Unexpected Consequences: How the Affordable Care Act is Driving the Growth of the 340B Program in 2024

Unintended Consequences: How the Affordable Care Act Helped Grow the 340B Program

Introduction

• 2023 Data: The 340B Drug Discount Program generated $124.1 billion in sales based on Wholesale Acquisition Cost (WAC) pricing and $56.1 billion based on 340B discount pricing, marking a 475.1% increase in 340B drug discount revenue since 2013.
• Program Growth: Over 2,600 hospitals were participating in the program as of January 2023, representing 42.5% of hospitals in the United States.
• Lack of Research: Despite the program's significant size and impact, there is a lack of published research exploring whether the program is appropriately sized.

Methods

• Estimation of 340B Patients: The study used a national sample of providers, products, payers, and pharmacies, leveraging pharmacy and medical claims data.
• Estimation of Vulnerable Individuals: The study utilized a federal survey of the U.S. population to estimate the number of vulnerable individuals.

Findings

• Prevalence of 340B Patients: In 2021, 25.9% of individuals using healthcare were patients of 340B hospitals and clinics.
• Ratio Comparison:
  • Without Medicaid individuals: 2.1 to 3.6 times more 340B patients than vulnerable individuals.
  • With Medicaid individuals: 3.7 to 7.7 times more 340B patients than vulnerable individuals.
• MFP Drugs: Patients taking one or more of the initial 10 maximum fair price (MFP) drugs selected for Medicare drug price negotiation were 2.4 times more likely to be 340B patients compared to the general population of healthcare users in 2021.
• Trends: From 2013 to 2021, while the size of the vulnerable population almost halved, 340B drug discount revenue grew by 374%.

Discussion

• Misalignment: The growth in 340B drug discount revenue has contributed to a misalignment between the program's scale and the needs of the vulnerable population.
• Financial Burden: Individuals using one or more of the 10 initial MFP drugs were twice as likely to be 340B patients, suggesting they may be shouldering a disproportionate financial burden.
• Implications: This suggests an unintended consequence of the program, where vulnerable individuals might be contributing more financially than intended.

Key Challenges

• Scope and Mandated Services: The scope of services is unclear, and there are no mandated services to support vulnerable individuals.
• Payment Terms: The size of the payment is not aligned with the scope of services, and hospitals receive 340B revenue regardless of whether services are delivered.
• Transparency: Hospitals are not required to report how 340B revenue is used.
• Contract Enforcement: The contract provisions of diversion and duplicate discounts are not enforced effectively.
• Comparison with Medicaid Drug Rebate Program: The 340B program operates differently from the Medicaid Drug Discount Program (MDRP), with the 340B program generating revenue from all patients rather than Medicaid patients alone.

Conclusion

• The 340B program's growth, driven in part by the Affordable Care Act, has resulted in a misalignment between its scale and the needs of the vulnerable population it serves. This misalignment may lead to unintended consequences, such as a disproportionate financial burden on individuals using certain medications.