Many 340B lobbyists frequently claim that the 340B Drug Pricing Program amounts to “only 2%” of total U.S. drug purchases and is therefore not a significant issue.

This is an extremely careless misrepresentation of the truth. As I document below, 340B now accounts for at least 4% of the U.S. drug market. That’s twice as large as the lobbyists’ “only 2%” figure, which hasn’t been true for at least 7 years. You can check my math below.

Regardless of whether you believe that 340B should be a bigger or a smaller part of the market, we shouldn’t be debating its actual share. Just remember our Drug Channels philosophy, courtesy of the late senator Daniel Patrick Moynihan: “Everyone is entitled to his own opinion, but not his own facts.”

340B WAS AT LEAST 3.9% OF THE MARKET IN 2015

Apexus, the HRSA-designated Prime Vendor for the 340B Drug Pricing Program, reports that discounted purchases made under the program totaled $12 billion in 2015. (See 340B Purchases Hit $12 Billion in 2015—And Almost Half of the Hospital Market.)

Note that the Apexus figure includes purchases at or below the deeply-discounted 340B ceiling prices. To compute 340B’s share of the total drug market, the appropriate denominator must therefore also be discounted purchases.

Fortunately, we have this figure for 2015. According to IMS Health’s IMS Institute for Healthcare Informatics, “net price spending” (after discounts) on pharmaceuticals was $309.5 billion in 2015. See Key Insights on Drug Prices and Manufacturer Rebates from the New 2015 IMS Report. IMS provided the following definition:

“Net price spending” is an estimate of the net revenues received by pharmaceutical manufacturers. It therefore reflects estimated rebates, off-invoice discounts, chargebacks, cash discounts, and other price concessions made by manufacturers to distributors, health plans and intermediaries.

Therefore, 340B’s share in 2015 was 3.9%, or $12 billion ÷ $309.5 billion

Note that the $12 billion figure includes only indirect sales made via wholesalers. The data therefore understate total 340B purchases, because they exclude an unknown amount of manufacturer sales made directly to healthcare institutions. That means 340B could be an even bigger share.

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