Pharmaceutical Research and Manufacturers of America (PhRMA) announced on March 12 a new analysis indicating that hospitals participating in the 340B program acquire medicines at deep discounts but charge much higher prices to commercial insurers and patients.
The topic is significant because the 340B program was originally intended to support access for underserved patients, but the analysis suggests current practices may be increasing costs for businesses, residents and taxpayers. A blog post from PhRMA cites a new analysis indicating that participating hospitals obtain medicines at low acquisition costs, then bill commercial insurers and patients at much higher rates, sometimes by thousands of percent. The post says this pricing approach generates revenue for hospitals, diverging from the program’s original intent to expand access for underserved patients.
An IQVIA analysis focused on Illinois found that "the program leads to higher health insurance expenses for businesses and residents in Illinois. The data reveal the 340B structure results in hundreds of millions of dollars in additional annual costs passed on through premiums. Hospitals in the program do not always direct the resulting financial gains toward expanded care for low income populations in the region. This dynamic affects local employers and taxpayers who fund public plans" according to IQVIA.
The Congressional Budget Office reported that "spending through the program increased at a rapid rate over a decade, accounting for a growing share of outpatient drug expenditures. This growth contributes to elevated costs across the health system for employers, government programs, and ultimately taxpayers. The structure provides incentives that can lead to higher utilization of more expensive medicines without corresponding benefits reaching patients directly" according to CBO.
PhRMA represents leading biopharmaceutical research companies in the United States and focuses on advancing policies supporting medicine discovery and development. The association said it works "to promote an environment where scientific innovation can deliver better health outcomes while addressing challenges in programs that affect medicine affordability and access."
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