Achieving high value care for all and the perverse incentives of 340B price agreements

Abstract

Section 340B of the Public Health Service Act requires drug manufacturers to enter into price agreements with the Department of Health and Human Services. These agreements result in variation in the price paid to acquire a drug by sector, which complicates the price used in cost-effectiveness analyses. We describe the transactions and sectors in a 340B agreement using a multiple sclerosis drug. Cost-effectiveness estimates were calculated for the drug using drug prices from the manufacturer and payer perspective. We found the amount paid to the manufacturer (340B price) was a good value ($118,256 per quality-adjusted life-year); however, from the payer drug cost perspective, good value ($196,683 per quality-adjusted life-year) was not achieved. Given that emerging value frameworks incorporate cost-effectiveness, these price variations may have downstream negative consequences, including inaccurate coverage and reimbursement policy recommendations. Upcoming policy changes to the 340B program should incentivize pricing schemes hinged on transparency and value.