Protecting Patients, Not Programs: Why 340B Reform Matters for Autoimmune Care
As anyone who has dealt with an autoimmune condition can attest, these lifelong and chronic conditions are difficult to diagnose and treat. Many in the autoimmune community rely on biologics and biosimilars (specialty medications that often come with a significant price tag). Affordable and reliable access to these medications is critical for the treatment and maintenance of autoimmune diseases.
While some of these medications can be administered by patients themselves at home, some must be administered by healthcare professionals. Hospitals buy these drugs and administer them to patients; they are then reimbursed for these costs by insurance providers. When the reimbursement rate is higher than the acquisition cost of the drug, hospitals derive profit for the medications they administer to their patients.
With any healthcare service, it’s important that the hospital act in the best interest of the patient to minimize costs while also providing the most appropriate care for that individual. Abuse can occur when a hospital is incentivized to provide care that might not be in the interest of the patient but provides the hospital with a financial benefit. A very simplified example might be when a patient arrives with a broken arm which could be diagnosed with an X-ray, but an MRI is used instead. Unfortunately, the patient would be left paying a higher hospital bill for an MRI, when an X-ray would have sufficed.
Under a federal program called the 340B Drug Pricing Program, certain hospitals are eligible to purchase medications at significant discounts. The intent of this program is that these hospitals would utilize these discounts to ensure patients have access to affordable medications and healthcare services. The spread between what hospitals must pay to acquire the drugs and the amount that they are reimbursed for them can result in substantial markups for hospitals. Unfortunately, hospitals that participate in the 340B program are not required to disclose how they use the profits generated by the program.
Hospitals have recently been required to start disclosing their reimbursement rates as part of new transparency laws. AiArthritis commissioned the global healthcare consulting firm Milliman to use this newly available data to examine reimbursement rates for autoimmune drugs at 340B and non-340B hospitals. The analysis included 10 autoimmune drugs and their biosimilars across 25 hospitals in the United States.
- 340B hospitals generally had higher contracted reimbursement rates for autoimmune drugs compared to non-340B hospitals.
- Aggregate margins between the estimated acquisition cost and reimbursement rate were higher at 340B hospitals than non-340B hospitals for 9 out of the 10 drugs analyzed.
- Drug level margins were variable, but specific drugs showed significantly higher margins for 340B hospitals than non-340B hospitals:
- Margins for drug N at non-340B hospitals is 248% compared to 108721% at 340B hospitals
- Margins for drug L at non-340B hospitals is 241% compared to 3610% at 340B hospitals
The Milliman report notes, “[I]t is important to recognize that while some 340B hospitals may use these margins to fund patient support services or community programs, many autoimmune patients are covered by traditional group insurance (e.g., Medicare Advantage, employer-sponsored plans, exchange plans) and are subject to high deductibles and copays/coinsurance amounts. For these patients, higher reimbursement levels can directly translate to greater out-of-pocket cost, especially if these costs are calculated as coinsurance amounts. Our study did not assess the impact of increased reimbursement on out-of-pocket costs, and further research is needed in this area.”
What does this all mean for autoimmune patients? Well, the short answer is we don’t know, and that’s due to the lack of transparency and accountability in the 340B program. It’s clear that the discounts received by 340B hospitals can drive higher profit margins on autoimmune medications. If hospitals are incentivized to prescribe more of these medications or choose to give patients the medications with higher margins, then, like the X-ray example above, autoimmune patients might be paying higher medical bills as a result of these decisions.
Unfortunately, the 340B program does not currently have enough transparency or oversight requirements to ensure that discounts are being used appropriately and to improve patient care. These findings demonstrate why transparency and accountability in the 340B program are vital to ensuring patients are getting most affordable and appropriate care.
AiArthritis supports legislation to protect the 340B program while also ensuring it lives up to its intended goal of helping patients. We urge Congress to implement reforms to:
- Require 340B covered entities report detailed information on program savings, policies, and patient benefits
- Implement clear standards and oversight requirements for 340B entities
- Establish clear charity care and patient support requirements for program participation
We urge Congress and the Trump Administration to make 340B reform a healthcare priority in 2026.
