Editorial Staff

First-of-Its-Kind Interactive Mapping Tool Reveals Extent of For-Profit Entities Benefitting from the 340B Drug Pricing Program

/in , , , /by Editorial Staff
Share on Facebook
Share on Twitter
Share on
LinkedIn
+

Pioneer Institute Database Spotlights How 340B Covered Entities Utilize Thousands of Out-of-State Contract Pharmacies to Turn Profits in Program Intended to Serve Vulnerable Patients

JANUARY 11, 2023 (BOSTON, MA) – Today, Pioneer Institute released a first-of-its-kind, 50-state mapping tool and database highlighting the troubling way in which hospitals and covered entities leverage unlimited pharmacy contracts under the 340B Drug Pricing Program. Authored by Dr. Bill Smith and Dr. Robert Popovian, the easy-to-use tool and database enables policymakers, legislators, researchers, and practitioners to see the number and location of contract pharmacies for 340B covered entities in all 50 states. Pioneer Institute data visualizations illustrate the growth in the web of for-profit entities now benefitting from the 340B program, a program intended to benefit the most vulnerable patient populations.

The mapping tool features interactive data visualizations that shed light on how 340B entities have taken advantage of the contract pharmacy arrangement, including:

  • Zip code level mapping of the number of contract pharmacies in each state for every 340B covered entity, spotlighting the number of out-of-state pharmacies in high-income areas.
  • State level mapping of contract pharmacy relationships for every 340B covered entity.
  • Growth of contract pharmacy relationships with 340B covered entities since 1992, in all 50 states, including unique contract pharmacies and active contracts with those pharmacies.

“While the 340B program was created with good intentions, evidence continues to show that the program has enormous potential for abuse by for-profit pharmacy chains and pharmacy benefit managers,” said Dr. Bill Smith, Senior Fellow and Director of the Life Sciences Initiative at Pioneer Institute and primary author of the Pioneer tool. “This new tool lays bare how convoluted the 340B program is in design and how for-profit entities are now some of the principal beneficiaries of the program.”

The 340B Drug Pricing Program was established as a federal safety-net program to offer discounts on healthcare treatments to low-income and uninsured populations. In 1996, the Health Resources and Services Administration (HRSA) issued guidance allowing 340B hospitals and other covered entities to dispense 340B drugs through an in-house pharmacy or a single external pharmacy. However, in 2010, HRSA updated its guidance to allow covered entities to contract with an unlimited number of pharmacies to purchase and dispense 340B drugs. As a result, the number of 340B contract pharmacy arrangements has exploded by 4,000% since 2010. As many as 73% of 340B contract pharmacies are large for-profit chains and pharmacy benefit managers.

“The mapping tool clearly demonstrates that powerful hospitals have established tens of thousands of contracts with for-profit entities who are securing enormous profits from the 340B program,” said Dr. Robert Popovian, Senior Visiting Health Policy Fellow at Pioneer Institute and co-author of the Pioneer tool. “There must be increased oversight of 340B covered entities’ use of contract pharmacy relationships to return the program to its original intent of supporting the most vulnerable patients.”

The scope and number of contract pharmacies create an enormous potential for abuse as pharmacies can drive profits by charging multiple discounts, such as purchasing drugs at 340B discounts and billing drug manufacturers for Medicaid rebates on the same drug, known as duplicate discounts. While duplicate discounts violate federal law, and government watchdogs have requested that pharmacies install tools to prevent them, pharmacy chains have not heeded these government requests.

Federal and state legislators and regulators can utilize this new tool to investigate, down to the zip code level, and better grasp how 340B contract pharmacies are taking advantage of the program. Recent research concluded that 340B contract pharmacy growth was concentrated in high-income neighborhoods, compared to low-income communities where the number of contract pharmacies declined.

  • Cambridge Public Health Commission, a Massachusetts-based healthcare system, has 349 contract pharmacies in the state. However, it also has 11 contract pharmacies in California, 11 in Florida, and many more across the country.
  • In Virginia, Bon Secours Richmond Community Hospital, recently the subject of an investigation into their misuse of 340B drug discounts, has a contract pharmacy in Florida and one in Arizona, in addition to contract pharmacies in neighboring states.

To view the Pioneer Institute 340B interactive mapping tool, visit https://pioneerinstitute.org/340babuse/.

###

About the Authors

Dr. William S. Smith is Senior Fellow and Director of the Life Sciences Initiative at Pioneer Institute. He has 25 years of experience in government and in corporate roles, including as vice president of public affairs and policy at Pfizer, and as a consultant to major pharmaceutical, biotechnology and medical device companies. He held senior staff positions for the Republican House leadership on Capitol Hill, the White House, and in the Massachusetts Governor’s office. He earned his PhD with distinction at The Catholic University of America (CUA).

Dr. Robert Popovian is Senior Visiting Health Policy Fellow at Pioneer Institute. Dr. Popovian is the Founder of the strategic consulting firm Conquest Advisors. He previously served as Vice President, U.S. Government Relations at Pfizer. Dr. Popovian was appointed as the Chief Science Policy Officer for Global Healthy Living Foundation. He also serves on the Board of Councilors of the University of Southern California School of Pharmacy, Senior Health Policy Fellow at Progressive Policy Institute, and Board of Advisors for Equideum Health. Robert completed his Doctorate in Pharmacy and Master of Science in Pharmaceutical Economics and Policy degrees at the University of Southern California with honors.

Gauri Binoy is a research assistant at Pioneer Institute. She graduated from Cornell University with a BA in Biological Sciences and Developmental Sociology in May 2021.

About Pioneer Institute

Pioneer’s mission is to develop and communicate dynamic ideas that advance prosperity and a vibrant civic life in Massachusetts and beyond. Pioneer’s vision of success is a state and nation where our people can prosper and our society thrive because we enjoy world-class options in education, healthcare, transportation and economic opportunity, and where our government is limited, accountable and transparent. Pioneer values an America where our citizenry is well-educated and willing to test our beliefs based on facts and the free exchange of ideas, and committed to liberty, personal responsibility, and free enterprise.

Get Updates On Our Life Sciences Work!

Related Content

New Book Highlights the Negative Impacts of Controversial QALY Value Assessment Framework on Patient Access & Affordability

Pioneer Institute has released a new compilation of research regarding the impact of the Quality Adjusted Life Year (QALY) methodology on the ability of patients, including some of the most vulnerable patient communities, to access treatments. The Pioneer book, Rationing Medicine: Threats from European Cost-Effectiveness Models to America's Seniors and other Vulnerable Populations, is authored by Dr. Bill Smith, Senior Fellow and Director of the Life Sciences Initiative at Pioneer Institute, and compiles research and data about the discriminatory nature of the QALY for aging adults, those living with disabilities or rare diseases, and more.

A Federal Drug Discount Program for the Wealthy

The combination of legal disputes, a growing data repository and investigative reports have necessarily put the 340B Drug Pricing Program under the microscope. Combined with the fact that the policy lacks transparency, 340B has spiraled out of control to the point that no policymaker can ignore the need to look closer.

First-of-Its-Kind Interactive Mapping Tool Reveals Extent of For-Profit Entities Benefitting from the 340B Drug Pricing Program

Today, Pioneer Institute released a first-of-its-kind, 50-state mapping tool and database highlighting the troubling way in which hospitals and covered entities leverage unlimited pharmacy contracts under the 340B Drug Pricing Program.

Harvard research points to ending drug cost help

A common grievance about Harvard is that the university is out of touch with the concerns of everyday Americans. This perception is confirmed by recent research from Harvard Business School that contends patients should be denied assistance that helps them afford their prescription drugs. The Harvard study argues that in order to control drug prices, the government should deny patients’ access to copay assistance programs offered by drug manufacturers. It flies in the face of federal and state efforts to protect the value of such assistance programs for patients and ignores basic facts about how and when patients use copay assistance to access their medications.

Comments on How Pharmacy Benefit Managers (PBMs) affect Smaller Pharmacies and Consumers (ID FTC-2022-0015-0001)

Pioneer Institute Senior Fellows William Smith and Robert Popovian submitted public comments about PBM business practices to the Federal Trade Commission (FTC). Pioneer recommended that PBM discounts be passed along to patients when they are meeting their deductible or coinsurance requirements.

Massachusetts Hospitals Pull Back on Charity Care as Revenue from Federal 340B Drug Discount Program Explodes

Over the past decade, the revenue for hospitals generated by the federal 340B drug discount program, initially intended to serve low-income, uninsured populations, has exploded even while a number of important Massachusetts hospitals have reduced the level of charity care they provide, according to a new study published by Pioneer Institute. The Pioneer Institute study, “340B Drug Discounts: An Increasingly Dysfunctional Program,” notes that nationwide, 340B drug sales rose from $9 billion in 2014 to $38 billion in 2020.

340B Drug Discounts: An Increasingly Dysfunctional Program

This report reviews the federal 340B drug discount program, showing that, over the past decade, the revenue for hospitals generated by the program, initially intended to serve low-income, uninsured populations, has exploded even while a number of important Massachusetts hospitals have reduced the level of charity care they provide. The study notes that nationwide, 340B drug sales rose from $9 billion in 2014 to $38 billion in 2020.

Testimony in opposition to S. 2651 to impose price controls

Testimony submitted on February 4, 2022 in opposition to S. 2651, legislation that would impose price controls on one of Massachusetts most important economic sectors, biopharmaceuticals.

The Promise and Challenges of Rare Cancer Treatments

Dr. William Smith, Pioneer Institute's Visiting Fellow in Life Sciences, spoke about the challenges and opportunities for rare cancer treatments, in a video interview produced by Rare Cancers, a patient group based in Australia, for the November 26th CAN Forum. 
A Woman Helping a Disabled Man in a Wheelchair

An Act advancing health care research and decision-making centered on patients and people with disabilities

On November 9th, 2021, William Smith, Pioneer Institute Visiting Fellow in Life Sciences, submitted the following testimony to the Massachusetts Legislature in support of House Bill 201, which addresses a number of flaws and infirmities in the Quality Adjusted Life Years (QALYs) methodology that is utilized by a number of foreign nations in evaluating the value of medicines.