The 340B drug pricing program was created to help safety-net hospitals and clinics stretch their resources to care for low-income and uninsured patients. But has it spiraled out of control? Originally a modest plan, the program has exploded into a $130 billion market, leading to a fierce debate over who truly benefits from the massive discounts. Is it the patients, as intended, or are for-profit corporations, PBMs, and large hospital systems capturing the profits? In this episode, we unpack the controversy and explore the future of 340B.
Joined by two of the nation's leading experts on the topic, we dissect the complex mechanics of the 340B drug pricing program and the powerful financial incentives that drive it. We explore how the program has grown exponentially, fueled by rising drug costs and the explosion of 340B contract pharmacies. This discussion sheds light on the central question: who benefits from the 340B program? Our guests break down how pharmacy benefit managers (PBMs) and major chains like CVS and Walgreens have become major players, diverting funds that were meant for patient care. We provide a clear, step-by-step example of how the money flows for a single prescription, revealing the winners and losers in this system.
A significant focus of our conversation is on 340B in oncology, where high-cost drugs create enormous financial spreads for participating hospitals, often without any direct savings for the cancer patient. This raises critical questions about whether the program encourages the use of more expensive drugs and consolidates cancer care into large hospital systems. We also dive deep into the push for 340B program reform, covering the recent Senate hearings, the legal battles over state laws restricting manufacturers, and the debate over moving oversight from HRSA to CMS. We analyze proposals like a rebate model and increased transparency requirements to understand what the future may hold for this vital, yet deeply flawed, healthcare program.
About Our Guests:
Ted Okon: As the Executive Director of the Community Oncology Alliance (COA), Ted Okon is a nationally recognized voice on the policy and politics of cancer care. He is a frequent presence on Capitol Hill, advocating on critical issues like drug costs, Medicare reimbursement, and the changing economics of oncology.
Amanda Smith: Amanda is Counsel at K&L Gates in their healthcare and FDA practice, with a specialized focus on the federal 340B drug pricing program. She advises clients on complex regulatory, legislative, and litigation matters related to the program and previously served as a healthcare law clerk for the U.S. Senate Committee on Finance.
Timestamps / Chapters: (00:20) Understanding the 340B Drug Pricing Program (07:24) How the 340B Program Really Works (09:29) Who Truly Benefits from 340B Discounts? (12:03) The Financial Impact: How 340B Influences Drug Prices (16:33) Navigating the Regulatory Landscape: HRSA's Role and Limitations (22:03) The Rise of 340B Contract Pharmacies & PBM Influence (25:26) The Legal Battleground: State Laws and Lawsuits (30:21) FOLLOW THE MONEY: A $10,000 Drug Example (36:11) Hospital Eligibility and the Lack of Transparency (44:26) The Future of 340B Program Reform: Rebates, CMS Oversight & More (59:45) PREDICTIONS: What Will 340B Look Like in 2 Years?
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