Opinion: How CMS plans to fix a major flaw in the 340B drug discount program — SkimNews
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- CMS proposed paying affected 340B hospitals at ASP minus 33.4% in 2027, estimating $4.55 billion in first-year Medicare drug payment cuts and $1.15 billion in beneficiary copayment reductions.
- 340B drug discount program eligible drug purchases grew from $12 billion in 2015 to $81 billion in 2024 — now larger than net Medicare Part B and Medicaid drug spending overall, per an HHS report.
- On a drug with an ASP of $1,000, a beneficiary's standard 20% coinsurance would fall from $212 to $133.20 under the proposed rule, with no change to the prescription itself.
- After the Supreme Court ruled in 2022 that HHS couldn't vary 340B payment rates without the statutory acquisition-cost survey, annual payments for the affected drugs jumped from $7.1 billion in 2021 to $10.7 billion in 2023 — a $3.6 billion increase.
- President Trump directed HHS on April 18, 2025, to obtain the required cost information, and CMS surveyed hospitals from January through April 2026 to set the proposed rate.
- Hospital off-campus clinic sites grew from roughly 7,000 in 2013 to more than 34,000 in 2023, and contract pharmacies from about 1,300 in 2010 to over 31,000 by mid-2026 — expansion the proposed rule aims to disincentivize.
- The first Trump administration in 2018 had already cut the 340B spread to ASP minus 22.5%, and inflation-adjusted outpatient drug payments largely plateaued once that lower rate was fully in effect.
Why it matters: Medicare patients on expensive Part B drugs would see their 20% coinsurance drop materially — from $212 to $133.20 on a $1,000 drug — while hospitals lose part of a spread that fueled $12 billion-to-$81 billion 340B purchase growth in a decade. The rule also weakens financial incentives for hospital systems to acquire physician practices and steer patients to costlier drugs, per the HHS report.
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