Drugmakers and PBMs Disagree Over 340B Contracts, Discounts and Patient Benefit
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Summary
Drugmakers told lawmakers that the federal 340B discount program for safety‑net providers has expanded and, in some cases, been routed through contract pharmacies in ways that do not reduce patient cost sharing. Manufacturers and PBMs gave different accounts of whether discounts reached patients.
COLUMBIA, S.C. — Witnesses told a legislative committee that the federal 340B program — created to give safety‑net hospitals and clinics discounts on outpatient drugs — has expanded and become intertwined with contract pharmacies and PBM practices in ways that complicate who gets discounts and whether patients benefit.
What witnesses said: Scott White of Johnson & Johnson told the committee that manufacturers provided large discounts to 340B covered entities, and he expressed concerns that contract pharmacy arrangements and extensive use of 340B by large hospital systems and their pharmacy partners have not always routed benefits to patients. White described the program’s rapid growth and cited examples of deep discounts for covered entities and of contract pharmacies that extend the program’s reach beyond the populations originally intended.
Key mechanics and tension points: Witnesses explained that 340B discounts are statutory and typically provide deep price reductions to covered entities. Pharmaceutical manufacturers and PBMs said that when 340B discounts apply, manufacturers may not be able to claim the corresponding Medicaid rebate for the same patient; witnesses also said the Inflation Reduction Act introduced new priorities for rebate application that interact with 340B in complex ways. Manufacturers and patient advocates told the committee they are concerned that patients’ out‑of‑pocket cost sharing is often indexed to list price, not the discounted price obtained by hospitals or contract pharmacies.
Why lawmakers should care: Committee members were told that the 340B program’s expansion can have fiscal consequences for Medicaid and for manufacturer net prices, and that contract pharmacy arrangements — particularly when those contract pharmacies are affiliated with PBMs — can increase opportunities for discount capture without clear evidence of direct patient benefit.
Next steps: Members requested additional state‑level data on 340B purchases and asked federal program representatives and state agencies to clarify how program discounts interact with Medicaid rebate rules and plan cost‑sharing rules.
Ending: The committee did not reach policy decisions at the hearing; witnesses agreed to provide more documentation to help lawmakers evaluate whether state action is warranted.