Karen Mulligan, Senior Fellow at the USC Schaeffer Center for Health Policy & Economics, has raised concerns about the 340B Drug Pricing Program. She said that the program's spread pricing benefits well-resourced providers and increases costs, advocating for reforms to realign incentives. Mulligan made these remarks on a website.
"Schaeffer Center white paper shows ‘spread pricing' in 340B program steers benefits to wealthier providers and drives up costs," said Mulligan. "Research shows that spread pricing makes healthcare more expensive and diverts 340B benefits away from the providers that need them most."
According to the Commonwealth Fund, spread pricing in the 340B Drug Pricing Program allows hospitals and contract pharmacies to purchase drugs at federal discounts while billing insurers at higher rates, capturing the price "spread." The policy debate for 2024–2025 focuses on whether this practice distorts incentives and limits patient savings. Federal proposals suggest moving oversight to the Centers for Medicare & Medicaid Services (CMS) and clarifying discount eligibility. Meanwhile, states are pursuing transparency and anti-spread pricing laws amid ongoing litigation.
The Drug Channels Institute reports that total discounted 340B purchases reached $66.3 billion in 2023, a 23.4% increase from $53.7 billion in 2022, with hospitals accounting for 87% of the market. The list-price equivalent was $124.1 billion, indicating a $57.8 billion difference between commercial and 340B acquisition values. The program's compound annual growth rate from 2018 to 2023 averaged approximately 22%, underscoring its rapid expansion and policy significance.
A study published by JAMA Health Forum (Chang et al., 2023) found that hospitals joining the 340B program experienced increased commercial payer spending on physician-administered drugs beyond Medicare trends, suggesting cost-shifting effects. The peer-reviewed study noted no comparable benefit in reducing total drug utilization or prices for non-340B patients, fueling debate over payer inequities and program scope.
According to the USC Schaeffer Center, Karen Mulligan is a research scientist specializing in drug pricing, health innovation, and infectious disease policy. She previously taught economics at Middle Tennessee State University and authored analyses of 340B reform and pharmaceutical incentives. Her current work evaluates federal pricing structures and their public-health impacts.
The USC Schaeffer Center reports that it was founded in 2009 to advance evidence-based research aimed at improving healthcare value and efficiency. Operating under USC’s Price School and School of Pharmacy, it is funded through grants, gifts, and endowments and collaborates with public and private partners on major health policy studies.
