The federal 340B drug discount program offers a lifeline for safety net facilities, including critical access hospitals, federally qualified health centers, and sole community hospitals. The considerable discounts available to 340B covered entities (CEs) allow these community providers to extend important services such as free or low-cost care and prescription drugs to those in need.

Some critics have expressed concern that 340B entities are inflating drug costs to maximize discounts. Our analysis of drug costs of CE and non-CE clients of Caravan Health shows that this is not the case. In fact, CEs have far lower Part D drug costs and lower use of more expensive brand-name drugs than their non-CE counterparts.

Caravan Health clients are made up of mostly safety net facilities. In fact, more than 70% of our Medicare lives are attributed to CEs. Our analysis shows that this population uses brand name drugs at a much lower rate than the non-CE attributed patients. While 71% of Caravan patients are attributed to CEs, they account for only 45% of the brand drugs prescribed to our population. This is driven in part by the lower use of prescription drugs overall for the CE-attributed population. CE patients had an average of 1.8 prescriptions compared to 3.5 for the non-CE patients.

This trend continues in the total drug costs for our patients. Drug costs for CE patients average $3,243 annually, while non-CE patients are more than twice that amount, at $6,763 each year.
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The data make it clear that participation in the 340B program is not driving up prescription drug costs in our patient population. 340B CEs are also not directing patients and prescribers toward more costly brand-name drugs. 340B CE-attributed patients are much more modest in their prescription drug expenses than patients of other providers.

The reason for the glaring disparities between the two groups is unknown but is likely affected by the unaffordability of these drugs for the poor. Many CEs use 340B to provide direct drug discounts to their patients, allowing them to have access to these important medications. Without the 340B program, the disparities between the two groups may be even greater.

To learn more about 340B and drug costs, join Caravan Founder Lynn Barr and Tom Mirga and Ted Slafsky from the 340B Report for a webinar on Tuesday, October 5.

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