This week, our In Focus highlights a Leavitt Partners white paper, The Impact of the 340B Program on Drug Prices Charged by Manufacturers and Covered Entities, published in November 2022. Leavitt Partners examined publicly available resources to determine the 340B Drug Pricing Program’s (340B) impact on drug prices charged by both covered entities and pharmaceutical manufacturers. To answer these questions, Leavitt Partners undertook a comprehensive literature review of publicly available governmental reports, peer-reviewed journal articles, white papers, news articles, and other publicly available sources to identify the degree to which, and to what extent, the 340B program may impact drug prices. To supplement this literature review, Leavitt Partners also conducted interviews with ten subject matter experts representing the perspectives of covered entities (including Federally Qualified Health Centers, Ryan White Clinics, and Disproportionate Share Hospitals) and drug manufacturers, as well as the analysis of health economists and academic researchers.
Insights/Key Findings:
- The 340B program is a mandatory program for pharmaceutical manufacturers wishing to participate in the Medicaid drug rebate program. Today, the program has more than 53,000 participating covered entities and the total amount of drugs purchased at the 340B ceiling price under the program is almost $44 billion (Drug Channels).
- Drug list prices, like other prices in health care, are increasing. The research for this white paper suggests that 340B is one of many factors putting upward pressure on launch prices.
- Covered entities can generate savings from the prices charged for 340B drugs. There are no requirements for hospitals for how they use the savings, so pricing for services vary.
- Lack of comprehensive data across the program limits insights on pricing and discount strategies.
