Spending in the 340B Drug Pricing Program, 2010 to 2021

Presentation by Rebecca Sachs and Joshua Varcie, analysts in CBO’s Health Analysis Division, at the 13th Annual Conference of the American Society of Health Economists.

1. Presentation at the
13th Annual Conference of the American Society of Health Economists
June 17, 2024
Rebecca Sachs and Joshua Varcie
Health Analysis Division
Spending in the 340B Drug
Pricing Program, 2010 to 2021
The information in this presentation is preliminary and is being circulated to stimulate discussion and critical comment. This presentation has not been subject to CBO’s regular review
and editing process. The views expressed here should not be interpreted as CBO’s.
For more information about the conference, see ashecon.org.

2. 1
For information on CBO’s access to data from federal agencies, see www.cbo.gov/publication/57325. The HRSA data summarize transactions captured by the Prime Vendor Program
and are accurate as of April 1, 2023. The data do not capture all 340B sales, since about 10percent of 340B facilities do not participate in the Prime Vendor Program.
In the 340B Drug Pricing Program (340B), drug manufacturers sell drugs at
discounted prices to participating hospitals and federal grantees. 340B facilities
benefit from the program because the difference between the acquisition cost
and the amount they are paid (often called the “spread”) is larger for drugs
acquired through the 340B program.
The Congressional Budget Office obtained data from the Health Resources and
Service Administration (HRSA) to measure spending in the 340B Drug Pricing
Program from 2010 to 2021 and look at factors associated with changes in
spending over time.
Those data measure spending in the 340B program by National Drug Code, by
the type of facility where drugs were prescribed, and by whether drugs were
distributed through a contract pharmacy.
Overview

3. 2Spending amounts are adjusted for inflation using the consumer price index for all urban consumers (CPI-U) and are expressed in 2021 dollars.
Spending in the 340B Program, 2010 to 2021
From 2010 to 2021,
340Bspending grew
19percent annually.
340B spending represents
the total dollar value of
purchases of drugs at the
discounted 340B
priceacross all facilities
participating in the 340B
Prime Vendor Program.

4. 3
Determining Discounted Prices in the 340B Program
Average
manufacturer
price
Flat
rebate
Best-price
rebate
Inflation
rebate
Subceiling
discounts
340B
discounted
price
Unit rebate amount
---------------- 340B ceiling price ----------------
or

5. 4Drug class designations for individual National Drug Codes come from Micromedex Red Book data.
340B Spending, by Drug Class, 2021
Spending on cancer drugs,
anti-infective agents, and
immunosuppressants
comprised 70percent of
total 340B spending in 2021,
up from 58percent in 2010.
Only six other classes of
drugs accounted for more
than 0.5percent of 340B
spending in 2021.

6. 5
Hospitals are eligible hospitals and outpatient clinics affiliated with qualifying hospitals. Federal grantees comprise federally qualified health centers, Ryan White HIV/AIDS Program
grantees, and specialized clinics.
340B Spending, by Facility Type and Drug Class, 2021
In 2021, 47percent of 340B
spending at hospital-based
facilities was on cancer
agents.
By contrast, 77percent of
340B spending at federal
grantees was on anti-
infective agents.

7. 6
Growth in Spending, by Drug Class, 2010 to 2021
Seventy-three percent of the
growth in 340B spending
from 2010 to 2021 can be
attributed to spending on
cancer drugs, anti-infectives,
and immunosuppressants.
2010 spending is adjusted for inflation using the CPI-U and expressed in 2021 dollars.

8. 7
2010 spending is adjusted for inflation using the CPI-U and expressed in 2021 dollars. Numbers do not sum to the total for 2021 because $0.3 billion of spending in 2010 was not
assigned to a facility type.
Growth in Spending, by Facility Type, 2010 to 2021
Eighty-eight percent of the
growth in 340B spending
from 2010 to 2021 can be
attributed to spending on
drugs prescribed by
hospitals and their affiliated
off-site clinics.

9. 8
2010 spending is adjusted for inflation using the CPI-U and expressed in 2021 dollars. In 2010, HRSA modified its guidelines to allow all 340B facilities to contract with an unlimited
number of off-site pharmacies.
Growth in Spending, by Contract Pharmacy Status, 2010 to 2021
Twenty percent of the
growth in 340B spending
from 2010 to 2021 can be
attributed to spending on
drugs dispensed at contract
pharmacies.

10. 9
Analysis using data from SSR Health shows that only a portion of the growth in
340B spending can be explained by marketwide trends or by disproportionate
growth in spending on classes of drugs thathave greater representation in the
340B program.
Other factors that probably contributed to the growth in spending include:
Integration of hospitals and clinics,
Expanded facility participation due to the Affordable Care Act, and
Expanded use of off-site (“contract”) pharmacies.
Factors Contributing to Growth in Spending

11. 102010 spending is adjusted for inflation using the CPI-U and expressed in 2021 dollars.
Underlying Spending Data, by Drug Class, 2010 and 2021
Billions of 2021 dollars
Facility type Drug class 2010 340B spending 2021 340B spending
Hospitals
Cancer drugs 2.0 18.1
Anti-infective agents 0.5 2.2
Immunosuppressants 0.5 6.1
Other 2.3 11.8
Federal grantees
Cancer drugs 0.1 0.0
Anti-infective agents 0.6 4.4
Immunosuppressants 0.0 0.1
Other 0.3 1.2
Unattributed in data
Cancer drugs 0.1 0.0
Anti-infective agents 0.1 0.0
Immunosuppressants 0.0 0.0
Other 0.1 0.0
Contract pharmacy status Drug class 2010 340B spending 2021 340B spending
Contract pharmacies
Cancer drugs 0.0 1.3
Anti-infective agents 0.2 2.5
Immunosuppressants 0.0 1.4
Other 0.1 2.4
Noncontract pharmacies
Cancer drugs 2.1 16.8
Anti-infective agents 1.0 4.1
Immunosuppressants 0.5 4.8
Other 2.7 10.6