What causes variations in the 340B price?

Variations in the 340B price are primarily influenced by differences in purchase volume. The 340B Program allows covered entities—such as certain hospitals and clinics—to purchase outpatient drugs at significantly discounted prices. These discounts can vary based on the volume of purchases made by the entity. Generally, higher purchase volumes may lead to lower prices as manufacturers may incentivize larger orders with more considerable discounts.

Additionally, manufacturers may establish pricing structures that take into account the amount of product sold to specific clients, including those within the 340B Program. The rationale behind allocating better pricing to higher volume purchases is tied to the economy of scale, where greater quantities can reduce costs per unit for both the manufacturer and the purchasing entity.

In contrast, factors such as drug quality, pharmacy management input, and individual manufacturer pricing strategies play roles in the broader pharmaceutical market but do not directly drive the 340B price variations in the same manner as purchase volume differences. Understanding the impact of purchase volume helps entities better navigate pricing under the 340B program and maximize their savings, ultimately benefiting the healthcare services they provide.