The Impact Of The 340B Drug Pricing Program On Post-Launch Drug Prices

Government mandated drug-pricing policies are an understudied—but potentially significant—factor in the price of drugs. The 340B program is one of the more controversial government-mandated prescription drug discount programs. Proponents argue that the program helps health care systems cover the cost of care they provide for low-income patients. Critics argue that the program unfairly benefits certain health care systems by assuring them lower drug prices, drives consolidation and reduces competition in the health care market, and drives up the cost of drugs. Despite this last claim, there is very little evidence that the 340B program actually impacts post-launch drug prices (i.e., the price of drugs once they are on the market). This project uses regression analysis to explore how growth in the 340B program—specifically, growth in 340B hospitals that have 340B status because they serve a large number of low-income patients—impacts the cost of drugs administered in the outpatient setting (physician-administered drugs). The project’s findings reveal that growth in this subset of 340B hospitals (DSH-340B sites) between 2008 and 2017 is associated with an increase in the price of physician-administered drugs that were either on patent or had not been off-patent for more than four time periods (i.e., 24 months). These findings serve as evidence that should be used to inform policy decisions regarding the future of the 340B program.