Mission vs. Margin: Misaligned Incentives in the 340B Drug Pricing Program

Efforts by CMS to reform the 340B Drug Pricing Program aim to decrease financial incentives that place revenue over patients' health outcomes and access to care.

KEY POINTS

• The 340B Drug Pricing Program has expanded beyond its original intent to help safety-net providers care for their underserved populations, resulting in large growth in participation and costs associated with the program.
• The 340B Program may prioritize spread, or the margin between the discounted 340B price versus the reimbursement rate received by the covered entity, over patient needs.
• At present, the outsized revenue from drugs purchased through the 340B Program may incentivize consolidation and anticompetitive behavior in the health care market, which has negative implications for health care affordability.
• An ASPE analysis finds that following the halting of the 2017 CMS rule limiting Medicare Part B reimbursement to average sales price (ASP) -22.5%, inflation-adjusted payments for 340B drugs furnished by non-exempt providers increased by $3.6 billion from 2021-2023 ($7.1 billion to $10.7 billion), driving overall drug payments (from $14.3 billion to $17.6 billion).
• The Centers for Medicare & Medicaid Services’ proposed rule to reimburse drugs acquired through the 340B Program at ASP -33.4% aims to reflect reported acquisition costs and reduce hospitals’ incentives to engage in behavior that is misaligned with clinical best practices and that increases costs for consumers.

*This content is in the process of Section 508 review. If you need immediate assistance accessing this content, please submit a request to Aiden Lee, Aiden.Lee@hhs.gov. Content will be updated pending the outcome of the Section 508 review.