Table of contentsAbstractIntroductionFindingsChannel trendsImpact of state contract pharmacy billsDisease areasLimitationsDiscussion and future outlookData sourcesReferencesAcknowledgementsAbout the authors 11235677891010 This study is part of an ongoing series by IQVIA thatexamines the size and growth of the 340B Drug PricingProgram (“340B program”). In 2024, 340B purchasesreached $147.8B at list price, growing 16.7% year-over-year, driven in part by state bills mandating the use ofcontract pharmacies. Indexed to 2018, 340B purchasesat list price in 2024 grew by 174.6%, compared to only53.3% growth for non-340B purchases.We studied the effect of state bills mandating theextension of 340B pricing to drugs dispensed usingcontract pharmacies. As of the end of 2024, eight stateshad passed such bills. The incremental 340B growthin retail and mail contract pharmacies due to statebills was 45.9% from Q1 2024 to Q4 2024, a 9-monthperiod. This growth will lower manufacturer rebatepayments, increasing healthcare costs for state and localgovernment employers and for commercial employers.Potential policy shifts, including state and federal legislationand possible cuts in Medicaid funding, raise questionsabout future program growth and healthcare costs.IntroductionThe 340B Drug Pricing program is a federal initiativein which manufacturers provide substantial, Medicaid-like discounts on qualifying outpatient drugs toparticipating hospitals and clinics. The program hasgrown rapidly in recent years, driven by the expandeduse of contract pharmacies — third-party pharmaciesthat are contracted with 340B hospitals and clinics tohelp dispense 340B drugs to their patients. There isongoing debate about the reason for the program’sgrowth. Program critics argue it is driven by hospitalprofit maximization strategies, while program advocatessuggest it is caused by manufacturer drug priceincreases. Increased usage of 340B drugs has beenshown to increase healthcarecosts.Abstract 1 iqvia.com | 1Beginning in late 2020, multiple manufacturersimplemented integrity programs limiting contractpharmacy participation. By the end of December 2024,more than three dozen manufacturers had introducedrestrictions, and eight states responded by passing billsmandating unrestricted use of contract pharmacies,setting up potential conflicts and altering 340B growthdynamics. Understanding the impact of these state billsand their accompanying manufacturer exemptions isimportant for several reasons. First, 340B is a federalprogram, but state mandates are asserting controlover how it operates within their borders, and there isongoing litigation between manufacturers and statesover whether these laws are preempted by federal lawor not. Second, employers are concerned that 340Bexpansion driven by contract pharmacies driveshigher drug prices because it displaces manufacturerrebates. [Sun, 2024]Using a national sample of pharmaceutical products, thisstudy estimates overall 340B growth, studies channeltrends and the impact of contract pharmacy integrityprograms, estimates the impact of state bills mandatingthe use of contract pharmacies, and comparespurchasing trends for the five largest disease areas. 2 | The Size and Growth of the 340B Program in 2024FindingsIn 2024, total program purchases grew 16.7% year-over-year at list price, down slightly from 18.9% in 2023, reaching$147.8B at list price (Figure 1). In comparison, non-340B purchases at list price grew only 4.9%.Figure 1. Annual growth of the 340B program, from 2019 to 2024, at list priceFigure 2. Cumulative year-over-year growth for 340B purchases and non-340B purchases at list price, indexedto 2018In the seven years from January 2018 to December 2024, 340B purchases at list price have grown 174.6%, versus non-340B purchases which grew only 53.3% (Figure 2).$0B$40B$80B$120B$160B340B purchases0%50%100%150%200%I ndexed growt h $53.8B$66.2B$79.8B$95.7B$106.6B$126.7B$147.8B2018201920202021202220232024Year174.6%53.3%2018201920202021202220232024Year340BNon-340B iqvia.com | 3restrictions, grew 5%, versus 21% growth for hospitaland clinic purchases (Figure 3, upper graphic),continuing a trend of divergent growth in the two sets ofdistribution channels that started in 2021. For non-340Bpurchases, growth rates for the retail and mail channelswere slightly higher than for hospitals and clinics(Figure 3, lower graphic).Figure 3. Purchases by distribution channel for 340B purchases (upper graphic) and non-340B purchases(lower graphic) at list price. Data labels are year-over-year growth19%14%21%21%21%4%13%5%2021202220232024YearHospital and clinicRetail and mail10%4%10%6%8%7%14%5%2021202220232024YearHospital and clinicRetail and mail Channel trends340B purchases dispensed using contract pharmaciesare almost all in the retail and mail distributionchannels, and include national pharmacy chains,independent pharmacies, and specialty mail pharmacies.In 2024, 340B purchases at list price in the retail andmail channel