New AHA report highlights drug companies limiting 340B pricing

Nov. 16, 2022

The American Hospital Association (AHA) released a new report showing how the unlawful actions of drug companies to limit 340B pricing with community and specialty pharmacies are having an adverse impact on access to care for patients and communities across the country. The report is based on a survey of more than 300 hospitals and health systems participating in the 340B program conducted earlier this year by the AHA.

Federally authorized arrangements between 340B hospitals and community and specialty pharmacies are a critical component of the 340B program that allow providers to expand access to many drugs — including those used to treat rare and complex conditions such as some cancers — for the patients and communities they serve. However, over the last several years, the program has come under a new threat by many drug companies that in violation of federal law have ended discounted pricing to 340B hospitals with community and specialty pharmacies.

According to the study:

·        The average 340B critical access hospital (CAH), which are hospitals with 25 beds or less serving rural communities, reported annualized losses of approximately $507,000.

·         The average 340B disproportionate share hospital (DSH), which are hospitals that serve large numbers of Medicaid and uninsured patients, reported annualized losses of nearly $3 million.

·         On average, CAHs reported 44% of their total 340B savings coming from community and specialty pharmacies, with several CAHs reporting that their entire 340B savings come from these arrangements.

·         Overall, 10% of responding hospitals reported average annualized losses of $10 million or more, illustrating the magnitude of the harm that drug companies’ actions have on 340B hospitals and their ability to care for their patients.

“This important new report shows how unlawful actions by drug companies to restrict 340B discounts to community and specialty pharmacies are directly reducing access to care and services for patients and communities, especially those in rural areas,” said Stacey Hughes, AHA’s Executive Vice President. “Drug companies are limiting discounts that help hospitals provide free care for uninsured patients, services in mental health clinics and many community health programs. To protect access to care, we continue to urge the Department of Health and Human Services to aggressively use all tools available to stop these harmful tactics from drug companies.” 

Importantly, the financial losses reported by hospitals in this survey likely understate the full economic impact. When this survey was fielded in April 2022, 14 drug companies had imposed limits on 340B pricing; today there are 18 drug companies, affecting hundreds of drugs.

The 340B Drug Pricing Program was created by Congress to allow eligible providers to purchase certain outpatient drugs at a discounted price and use those savings to stretch scarce resources to provide more comprehensive care to patients. For 30 years, this program has successfully met this mission and helped providers furnish critical programs and services to the benefit of the patients and communities they serve.

There are currently numerous legal proceedings on this issue moving through the courts. The AHA, along with other hospital groups, have filed amicus briefs over HHS’ failure to enforce program requirements and halt drug company actions that undermine this vital program.

AHA release