Fact Check Friday: The truth about the cost of 340B to patients

Nicole Longo   |     January 26, 2018   |   SHARE THIS


The 340B program was designed to increase access to medicines for vulnerable or uninsured patients through safety-net facilities, but all signs point to 340B doing the opposite – distorting the market and increasing health care costs for everyone while at the same time generating record levels of profit for hospitals. Claiming that 340B operates at no cost for Americans seems a bit disingenuous.

This week on Fact Check Friday, we are setting the record straight. Here are three ways 340B is currently leading to higher health care costs for Americans:

1. The 340B program incentivizes hospitals to drive up treatment costs to increase their profits

Current rules enable participating hospitals to make a profit by dispensing 340B medicines that were obtained at a discounted rate, requesting reimbursement at the non-discounted rate and then pocketing the difference between the two rates. This means there is an opportunity for 340B hospitals to obtain higher profit margins when they administer more expensive drugs, and independent economists have called attention to the fact that 340B may lead prescribing at participating hospitals to “shift toward more expensive drugs because profit margins will in general be larger.”

2. The 340B program is driving the shift of treatment to more expensive sites of care 

A major trend among 340B hospitals is purchasing or acquiring community-based physician practices. Hospitals can then expand the reach of the 340B program and bring in more profit by registering these entities as their offsite outpatient sites. Patients with commercial insurance often are forced to pay more for medicines provided at hospitals or these hospital-owned physician practices than at a community physician office, and a recent analysis confirmed that 340B is driving patients to more expensive hospitals settings for physician-administered medicines. Furthermore, a white paper by the University of Minnesota notes that 340B “will ultimately end up increasing health care costs for everyone” as a result of this shift in site of care.

3. The 340B program’s year-over-year growth is contributing to higher prescription drug prices 

A 2016 analysis published in the New England Journal of Medicine found that the scope of 340B is so broad for commonly infused or injected drugs that it’s likely raising prices for all consumers. With no requirement to pass discounts onto patients, 340B hospitals may be increasing out-of-pocket costs for patients who are left to pay the regular price for their medicine despite the discounted price the hospital received.

And in case you missed it: On top of all of this evidence of 340B driving increased patient costs, a brand new study published this week in the New England Journal of Medicine and funded by a grant from a division of the Department of Health and Human Services concluded that “Financial gains for [340B] hospitals have not been associated with clear evidence of expanded care or lower mortality among low-income patients.”

Enough is enough. Congress should pass the 340B PAUSE Act and the HELP ACT so 340B can get back on track. For more information about the 340B program, visit PhRMA.org/340B.

Nicole Longo

Nicole Longo Nicole is senior director of public affairs at PhRMA focusing on Medicare, 340B, importation and more. She previously worked for a D.C.-based public affairs firm where she assisted a wide range of clients with communications efforts on everything from trade policy to agriculture policy to health care policy. Outside the office, Nicole can be found trying new restaurants (usually Italian), taking an occasional barre class and cheering on the Cincinnati Bengals.

Topics: Patients, 340B, 340B Spotlight

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