Who Is at the Controls of 340B?

Tony Hagen @oncobiz
Published: Sunday, Jan 29, 2017
New guidance from HRSA is anticipated on how 340B should be implemented, and this could slow the growth of the program or even reduce its size, the report said. A public comment period designed to allow stakeholders to weigh in on potential changes to the program ended in late 2016. The size of 340B also could be reduced if more biosimilar drugs, which are cheaper substitutes for brand name drugs, are launched in the marketplace, the report said. BRG also suggested that the now-defunct Medicare Part B Drug Payment Model may have had an impact on 340B sales. The proposed CMS program, which would have changed the drug payment formula for physicians, was abandoned in December by the Obama administration as the Republican administration prepared to take office. Weak political support for the drug pricing model was seen as the cause of the abandonment.

The new report from AIR340B states that BRG researchers had to upwardly revise their earlier estimates of 340B sales growth. Their 2014 forecast showed sales reaching $16 billion by 2019; that number is now obsolete. Based on current growth, sales could reach $20.8 billion in 2019, up from an anticipated $16.1 billion in 2016, BRG said. Among the components of the revised growth estimate are sales attributable to hospital acquisitions of private practices, new physician-hospital affiliations, and expanded hospital referral networks. As a group, these constituted the biggest change in the forecast and are expected to total $1 billion for 2016 and reach $5 billion in 2021, thereby eclipsing the growth of contract pharmacy sales, another rapidly growing element of 340B sales.

Contract pharmacy sales growth through 340B is expected to measure $1 billion in 2016 and $4.6 billion in 2021. Hospital pharmacy arrangements have soared as a result of 340B impetus (Figure 2). That growth can be traced back to 2010 guidance from HRSA that allowed covered 340B entities to contract with an unlimited number of third-party pharmacies to dispense 340B drugs. By 2016, over 68% of 340B-participating hospitals had at least 1 contract pharmacy arrangement, up from 13% in 2010. “Although there is a natural limit to overall participation rates, our research indicates emerging growth trends in specialty pharmacies and covered entity ownership of contract pharmacies. Therefore, we expect contract pharmacies to continue to drive incremental 340B sales for at least the next 5 years,” the report said.

In further conclusions, BRG said there may be unanticipated ripple effects from the dramatic growth of 340B drug discounting. The program may already be causing manufacturers to charge higher overall drug prices, thereby driving up the costs of healthcare, BRG stated.
Vandervelde A, Blalock E. 340B Program sales forecast: 2016 - 2021. AIR340B website. http://340breform.org/userfiles/December%202016%20 BRG%20Growth%20Study.pdf. Published 2016. Accessed January 9, 2017.

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