New research looked at the prices 340B-enrolled pediatric hospitals charged for pediatric oncology drugs.

PhRMA Says More than Half of Pharmacy and Provider Profits on Brand Drug Sales Come Through 340B

More than half (52%) of the $81 billion that U.S. pharmacies and health care providers collected in 2020 in reimbursement from payers for brand-name prescription drugs came through pharmacy and provider participation in the 340B program, up from 14% of the $24.7 billion they took in 2013, according to a new drug industry-funded study.

The American Hospital Association (AHA) dismissed the study as an attempt by brand drug manufacturers to deflect attention from their primary responsibility for high drug prices.

The 340B pharmacy and provider revenue finding was in a broader study of profits on the sales of brand drugs by Berkeley Research Group (BRG) for the trade group Pharmaceutical Research and Manufacturers of America (PhRMA). It was released on Jan. 7.

According to the study, U.S. prescription drug spending (retail and non-retail, brand and generic) totaled $686.9 billion in 2020. Total spending for brand medicine was $517 billion, it said.

BRG said the share of profits on brand drugs kept by manufacturers relative to the share kept by others in the marketplace shrank steadily from 2013 to 2019. The trend lines crossed in 2020, it said. Pharmacy benefit managers, hospitals, the government, pharmacies, insurers, and other payers now claim a 50.5% share of brand drug profits to manufacturers’ 49.5% share, the new study says.

In 2017 and 2018, PhRMA responded to ex-President Trump’s attacks on the drug industry and to bipartisan drug pricing legislation in Congress by launching lobbying and public relations campaigns to attach blame for rising drug prices to “middlemen.”

“We must address what is really driving up costs for patients, like when middlemen are paid based on the list price of a medicine and when insurers refuse to share savings with patients at the pharmacy counter,” PhRMA President and CEO Stephen Ubl said in a news release announcing the new study. “We also must fix the 340B program, which has enabled hospitals to profit without assurances that patients see any benefit.”

BRG has done previous research for PhRMA on 340B program. BRG Managing Director Aaron Vandervelde also is Business Development Lead of 340B ESP, the drug industry contractor that helps manufacturers implement 340B claims data submission requirements for those restricting 340B pricing on drugs shipped to contract pharmacies.

Bharath Krishnamurthy, the American Hospital Association’s senior associate director of policy, said PhRMA’s new study “tries to deflect attention away from the issue of skyrocketing drug prices that are set by drug companies.”

“It is important to highlight that many of these rebates are voluntary on the part of drug companies, and that ultimately the amount of rebates and fees they pay are tied to the prices of the drugs that only they can set,” Krishnamurthy said.

On the issue of 340B margins, Krishnamurthy continued, increases “are in large part due to drug companies’ own actions, which include raising the prices of their products faster than the rate of inflation.”