The 340B Drug Discount Program, launched in 1992, is designed to give Medicaid-like discounts on covered outpatient drugs to qualifying healthcare providers. In the first quarter of recent years, IQVIA has published estimates of the 340B program’s size and growth as part of an ongoing program-related series of articles^{1, 2}.

Findings

In 2021, 340B program sales reached $93.6 billion (Figure 1), versus total pharmaceutical sales of $668.3 billion (see Analysis Methods for further details about the data and methodology used). 340B sales grew 15.9% year-on-year in 2021 and total sales grew 6.6%, versus 18.1% and 4.0% growth in 2020, respectively.

Fig. 1. 340B program growth by year. Sales based on WAC pricing.

Disease areas with specialty products, such as targeted oncology, immunology, and anti-arthritics including well-known blockbuster biologic products, continued to show some of the highest 340B growth in 2021 (Figure 2). 340B sales of diabetes products showed a reverse trend, falling 7.4% year-on-year in 2021 versus the 22% growth they'd experienced in 2020, due in large part to contract pharmacy restrictions. Diabetes was disproportionately impacted by those restrictions (see next section) because among some of the largest diabetes products, more than half of their 340B sales flowed through retail channels, they were penny priced, and their manufacturers were among the first to implement contract pharmacy restrictions.

Fig. 2. 340B program growth for the 10 USC2 disease areas with the highest total sales in 2021 (sales decrease down the vertical axis).

Impact of contract pharmacy restriction policies

Nine pharmaceutical manufacturers implemented contract pharmacy restriction policies during or before 2021³ (manufacturers that changed policies for orphan drugs were not included, since this is a separate issue). The policies limited the number of contract pharmacies that could be used by covered entities to deliver 340B product to patients and the circumstances under which this occurred. Entity-owned pharmacies were not restricted.

The impact of contract pharmacy restrictions, illustrated in Figure 3, shows 340B growth broken out by distribution channel. Contract pharmacies are part of either the retail or mail/specialty mail distribution channels. 340B sales in the retail channel were essentially flat in 2021 versus achieving 22% growth in 2020, while mail sales grew 34% in 2021, down from 56% in 2020.

Fig. 3. 340B program growth by distribution channel.

Splitting the retail channel into its individual components of chain pharmacies, independents, food stores, and mass merchandizers presents further insights. 340B sales in chain pharmacies were down 5% year-on-year, while sales in independent pharmacies were up 15%. 340B growth in independent pharmacies may be due to the fact that most manufacturers didn't place restrictions on federal grantees, which are more likely to use independent pharmacies, and because 340B prescription discount cards, which some covered entities use to share 340B discounts with patients, are typically used at independent pharmacies. IQVIA is currently conducting further studies of 340B discount sharing.

Fig. 4. 340B growth in the four components of the retail distribution channel.

When 340B sales were segmented by the 2021 contract pharmacy restriction status of manufacturers, the impact of restrictions became clearer (Figure 5). For the nine manufacturers with restrictions in place for some or all of 2021, retail and mail 340B sales fell 32% and 20%, respectively. For sales among all other manufacturers, retail and mail 340B sales grew 16% and 44%, respectively. 340B sales in the hospital and clinic channels were similar for the two manufacturer groups. 340B sales in the mass merchandizer channel fell 60% for manufacturers with restrictions in 2021 (data not shown), which explains in part why this same channel was down 30% for 340B sales overall (cf. Figure 4).

Fig. 5. 340B program growth by distribution channel segmented contract pharmacy restrictions.

An additional seven manufacturers have announced they have implemented or are planning to implement contract pharmacy restrictions in 2022³.

Analysis methods

The current study used supplier sell-in data from IQVIA's DDD Subnational Sales database. Data spanned 2018 through 2021 and included all disease areas, specialty and non-specialty products, branded drugs and generics, prescription and over-the-counter products, and all distribution channels. Sales were dollarized using WAC pricing at the product/pack level, while growth statistics were calculated as year-on-year % change for the calendar year using dollarized sales. This is supplier sell-in data and rebates are not accounted for, and thus dollarized sales estimates (but not % 340B estimates) may be larger than reported elsewhere in the literature.

Pharma products were grouped into disease areas following the Uniform System of Classification (USC) system4. The analysis used USC2 level groupings which define approximately 70 therapeutic categories. This includes diabetes drugs,  targeted oncology drugs (e.g., growth factor inhibitors, immune checkpoint inhibitors, CDK inhibitors, and tyrosine kinase inhibitors), immunologic agents (e.g., monoclonal antibodies and glutarimide derivatives), anti-arthritics (including biologics for Crohn's disease, inflammatory bowel disease, psoriasis, and rheumatoid arthritis), anti-virals (e.g., drugs for HIV and HEP-C), respiratory therapy (drugs for asthma and COPD), hemostatic agents (such as heparins and anti-coagulants), psychotherapeutics (antipsychotics, anti-depressants, and ADHD products), neurological agents (drugs for Parkinson's disease, epilepsy, Alzheimer's disease, and migraine), and gastrointestinal agents (infused biologics and proton pump inhibitors).

Categories for distribution channels were retail (chain pharmacies, independent pharmacies, food stores, and mass merchandizers), mail/specialty mail, hospitals, and clinics. Three additional channels—long-term care, miscellaneous and plan—which together represent only 2% of 340B sales were omitted.

¹ The 340B Drug Discount Program: Complexity, Challenges, and Change, Martin & Krikorian, IQVIA White Paper, Aug 2020

² Growth of the 340B Program Accelerates in 2020, Martin, IQVIA Blog, March 2021

³ 340B Manufacturer Updates, AmerisourceBergen, March 2022

⁴ "The Uniform System of Classification (USC)," IQVIA Report 2018. USC was created by IQVIA and the Pharmaceutical Marketing Research Group as a standard way of grouping drugs that compete in the same market.