340B volatility hangs over employer pharmacy strategy

External factors like court rulings, regulatory changes or manufacturer responses can quickly reduce or eliminate savings tied to policy shifts.

Not all discount-driven strategies are flawed, but it does signal that employers should evaluate whether their pharmacy savings are truly sustainable.

In 2024, 340B-covered entities purchased $81.4 billion in outpatient drugs, raising the stakes for employers relying on these savings at scale.

When that much money moves through a program facing ongoing legal and regulatory pressure, it underscores that employers can't afford to treat external pricing rules as fixed.

The lesson is broader than 340B itself: Plans are exposed when too much value rests on mechanics they do not control.

Look past the pricing story.

Many pharmacy conversations still start with the same pitch about where the discount comes from, how the rebate works and how much the plan could save.

However, that framing is incomplete. A lower net cost on paper doesn't always mean a plan is better managed. It may simply reflect a pricing structure that's favorable under current regulatory conditions.

If those conditions change, the savings can change with them.

That's why employers need to plan around the two types of savings.

First, the financial mechanics that reduce spending but that may shift with policy or litigation changes.

Second, the guaranteed savings from waste reductions in the drug benefit budget through a cost-containment solution.*

The first helps until the rules change, while the second is more robust over time.

Audit where waste is hiding.

For employers that want pharmacy savings to remain stable amid change, the first step is looking for waste that doesn't belong in the benefit in the first place.

Oversupply is one clear example. When members refill medications too early, and prescriptions start to pile up, plans pay for excess supply without improving care.

Research published in Research in Social and Administrative Pharmacy found that approximately two out of three dispensed prescription medications go unused, with national projected costs ranging from $2.4 billion to $5.4 billion annually.

Duplicative therapy is another common source of waste, particularly after transitions of care, visits with multiple prescribers or incomplete discontinuation of an earlier medication.

Avoidable overlap within drug classes deserves the same scrutiny. Some overlap is clinically appropriate, but not always.

A CMS-funded study published in Population Health Management found that among high-risk patients with multiple chronic conditions, more than 75% experienced medication discrepancies following hospital discharge, with the average patient carrying 3.4 unresolved drug therapy problems.

The scale of the underlying problem continues to grow.

U.S. polypharmacy prevalence has roughly doubled over two decades, rising from 8.2% of adults in 1999-2000 to 17.1% by 2017-2018, with rates climbing even higher among people managing heart disease or diabetes.

When employers tackle these patterns, they begin to address preventable waste and stabilize pharmacy spending without restructuring the entire benefit.

And, the savings that result don't depend on what happens next in court or in Washington.

Pressure-test the savings claims.

Too many savings claims sound strong until someone asks a simple question: "Would these results still hold if the pricing rules changed?"

Employers need to know how much of their pharmacy savings comes from improved utilization versus external discount mechanics.

Discount-based savings shouldn't be dismissed, but they should be tested for stability and operational risk.

Brokers and consultants can create real value at this moment.

Don't ignore the member experience.

Members don't experience their pharmacy benefit as a pricing model.

They experience it through refill timing, out-of-pocket costs, medication changes and the overall ease or difficulty of staying on therapy.

A successful pharmacy strategy should yield savings without creating friction for employees.

When waste is reduced the right way, the member experience improves along with it.

Fewer unnecessary refills, fewer overlapping therapies and clearer medication regimens make the benefit easier to use.

That matters more than it might appear on a plan report.

Chronic disease medication nonadherence rates are estimated to range from 30% to 50%, and nonadherence is estimated to drive as many as 25% of hospitalizations each year — costs that land squarely on the plan.

Across the U.S. healthcare system, the total annual burden of medication nonadherence is estimated at as much as $528 billion.

A strategy that lowers net cost while making medication access feel inconsistent or confusing pulls in two directions at once.

It can erode trust, delay care and quietly rebuild the utilization costs it was designed to eliminate.

Use 340B as a warning, not a blueprint.

Employers don't need to build their strategy around the latest 340B dispute. They should treat it as a signal.

When the market shows how quickly discount arrangements can shift, employers should respond by adding additional layers of savings that the plan can influence directly.

That means focusing more on oversupply, duplication, avoidable overlap and other forms of unnecessary utilization as well as formulary optimization.

The plans best positioned for what comes next will be those that focused on guaranteed outcomes and built a pharmacy strategy that can hold up even when external rules change.

Josh Canavan, PharmD, is the director of pharmacy at RazorMetrics, where he oversees the company's Pharmacy and Therapeutics committee, which is responsible for the management and updating of the company's Intervention Codex, a system of therapeutic alternatives.