When I first got into this pharmaceutical health policy and reimbursement world in 2005, I mostly ignored 340B. It was a big discount that was required, and you couldn’t do anything about it, so it just was.  

Then maybe 2012 or so I remember Andy Swire from Amgen was super amped up about 340B and contract pharmacies and how THIS. WAS. NOT. GOOD. There was a full afternoon devoted to education and solutions. Oh, weren’t those the days. It feels quaint. That was when 340B purchases were at $6.9 billion and valued at $10.6 billion. According to the latest IQVIA report, today we are at $56.1 billion and valued at $124.1 billion.

Yesterday on LinkedIn I posted about how the revenues of the MLB, NBA, NHL, and NFL (and Premier league) are less than the revenue from 340B sales. I recognize that these things are not related but gosh, it shows the size of the program.

As quick background, 340B is a federal program where manufacturers who want their drugs to be part of Medicaid and Medicare must offer significant discounts to eligible health care organizations/covered entities including federally qualified health centers, Ryan White clinics and State AIDS Drug Assistance programs, Disproportionate Share Hospitals, children’s hospitals, and other safety net providers.

These entities procure the drugs at the discount but can get reimbursement at the full price. The savings enable them to stretch resources, reaching more eligible patients and providing more comprehensive services.

Are there covered entities who are doing amazing things with 340B dollars? ABSOLUTELY. Is it a lifeline for some entities? YES. Are even some of the entities that are doing good with it also maybe not being as good as they could be? Also yes. There are no guardrails for what this means in practice. Is complimentary valet parking a comprehensive patient service? (We can debate this one.)

$68 billion in revenue is a lot of money. And it isn’t slowing down. I mean we thought at some point we’d reach the top but year over year pharmaceutical manufacturers owe more and more. And with patient affordability a huge issue, it feels like we can be doing better.

Someone just read that last sentence and thought “well if pharma just reduced their prices, this wouldn’t be an issue.” Let me say, sort of. If a drug costs $10,000 a month and it gets reduced to $1,000 – a cost share of 20% is too much whether it is $2,000 or $200. Affordability is about benefit design. And, in this case, the manufacturer may very well be selling the drug to the pharmacy at a rate of $2,000 and still the beneficiary is paying based on $10,000. Even if they don’t have insurance. It may not be against the rules, but it feels wrong.