Growth in the 340B Drug Pricing Program

The 340B Drug Pricing Program requires pharmaceutical manufacturers to sell outpatient prescription drugs to participating health care facilities at discounted prices. Facilities that participate in the 340B program are hospitals, clinics, and other providers of health care services as well as other organizations that purchase drugs, such as those affiliated with state and local governments. In this report, the Congressional Budget Office examines trends in drug purchases through the 340B program (known as 340B drugs) over the 2010–2021 period.

• Drugs Purchased Through the Prime Vendor Program. About 90 percent of health care facilities that participate in the 340B program also participate in the Prime Vendor Program (PVP). Through that program, the Health Resources and Services Administration contracts with an external organization, known as the prime vendor, to support 340B operations. Health care facilities participating in the PVP spent $43.9 billion on 340B drugs in 2021, up from $6.6 billion in 2010. Most spending on drugs purchased through the PVP in 2021—87 percent—was on drugs that were administered or distributed in outpatient departments of hospitals and their off-site outpatient clinics. Spending on cancer drugs was 41 percent of purchases through the program, almost three times the amount spent on any other drug class.
• Factors Contributing to Growth in the 340B Program. CBO estimates that one-third of the increase in spending in the program from 2010 to 2021 can be attributed to trends in marketwide growth in drug spending and disproportionate growth among drug classes that account for more spending in the 340B program than in the overall market. CBO examined three additional factors that contributed to growth in spending under the 340B program: the integration of hospitals and off-site clinics, increased facility participation after the implementation of the Affordable Care Act, and expanded use of off-site pharmacies. CBO does not have sufficient data to quantify those factors' effects, but in the agency's assessment, the largest of those three factors was the integration of hospitals and clinics.
• Effects of the 340B Program on the Federal Budget. In CBO's assessment, the 340B program encourages behaviors—including the prescription of more and higher-priced drugs, the expansion of services, and the integration of hospitals and off-site clinics—that tend to increase federal spending. In many cases, the evidence about the behaviors is limited, and the magnitude of each is unknown. CBO has not estimated how legislation affecting those behaviors would alter federal spending.