program now accounts for almost $1 of every $5 spent on brand drugs prescribed at outpatient facilities. In the last decade, purchases under the 340B program have grown more than 700%, from an estimated $7.5 billion in 2013 to $53.7 billion in 2022.
According to the American Benefits Council, various factors have fueled the rapid growth of the 340B program, including the following:
- Increased participation by nonprofit hospitals;
- Consolidation of hospitals and providers and growth of offsite outpatient departments;
- Broad interpretations of which patients are eligible for the program; and
- A lack of transparency and oversight of covered entities by the Health Resources and Services Administration (HRSA), especially hospitals.
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