PhRMA Maps Provide State-by-State Look at 340B Drug Program

An interactive map made available by the Pharmaceutical Research and Manufacturers of America (PhRMA), a drugmaker advocacy group, shares state-specific data on the 340B Drug Pricing Program. The federal program, initially created over 30 years ago, enables qualifying clinics and hospitals to purchase prescription drugs at discounted prices.

However, a February 7 PhRMA blog post argues the program “has become less about patients and more about boosting the bottom lines of large hospitals and for-profit pharmacies, which are mostly owned by middlemen like pharmacy benefit managers.”

Why 340B Has Become Controversial

The pharmaceutical industry and other critics have raised questions and called for reform as this program has expanded to cover more eligible providers.

The number of 340B provider sites, which includes both hospitals and pharmacies, grew from approximately 8,000 back in 2000 to roughly 50,000 sites 20 years later, according to a Commonwealth Fund explainer. Furthermore, data released by the Health Resources and Services Administration suggests discounted purchases under this program reached $44 billion in 2021, a jump of roughly 16% over the prior year.

The data map highlights shortcomings of what PhRMA calls a “broken” program that has unintentionally become a source of profit for hospitals and pharmacies over time. More specifically, PhRMA’s state maps point out that nearly 8 in 10 nonprofit hospitals “spent less on charity care than they gained from tax breaks” and that the top performing 340B hospitals in the country “collected nearly $10 in total profit for every $1 they invested in charity care in 2021.”

Other health care stakeholders see the 340B program from a different vantage point. For example, the American Hospital Association (AHA) has stated that the program enables eligible hospitals to stretch resources and offer additional services to vulnerable populations such as children and rural patients. AHA has also pointed out that the cost of the discounts provided by drugmakers amounts to a small share of their total sales and argues that pharma companies are trying to limit the reach of this program to add to their profits.

A report released by AHA on March 12 found that the estimated discounts provided to 340B hospitals in 2022 ($46.5 billion) made up about 7 percent of US revenues that year. Between 2017 and 2022, revenue growth reached an estimated $347 billion, and the US drug market grew by $331 billion as discounts to 340B hospitals grew by $30 billion. “Therefore, the scale at which the discounts drug companies are providing to 340B hospitals pales in comparison to their revenue growth and the growth of the US drug market,” notes an executive summary.

Exploring 340B and PhRMA’s State Maps

Some have set out to take a closer look, both at the 340B program and at PhRMA’s data maps. For example, a group of Harvard researchers reviewed the 340B program and published their findings last year in a JAMA Health Forum paper. According to their study, the program was found to be “associated with revenue to hospitals, clinics, and pharmacies; expanded services for patients; and costs to pharmaceutical manufacturers.”

However, it was unclear whether 340B revenue funded care for low-income populations. “Increased transparency regarding the use of 340B program revenue and strengthened rulemaking and enforcement authority for the Health Resources and Services Administration would support compliance and help ensure the 340B program achieves its intended purposes,” the researchers concluded.

More recently, regulatory consultant William Sarraille shared some of his observations after reviewing PhRMA’s state-specific maps. After exploring the data on 2 large states (New York and California), he randomly selected a rural state to see if the information would align with his predictions. He approached an analysis of Wyoming with 3 hypotheses:

1. That there would be a far better charity care rate;
2. A much-improved correlation between contract pharmacy locations and underserved areas; and
3. A tighter contract pharmacy geographical footprint.

Based on the PhRMA map, though, “essentially none of those hypotheses proved correct,” Sarraille noted in a LinkedIn post. Although the charity care rates were slightly better, they were still “quite poor,” the correlation to underserved areas was not any better, and there weren’t any contract pharmacies in states sharing a border with Wyoming. “I find this all fascinating,” he added.