CBO Data Shows 340B Is a Tale of Two Providers

It’s Juneteenth today, and one way of recognizing the day would to be listen to the thoughts of Porsha Olayiwola, Boston’s poet laureate, who shared her reflection on Juneteenth with WBUR this week.

340B can be tough to conceptualize. It’s a drug discount program, sure, that makes discounted meds available to a huge range of safety-net providers, but it’s not always clear which meds and which providers we’re talking about. 

So this presentation from the Congressional Budget Office (h/t to Adam Fein) is hugely useful. It tracks not only which kinds of providers are taking advantage of the program, but which kinds of medicines are getting the 340B discounts. 

Taken together, it’s clear that there are two 340B programs. One is based around large hospitals, who buy the most 340B-discounted drugs … about half of which are cancer meds. The other is centered on federal grantees, who account for 13% of the 340B market and where 77% of the spending is on anti-infectives (and zero is on oncology drugs). 

Unsurprisingly, the growth, too, is only the hospital/oncology side. 

So there is a clear bifurcation in both who uses 340B and how those different entities use 340B. 

It helps explain why there are increasingly fissures in the covered entity world. A federal grantee getting HIV meds to at-need patients is a different beast than the Cleveland Clinic marking up Keytruda for insured patients.

One of the core beliefs over here at Cost Curve is that the obsession with the price of gene therapies and obesity meds is borderline dangerous. In general, those treatments are cost-effective, and the real question is not “are they worth it?,” but rather “how do we, as a society, pay for and incentivize powerful, cost-effective meds in a world of limited resources?”

Whining and moaning about prices, then, distracts from our ability to actually address the core, underlying issues.

I don’t always put that very elegantly, and the fact that I’m sometimes in the bag for industry probably erodes the power of that argument. 

So I was thrilled that ICER’s founder Steve Pearson took on that exact topic -- with more eloquence and considerably more credibility -- in a great piece in The Economist. 

Steve’s essay is a must-read because he drills down on the kind of questions we really ought to be asking about innovative payment approaches and the responsibilities of all parties -- including drug manufacturers -- to get us to a place where the budget issues can start to be ameliorated.

Of course, the piece carries with it is own kind of warning: one way of creating the budgetary headroom for cost-effective treatments is to stop spending money on therapies that don’t have the same evidence of value.

The sword cuts both ways.

• Bernie Sanders gave an interview to Axios on his obesity-drug crusade. It sure sounds like Bernie doesn’t have any real policy solutions and that he’s hoping he can just shame Novo into dropping the price. Maybe he needs a copy of the Steve Pearson piece. 

• Fierce covered the study that found that Mark Cuban Cost Plus Drug Company beat insurance-company out-of-pocket prices about 11% of the time. Fierce framed it as evidence that insurance works well, but it sure feels like insurance companies should never take money from a beneficiary at the pharmacy counter. Not even 11% of the time.

Header image via Flickr user Office Holidays.

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