Rethinking Drug Pricing

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The 340B Drug Pricing Program was created by Congress back in 1992 as a way to help vulnerable patients have access to hospital services and more affordable medicines; however, the savings that hospitals are gaining are not always finding their way to the patient via the intended pathway (1). This discrepancy is leading some drug manufacturers to change their drug-discount models.

French drug manufacturer, Sanofi, is the latest to announce their changing plans for drug discounts to certain US hospitals, which will require the institutions seeking the discounted drugs to provide specific information up front (2). “The changes we are making are consistent with the 340B program’s mission ... helping to eliminate prohibited duplicated discounts and diversion of 340B drugs away from eligible patients,” said Sanofi in the news release (2).

Earlier in November, lawsuits were raised by Eli Lilly (3) and Johnson & Johnson (4) against the Health Resources and Services Administration (HRSA) as a result of the government agency’s actions to block their reduced drug price models, which both companies assert will provide greater transparency for drug access. The actions being taken by drug manufacturers to innovate the discounted drug payment structure should not only improve transparency but also help to reduce any potential abuse of the funding received, and these actions, as reported in Forbes, should be considered by legislators (5).

In a study assessing the cost of the 340B program, IQVIA used a model to quantify the potential financial impact of the drug discount program. Through their analysis, IQVIA found that there are increased costs for self-insured employers and their workers of around 4.2% versus if the program did not exist (6).

Given the outcomes of IQVIA’s analysis and recent litigation cases, the 340B program is under greater scrutiny and reforms are generally expected as a priority. In an interview with the American Journal of Managed Care, Lindsay Baelor Greenleaf from ADVI Health stated that a Republican-led Congress and Republican White House are more likely to lead to some significant 340B reforms enacted into legislation (7).

References

1. PhRMA. The 340B Drug Pricing Program. PhRMA.org/policy-issues (accessed Nov. 25, 2024).
2. Reuters. Sanofi Plans to Change Hospital Drug-Discount Program. News Release, Nov. 22, 2024.
3. Eli Lilly. Lilly Statement on New 340B Litigation. Press Release, Nov. 14, 2024.
4. Johnson & Johnson. Why Transparency is Critical for Patients. Press Release, Nov. 12, 2024.
5. Numerof, R. Rethinking 340B: Johnson & Johnson’s Bold Challenge to HRSA and What it Means for Healthcare Transparency. Forbes, Nov. 22, 2024.
6. Sun, C.; Zeng, S.; Martin, R. The Cost of the 340B Program Part 1: Self-Insured Employers. IQVIA White Paper, March 12, 2024.
7. Caffrey, M. The Trump Sequel: What to Expect on PBMs, 340B, Drug Pricing, and RFK Jr. AJMC, Nov. 12, 2024.

About the author

Mike Hennessy Jr is president and CEO of MJH Life Sciences®

Article details

BioPharm International®
Vol. 37, No. 10
November/December 2024
Page: 6

Citation

When referring to this article, please cite it as Hennessy, M. Rethinking Drug Pricing. BioPharm International 2024 37 (10) 6.