Ted Okon, Executive Director of the Community Oncology Alliance (COA), has called for drug pricing reform to focus on pharmacy benefit managers (PBMs) and large hospitals benefiting from 340B discounts. Okon's statement was made on the social media platform X.
"Start with PBMs then mega hospitals that pocket 340B discounts," said Okon.
According to the Government Accountability Office, the 340B Drug Pricing Program allows certain hospitals and clinics to purchase outpatient drugs at reduced prices to support underserved patients. However, oversight issues have emerged as the program expanded, with critics alleging that some hospitals use 340B savings to increase revenue rather than expand care. Congressional reviews are ongoing to assess program accountability.
Pharmacy benefit managers negotiate with drug manufacturers and health plans to determine which drugs are covered and at what cost. According to the Commonwealth Fund, their use of rebates, formularies, and spread pricing can increase total drug spending while reducing transparency. Critics argue that these practices financially benefit PBMs at the expense of consumers and independent pharmacies.
The Berkeley Research Group reports that more than half of U.S. spending on brand-name medicines in 2023 went to supply chain middlemen and other stakeholders, not drug manufacturers. The analysis found that entities such as PBMs, health plans, and wholesalers retained 53% of gross spending. This has intensified calls for transparency across the pharmaceutical supply chain.
Okon has testified before Congress on the need to reform PBM practices and the 340B program. He advocates for protecting access to cancer care in community settings and addressing financial pressures caused by current drug pricing models.
