January 13, 2023– Note: This story is updated to include information for Biogen, which announced 340B restrictions in December 2022.
The 19 drug companies that have imposed restrictions on safety-net hospital access to 340B drug pricing program discounts collectively brought more than $660 billion in revenues in 2021. The banner year for the companies occurred as hospitals reported increasing losses of 340B savings from the drugmaker-imposed cuts.
In February 2022, most drug companies reported their financial results for both the final quarter of 2021 and the full year, and the reports to investors contain some massive figures.
2021 Revenues for Companies Implementing 340B Cuts
| Johnson & Johnson | $93.8 billion |
| Pfizer | $81.3 billion |
| AbbVie | $56.2 billion |
| Novartis | $51.6 billion |
| Merck | $48.7 billion |
| GlaxoSmithKline | $46.8 billion |
| Bristol Myers Squibb | $46.4 billion |
| Sanofi | $44.6 billion |
| AstraZeneca | $37.4 billion |
| Eli Lilly | $28.3 billion |
| Gilead | $27.3 billion |
| Amgen | $26 billion |
| Boehringer Ingelheim | $24.3 billion |
| Novo Nordisk | $22.4 billion |
| Biogen | $11 billion |
| UCB | $6.8 billion |
| Bausch Health | $4.7 billion |
| United Therapeutics | $1.7 billion |
| Exelixis | $1.4 billion |
| TOTAL | $660.7 billion |
Leading the pack is Johnson & Johnson, the largest drugmaker in the world, with annual revenues approaching $100 billion. The company reported significant growth in its pharmaceutical sales last year for top-selling drugs used to treat various cancers, inflammatory diseases, and schizophrenia. Also contributing to this total figure were sales of the COVID-19 vaccine the company produced under its subsidiary Janssen. J&J’s restrictions on 340B did not take effect until May 2, so the 2021 revenue figures account for what the company brought in while offering full discounts on all eligible drugs.
Pfizer was close behind J&J, bringing in a record $81.3 billion in revenue last year. This performance was driven largely by sales of Comirnaty, the COVID-19 vaccine that Pfizer and BioNTech produced jointly, and Paxlovid, the Pfizer medication for patients with COVID infections. At the same time Pfizer was preparing to release its report, the company announced it would become the 13th drugmaker to impose pricing conditions for safety-net hospitals on 340B drugs dispensed at community-based pharmacies. To continue receiving discounted prices through their community pharmacy partnerships, hospitals must hand over pharmacy patient claims data the company is demanding. The policy, which took effect March 1, targets Xeljanz, a drug used to treat certain types of arthritis, as well as 11 oral oncology drugs that the company makes for patients living with cancer. Pfizer brought in more than $2.5 billion in Xeljanz sales alone last year.
Following Pfizer in the revenue column is AbbVie, which reported that it brought in more than $56 billion in 2021. This figure was driven largely by sales of the immunosuppressive medication Humira, which at more than $20 billion in net revenues is the world’s top-selling drug. AbbVie implemented its restrictive 340B policy on Feb. 1, the day before its financial report came out. The policy, which also conditions discounted pricing through community pharmacies on the submission of patient claims data, applies to a list of two dozen drugs that includes Humira. The company has warned that it might consider expanding that list to restrict access to discounts on more of its drugs.
One of the newest drug companies to announce 340B restrictions is high up on the 2021 revenue list as well. GlaxoSmithKline (GSK) pulled in almost $47 billion last year, nearly $6 billion of which came from the sales of inhaler products used to treat patients with respiratory diseases such as asthma and chronic obstructive pulmonary disease (COPD). In a policy that took effect April 1, GSK is targeting these respiratory drugs – including bestsellers Advair, Breo, and Ventolin – with 340B pricing restrictions for hospitals that do not turn over claims data.
Cuts Are Leaving Deep Marks
340B restrictions by 10 drug companies – AbbVie, Amgen, Bausch Health, Biogen, Bristol Myers Squibb, Exelixis, Gilead, GSK, J&J, and Pfizer – did not take effect until after the start of 2022. Collectively, those companies alone brought in nearly $400 billion in revenues even while offering unrestricted 340B discounts to safety-net hospitals, health centers, and clinics.
Hospitals have been reporting significant financial pain caused by the 340B restrictions. In July 2020, Eli Lilly became the first drug company to start denying discounts on drugs dispensed at community pharmacies. Those restrictions now have been in place long enough that they have been noted on numerous Lilly financial reports as a significant contributor to the company’s bottom line. Lilly reported more than $28 billion in revenues in 2021 on the strength of top sellers Trulicity, Humalog, and Jardiance. Those are diabetes drugs for which safety-net hospitals are sustaining some of their largest losses of 340B savings under drug company restrictions.
The 19 restrictive policies involve many of the best-selling drugs in the world needed to treat patients with diabetes, cancer, respiratory diseases, and other chronic illnesses. When a company refuses to offer a discount on one of these drugs, resources that hospitals say should be going toward the health care safety net instead shows up as part of a revenue column on these financial reports.
Price Hikes, Like Clockwork
As drug companies were putting the finishing touches on their earnings reports, they were also engaging in another annual tradition – price hikes. Companies typically raise prices in two batches, once at the beginning of the year and again in the middle of the year. January 2022 was no exception.
The Campaign for Sustainable Drug Pricing (CSRxP), which closely monitors drug pricing and promotes policy solutions designed to lower drug prices, reported on the first batch of 2022 price hikes in January and again in July. CSRxP noted 785 such increases on brand-name drugs at the beginning of the year, with the average increase approaching 5%. The group reported a second round of increases for more than 100 brand-name drugs in the first week of July alone.
Some of the more notable pricing jumps involve drug companies that are among the 19 now limiting 340B discounts. For instance, Pfizer increased its prices on more than 100 of its drugs, including a 16.8% boost on the price of the frequently prescribed drug Solu-Cortef, which treats a wide range of conditions. GSK raised prices on more than 30 of its drugs, including 7% hikes for cancer drug Zejula and anti-seizure drug Lamictal. BMS hiked the price tags on more than a dozen of its most-prescribed drugs. Gilead raised prices more than 5% on its HIV drugs Biktarvy and Descovy. Some drug companies have limited their 340B pricing restrictions only to certain drugs, but they could expand those lists at any time.
The earnings reports and the news about price increases together formed another reminder that the pharmaceutical companies are the ones that determine the prices of drugs, based largely on what they expect the market will bear. Now an increasing number of companies are making themselves the ones that determine when they will grant discounts to safety-net hospitals as well.