Adam Fein, President of the Drug Channels Institute, said that hospitals have increased their reliance on large pharmacy benefit managers (PBMs) due to manufacturer-imposed 340B restrictions. This development occurs even as those PBMs limit hospital participation in specialty pharmacy networks.
“Over the past four years, manufacturers’ restrictions on 340B contract pharmacies have led hospitals to deepen their relationships with the largest PBMs—even as those PBMs have simultaneously limited hospitals’ direct participation in specialty pharmacy networks,” said Fein.
According to the American Hospital Association (AHA), the 340B Drug Pricing Program allows hospitals and other providers to purchase outpatient drugs at discounted rates to serve vulnerable populations. Established in 1992, the program aims to help providers stretch limited federal resources. Participating hospitals utilize savings to support care for underinsured and uninsured patients.
The USC Schaeffer Center reported that covered entity sites within the 340B program expanded from 8,100 in 2000 to 50,000 by 2020. Hospitals constituted approximately 60% of these sites, with the total value of discounts increasing from $4 billion annually between 2007-2009 to $38 billion in 2020. This significant growth has led to scrutiny regarding the program’s original mission.
PhRMA highlighted that California’s 340B program includes over 3,500 contracts between hospitals and pharmacies as of 2025, with about 40% involving out-of-state partners. This contracting pattern has raised questions about adherence to the program’s intent. The growth reflects how hospitals navigate complex pharmacy arrangements under the program.
Fein has led the Drug Channels Institute since March 2012, focusing on pharmaceutical supply chain economics. In 2024, HMP Global acquired the Institute, broadening its impact on healthcare insights and education. Fein continues his role from Philadelphia, Pennsylvania.
