Measuring the Relative Size of the 340B Program: 2012–2017

Aaron Vandervelde and Eleanor Blalock write about estimates of 340B Drug Discount Program sales and annual US drug sales and the impact of the 340B program on the pharmaceuticals market.

The 340B Drug Discount Program has come under increased scrutiny in recent years from government agencies and others who note the negative impact the program may have on the broader market for pharmaceuticals. This impact is in part due to the program’s increasing size relative to the overall pharmaceutical market. Since 2010, the program has expanded at an average annual growth rate of 21 percent and has grown by 125 percent in the last three years alone. In May 2017, the Health Resources and Services Administration (HRSA) reported that in 2016, 340B covered entities purchased more than $16 billion in drugs at the 340B price.

This study evaluates the accuracy of an often-cited statistic that estimates 340B sales at only 2 percent of annual US drug sales. This statistic compares the highly discounted 340B net sales amount to total US gross drug sales as reported by IMS Health (IMS). A more accurate measure of the 340B program, and the measure used in this study, is to compare total gross 340B purchases to the total gross potential market for which 340B purchased drugs are eligible. By law, the 340B program is limited to a subset of the overall US pharmaceuticals market, because 340B purchased drugs are exclusively for outpatient use.

This study was funded by the Pharmaceutical Research and Manufacturers of America.