What is driving 340B growth: utilization or price?

Area of Science:

• Health Economics
• Pharmaceutical Policy
• Healthcare Management

Background:

• The 340B Drug Pricing Program (340B program) experienced significant growth, reaching $66 billion in discounted purchases in 2023.
• Limited research exists on the drivers of 340B program growth, with conflicting explanations from stakeholders.
• Advocates attribute growth to manufacturer price increases, while critics cite increased utilization by 340B hospitals.

Purpose of the Study:

• To investigate the primary drivers of 340B program growth by analyzing the relative contributions of price and utilization.
• To provide empirical evidence to inform the ongoing debate regarding the factors influencing 340B program expansion.

Main Methods:

• Employed price-volume-mix decomposition analysis.
• Utilized a national dataset of over 28,000 National Drug Code drugs from 2018 to 2024.
• Examined growth based on both list prices and 340B discount prices.

Main Results:

• Utilization accounted for an average of 79.6% of 340B growth based on list prices.
• Utilization accounted for nearly 100% of growth when considering 340B discount prices.
• Utilization was the dominant factor for top-selling drugs and those with price increases exceeding inflation.

Conclusions:

• Increased drug utilization, rather than manufacturer pricing strategies, is the principal driver of 340B program growth.
• These findings have critical implications for public policy and the future regulation of the 340B program.