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WASHINGTON — A new report from IQVIA found that the 340B program raised costs for employer-sponsored plans by $6.6 billion and for state and local government plans by $1 billion in 2023. Current and proposed contract pharmacy legislation would drive those costs even higher.
While many view the 340B program as "free," "The Cost of the 340B Program to States" shows that employers, state and local governments, and an estimated 150 million beneficiaries see their health care costs increase as a result of the 340B program.
The effects vary across states, due to factors such as the geographical concentration and distribution of 340B covered entities and the extent of their contract pharmacy networks. Utilization is also affected by the passage and implementation of state legislation to broaden 340B contract pharmacy networks.
"This new report from IQVIA provides important state-level data about how the 340B program drives costs up for employers, state and local governments, and ultimately patients," said Jon Campbell, National Pharmaceutical Council's chief science officer. "This provides important evidence for decision makers when considering 340B reform at the state and national level."
Using a national sample of pharmacy claims and drug sales data for the year 2023, the report examines 340B utilization in each U.S. state and modeled its costs on employer-sponsored health insurance plans:
- 340B utilization was found to vary greatly between states by an order of magnitude, ranging from 4% (New Jersey) to 43% (Vermont).
- Utilization translated into cost increases for employer-sponsored plans from $13 to $152 per covered beneficiary depending on the state, aggregating to $6.6 billion over the entire United States for 2023.
- 340B utilization was found to increase healthcare costs for state and local governments by $1.0 billion. Cost per covered beneficiary was about 10% larger due to higher government plan spending.
In recent years, eight states have passed laws to prohibit drug manufacturers from applying any conditions on contract pharmacy access. More than 20 states introduced similar bills in 2024, which restores a potentially unlimited number of contract pharmacies per covered entity. The report models the potential cost effects of the resulting increase in 340B utilization if such bills were enacted.
- If enacted, the bills would increase costs by $1.88 billion for all employer-sponsored plans.
- State and government plans would face additional spending of $273 million.
