Adam Fein, President of the Drug Channels Institute, said that hospitals have increasingly utilized 340B contract pharmacies to generate profits from external prescriptions, particularly when excluded from payer or manufacturer networks. This statement was made in a blog post.
“Hospitals have long relied on 340B contract pharmacies to profit from prescriptions dispensed by external pharmacies—especially when a hospital has been excluded from payers’ or manufacturers’ networks,” said Fein.
According to the Government Accountability Office, the 340B Drug Pricing Program was established in 1992 to assist hospitals and clinics serving low-income patients in obtaining medications at discounted prices. Over time, concerns have arisen regarding insufficient oversight of the program and whether savings are consistently passed on to patients. In recent years, both lawmakers and watchdog groups have advocated for increased transparency in the utilization of 340B funds.
The Health Resources and Services Administration (HRSA) reported that purchases by 340B-covered entities amounted to $38 billion in 2020. This figure represents a significant increase from $12 billion in 2015, indicating more than a 200% growth over five years. HRSA releases these data to provide transparency into the scale and financial impact of the program.
Pharmaceutical Research and Manufacturers of America (PhRMA) reports that 25 hospitals in New Jersey participate in the 340B program, maintaining 547 contracts with pharmacies nationwide. Of these contract pharmacies, only 18% are situated in medically underserved areas, potentially affecting the program’s intended impact. Furthermore, it is noted that 16% of participating hospitals in New Jersey offer charity care at levels below the national average.
Fein has led Drug Channels Institute since March 2012, focusing on pharmaceutical supply chain economics. In 2024, HMP Global acquired the Institute, broadening its influence in healthcare insights and education. Fein continues his role from Philadelphia, Pennsylvania.
