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Who Gains If 340B Is Restricted?


 

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Many of those who say 340B should be restricted are the ones who will gain the most if that actually happens.

Drug manufacturers and biotechnology companies have an obvious reason to restrict the program: They would get to keep more money. These companies are already making billions in profits. According to one recent study, the 11 biggest multinational drug companies racked up $711.4 billion in net income between 2003 and 2012. Among the U.S. companies, the study found that Pfizer cleared roughly $14.6 billion in 2012, Johnson & Johnson about $10.9 billion, Merck about $6.2 billion, Abbott about $6.0 billion, Eli Lilly about $4.1 billion, and Bristol-Myers Squibb about $2 billion.

In addition, some pharmacy benefit management (PBM) companies would like to end all 340B discounts on drugs provided to insured patients or, if that is not possible, to pocket some if not all of safety net providers’ 340B savings. The PBM market is dominated by two PBMs, ESI/Medco and CVS Caremark. Together, they control more than 80 percent of the market for large health plans. These two companies alone have seen their profits jump in less than a decade from $900 million a year to over $7 billion a year.

Private practice oncologists claim that hospitals’ access to 340B drug discounts puts them at a competitive disadvantage, even to the point of driving them out of business. 340B purchases, however, account for a small fraction of overall oncology drug spending, making it very unlikely that 340B is having a significant impact on non-340B oncology practices. Inadequate Medicare reimbursement and broader market forces, not others’ access to 340B discounts, is why so many private oncology practices are struggling to stay financially afloat.  What is more, according to a recent study, only 4 percent of patients treated by community oncologists are uninsured and only 4 percent are Medicaid beneficiaries.

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