Study Confirms 340B Affects Small Share of US Drug Market

A new report by independent researchers refutes claims by the pharmaceutical industry that the 340B drug pricing program is so large it forces manufacturers to raise their prices. Writing in the Health Affairs Blog, a team of researchers from the Pew Charitable Trusts found the 340B program is only 1.4 percent of gross US drug sales. This confirms earlier research published in 2017 that estimated a 1.3 percent impact.

Publication of the new report comes as Congress and the Trump administration are debating policies to reduce the scope of the 340B program, which, for the past 25 years, has helped provide low-cost medications and better health outcomes for millions of Americans and the non-profit hospitals and clinics. But, the researchers note, any reductions in 340B discounts will simply shift revenue to manufacturers.

The authors – Sean Dickson, Allan Coukell, and Ian Reynolds of Pew – also examined the impact of 340B discounts on manufacturers’ revenues and found they represent just 1.9 percent of that total.

The authors conducted the study to quantify the size of the 340B program and assess its impact on drug sales and on manufacturer revenues. “By estimating the marginal impact of 340B discounts on drug sales (1.4 percent) and manufacturer revenues (1.9 percent), we provide policymakers with a reference for the potential impact on the drug market from changes to the size of the 340B program,” the report says. “An accurate accounting of 340B’s impact on gross drug sales (1.4 percent reduction) and impact on manufacturer revenue (1.9 percent reduction) will aid officials in evaluating policy choices,” it adds.

The Pew research team examined data from the Health Resources and Services Administration (HRSA) of $12 billion in 340B sales in 2015 and $6 billion in discounts. This is 1.4 percent of the $433 billion in total U.S. drug sales and 1.9 percent of the $317 billion in 2015 estimates of net revenue earned by manufacturers.

The new report also notes that these estimates differ from a report commissioned by the drug industry that claimed 340B represents 6.6 percent of outpatient branded drug sales.

Congress is in recess but when lawmakers return to Washington in September they are likely to continue the debate over changes to 340B. This new evidence should play an important role in those discussions.