Adam J. Fein, Ph.D., president of the Drug Channels Institute, said a new IQVIA analysis shows that access to 340B contract pharmacies is unrelated to program eligibility and has surged following manufacturer changes, suggesting the program has strayed from its original intent to benefit patients.
"No, 340B contract pharmacies don't increase patience access," said J Fein. "Drug access at contract pharmacies is unrelated to 340B eligibility. The 340B program's operations have diverged from its original intent. As Senator Bill Cassidy said, the 340B program “was never meant to be part of an earnings call. It was meant to be part of patient care."
The 340B program, established in 1992, enables safety-net providers such as disproportionate-share hospitals and federally qualified health centers to purchase outpatient drugs at significant discounts through the Health Resources and Services Administration (HRSA). The initiative aims to extend resources to assist low-income patients. Providers are required to avoid "diversion" and duplicate discounts; however, the program has expanded rapidly, with contract pharmacy sales reaching $81.4 billion in 2024. Critics argue that the discounts do not always benefit patients directly, leading to calls for reforms to refocus on supporting safety-net care.
The expansion of the 340B program reportedly increases taxpayer costs due to higher Medicare and insurance spending. Purchases surpassed $81.4 billion in 2024. Spread pricing allows contract pharmacies to profit, resulting in billions of dollars in additional premiums for employers due to elevated drug costs. Medicare also incurs higher expenses at 340B sites. Proposed reforms include banning spread pricing and verifying patient need to decrease subsidies.
According to Patients Rising, patients frequently experience minimal savings from the 340B program. Providers can acquire drugs at a discount but may still charge full prices, retaining profits while patients continue paying their usual copays. For instance, a costly cancer drug can leave patients with considerable out-of-pocket expenses. The swift growth of contract pharmacies has added up to $218 million in extra costs in certain states, prompting demands for reforms ensuring that discounts reach patients.
Fein specializes in pharmaceutical economics, pharmacy benefit managers (PBMs), drug pricing, and the 340B program as President of Drug Channels Institute under HMP Global. He authors influential articles and manages the Drug Channels blog. Frequently cited by The Wall Street Journal and New York Times, Fein holds a Ph.D. from Wharton School and a B.A. from Brandeis University. Residing in Philadelphia with his wife Paula, his analyses highlight issues within the 340B program and advocate for reforms.
Alerts Sign-up