Presentation (CTI)

OBJECTIVES: The 340B Drug Discount Program ("340B") is a federal program in which manufacturers provide discounted outpatient drugs to participating 340B covered entities. 340B discounts displace manufacturer rebates on the same drug, normally returned to health plans to reduce costs. Previous research has estimated national 340B costs, but state 340B costs have yet to be explored. This study quantifies the cost of 340B to employer-sponsored and state and local government health plans for all 50 U.S. states.
METHODS: We used a previously reported financial model [Sun et al. 2024] to estimate 340B utilization and rebate losses for employer and government health plans in each state. We also examined self-administered drugs subject to manufacturers’ contract pharmacy restriction policies and used claim-level and historical trend analyses to estimate additional rebates lost due to current and proposed state contract pharmacy legislation.
RESULTS: 340B utilization varied from 4% to 43% across states, which corresponded to rebate losses for employers ranging from $13 to $152 per covered beneficiary, respectively. Importantly, 340B costs per beneficiary was higher among rural states and for state and local government plans. In total, 340B increased healthcare costs by $6.6 billion for all employer-sponsored plans, and separately measured, by $1.0 billion in additional annual costs for state and local government plans. Rebates lost due to current and proposed contract pharmacy legislation were an additional $1.8 billion for employer-sponsored health plans and $273 million for state and local government plans.
CONCLUSIONS: 340B utilization varies significantly by state, which contributes to the disproportionately higher 340B costs borne by patients and plan sponsors in certain rural states. Our findings suggest employers and workers are being asked to pay substantial 340B program costs, which has policy implications.