Press Release

New Analysis: 340B Program Shifting Delivery of Physician-Administered Medicines to More Expensive Hospital Settings

Shift in site of care driving up out-of-pocket costs for patients

PhRMA October 16, 2017

Washington, DC (October 16, 2017) – From 2008 to 2015, there was a significant shift in site of care from physician offices to more expensive 340B hospital outpatient settings for certain classes of physician-administered medicines, according to a new analysis by the Berkeley Research Group (BRG) that was commissioned by the Pharmaceutical Research and Manufacturers of America (PhRMA). For Medicare beneficiaries and patients with private health insurance whose insurance does not fully cover the cost of their treatment, this shift in site of care often results in increased costs for their share of the bill. This undermines the purpose of the 340B program, which is to help safety-net facilities access discounted medicines for the vulnerable and uninsured.

Building off of a July 2017 report, this analysis explores how Medicare Part B reimbursement at 340B hospitals for three conditions – breast cancer, rheumatoid arthritis and multiple myeloma – has increased since 2008. By comparing Part B reimbursement at physician offices, non-340B hospitals and 340B hospitals, the analysis found that the share of Part B reimbursements steadily increased in the 340B hospital setting during the 2008 – 2015 period while decreasing in the physician office setting. At the same time, the share of reimbursements at non-340B hospitals remained relatively steady.

  • For breast cancer and multiple myeloma medicines in this study, about 33 percent of all Part B sales were at 340B hospitals by 2015, compared to 11 or 12 percent in 2008.
  • About 19 percent of the rheumatoid arthritis drug sales through Part B were to 340B hospitals in 2015, compared to 6 percent in 2008.

This shift in site of care can have significant consequences for Medicare and privately insured patients whose insurance does not fully cover their costs and leaves them with a share of the bill. These patients pay more when their physician-administered medicines are provided at hospitals or hospital-owned physician practices because these settings tend to be more expensive than community-based physician offices. Several pieces of research have noted this impact on patients, including the Medicare Payment Advisory Commission in its March 2017 Report to Congress and a 2017 Magellan Rx Management report on patients with commercial insurance.

“This new analysis suggests the 340B program may be raising patient costs instead of helping vulnerable or uninsured patients access medicines,” said Stephen J. Ubl, president and CEO of PhRMA. “This is just another example showing how the 340B program is benefiting hospitals at the expense of patients.”

The 340B program incentivizes participating hospitals to buy up community-based practices to expand in a way that maximizes manufacturer 340B discounts and increases their revenue from the program. Under current rules, 340B hospitals are able to obtain 340B discounts for prescriptions written by physicians at these outpatient settings, even though many of these community-based practices are in wealthier areas and treat insured patients. Because of lax program rules and no requirement that hospitals use any profit from the program to help patients, 340B hospitals are able to bill both insured and uninsured patients at a higher price and pocket the difference between the reimbursement amount and the 340B discounted price.

“One of our top priorities is fixing this broken program,” continued Ubl. “We encourage Congress and the Administration to reform the 340B program to help ensure it targets the patients and true safety-net facilities it was intended to help.”

To learn more about the 340B program and ways it could be fixed, visit

About PhRMA
The Pharmaceutical Research and Manufacturers of America (PhRMA) represents the country’s leading innovative biopharmaceutical research companies, which are devoted to discovering and developing medicines that enable patients to live longer, healthier, and more productive lives. Since 2000, PhRMA member companies have invested more than $600 billion in the search for new treatments and cures, including an estimated $65.5 billion in 2016 alone.

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