Analysis

By Adam J. Fein, Ph.D.

Whoa. The 340B Drug Pricing Program has once again given new meaning to the word “skyrocketing.”

For 2024, discounted purchases under the 340B program reached a record $81.4 billion—an astounding $15.1 billion (+23%) higher than 2023. The gross-to-net difference between list prices and discounted 340B purchases—a proxy for funds available to covered entities—also grew, to $66.4 billion (+$6.0 billion). Hospitals again accounted for 87% of 340B purchases.

How big is the program? 340B purchases are now more than 50% larger than Medicaid’s net prescription drug spending. The program now accounts for nearly one-fifth of the total U.S. gross-to-net bubble.

But thanks to the Inflation Reduction Act (IRA), 340B’s day of reckoning is coming soon. I expect 2026 to be the first year of structural 340B pressure as the Centers for Medicare & Medicaid Services (CMS) continues its regulatory takeover of the 340B program. What’s more, I expect the program’s out-of-control growth rate to slow and for some long-overdue transparency to enter this notoriously opaque program.

Read on for our full analysis—and why the 340B swell may finally be breaking.

This week, I’m rerunning some popular posts while I prepare for today’s live video webinar: Drug Channels outlook 2026. I'll be discussing why and how the gross-to-net bubble will be deflating.

Click here to see the original post from July 2025.

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Is the gross-to-net bubble—the ever-widening gap between brand-name drug sales at list prices and their net revenues after rebates and discounts—finally beginning to deflate?

Drug Channels Institute (DCI) estimates that the gross-to-net reductions for all brand-name drugs reached $356 billion in 2024, a 7% increase over the previous year. Yet despite this record total, the bubble expanded at the slowest rate in at least a decade.

In our analysis below, we highlight five key forces driving this shift. Among them: manufacturers’ evolving market access strategies, which increasingly aim to offset—or circumvent—growing pricing pressure from both commercial and government payers.

Meanwhile, many patients remain adrift in the drug channel’s murky waters. As for SpongeBob SquarePants—the longtime mascot of the gross-to-net bubble here at Drug Channels—he’s still with us…but may be eyeing the exit.

This week, I’m rerunning some popular posts while I prepare for tomorrow's live video webinar: Drug Channels Outlook 2026 .

Click here to see the original post from October 2025.

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Vertical integration continues to reshape U.S. healthcare, as detailed in DCI’s new 2025-26 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors.

Our latest analysis shows how the Big Three companies—Cencora, Cardinal Health, and McKesson—are extending their reach far beyond drug distribution, building influence throughout the drug channel.

In recent years, these companies have spent more than $16 billion to acquire management service organizations (MSOs) that oversee physician practices in such specialties as gastroenterology, oncology, ophthalmology, and urology.

Below, we highlight the largest MSO transactions and explore five ways wholesalers benefit from ownership in their downstream physician customers. Ultimately, these strategies may allow wholesalers to exert unprecedented control over market access for provider-administered drugs—if they can figure out how to realize this power.

Today’s post is adapted from Section 6.3.2. in DCIs 2025-26 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors.

This week, I’m rerunning some popular posts while I prepare for Friday's live video webinar: Drug Channels Outlook 2026 .

Click here to see the original post from September 2025.

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Over the summer, the boffins at the Centers for Medicare & Medicaid Services (CMS) released the latest projections for U.S. spending on healthcare. (See links below.) These data provide the latest official and apolitical look at the future of U.S. healthcare spending.

The top line projections highlight the government’s official view that prescription drugs dispensed by retail and mail pharmacies will have a modest impact on U.S. healthcare costs.

However, there are some notable changes from the previous forecast. CMS now expects that the Inflation Reduction Act’s changes to the Medicare Part D program will have a greater impact than previously projected, while private insurers will find drug costs creeping higher.

Below, we outline the four major takeaways from the latest projections, which continue to show that taxpayers—primarily via Medicare and Medicaid—will continue to dominate the employer-sponsored insurance market. And like it or not, vertically integrated insurers, PBMs, specialty pharmacies, and providers will continue to prosper.

This week, I’m rerunning some popular posts while I prepare for Friday’s live video webinar: Drug Channels Outlook 2026.

Today's rerun provides background for the webinar, when I will discuss the consequences of the Inflation Reduction Act for the 340B program and contract pharmacies. Click here to see the original post from May 2025.

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Two weeks ago, Senator Bill Cassidy—now chair of the Senate Committee on Health, Education, Labor, and Pensions (HELP)—dropped a must-read, eyebrow-raising report on the out-of-control 340B Drug Pricing Program. (Link below.)

The report reveals previously confidential information showing how billions are funneled to health systems and pharmacies—with manufacturers unable to follow the flow.

Below, we use these new disclosures to illustrate the 340B program’s hidden prescription economics for 340B contract specialty pharmacies operated by CVS Health and Walgreens Boots Alliance.

As you can see, the program’s participants earn substantial margins, while plans and third-party payers foot the bill.

What do you think? Click here to share your thoughts with the Drug Channels LinkedIn community.

This week, I’m rerunning some popular posts while I prepare for Friday’s live video webinar: Drug Channels Outlook 2026 .

Today's rerun provides valuable context for the webinar, when I will discuss how the large PBMs' profit model will be changing in the coming years. Click here to see the original post from May 2025.

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During my PBM Industry Update: Trends, Challenges, and What’s Ahead video webinar, I explored the latest trends, emerging data, and strategic shifts transforming the pharmacy benefit management (PBM) industry.

In the video clip below, I explain how PBM compensation models continue to evolve:

• Traditional profit sources, such as mail dispensing of nonspecialty drugs and retained rebates, have become less significant.

• Retail network spreads now account for a small portion of large PBMs’ overall profits.

• Specialty dispensing profits, manufacturer administrative fees, and revenues from group purchasing organizations (GPOs) have emerged as major contributors to PBM profitability.

Can’t see the video? Click here to watch the PBM compensation models clip.

Understanding how PBMs generate profits is key to navigating the evolving drug channel landscape. Watch the full webinar replay and download the complete slide deck to explore these dynamics in more depth.

For a more comprehensive analysis of the forces transforming PBMs, see DCI’s 2025 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers.

Today’s guest post comes from Laura Jensen, Chief Commercial Officer and President, Pharma Solutions at GoodRx

Laura explores the structural hurdles that slow time-to-therapy and outlines practical ways stakeholders can streamline the path from prescription intent to treatment initiation.

To learn more, book a meeting with GoodRx.

Read on for Laura’s insights.

By Adam J. Fein, Ph.D.

Contrary to popular belief, the Inflation Reduction Act’s (IRA) maximum fair prices (MFPs) could temporarily boost profits for retail pharmacies serving Medicare Part D patients.

The bad news? The IRA is also one of the five key forces deflating the gross-to-net bubble.

That’s why any IRA-related pharmacy profits will vanish if manufacturers lower list prices to be closer to net prices. At least 13 brand-name drugs—five of which have MFPs—reportedly plan to reduce list prices within the next two months.

As I show below, retail pharmacies risk becoming collateral damage from significant deflation in the gross-to-net bubble for drugs subject to an MFP. Welcome to our bonkers healthcare system—where everyone wants lower prices, until they actually get them.

What’s more, list price cuts will reduce profits from 340B contract pharmacy operations, while weakening covered entities’ main objections to a 340B rebate model. Get ready for a 340B slowdown.

For more on the intended and unintended consequences of the IRA—and its interplay with 340B—join me for my live video webinar, Drug Channels Outlook 2026, on December 12, 2025, from 12:00 p.m. to 1:30 p.m. ET.

Today’s guest post comes from Josh Schwartz, Vice President, Medical Affairs, North America at BeOne Medicines and Matt Shaulis, General Manager, North America at BeOne Medicines.

Josh and Matt aim to raise awareness about the negative effects of insurer-imposed policies such as therapeutic substitution and step therapy. They argue that physicians have a deeper understanding of disease states and individual patient biology than insurance companies and pharmacy benefit managers (PBMs). To ensure the best outcomes, they contend that doctors—not insurers—should determine each patient’s optimal treatment plan.

Learn about BeOne Medicines, a global oncology company.

Read on for Josh and Matt’s insights.

By Adam J. Fein, Ph.D.

Happy Thanksgiving, everyone! Before you stretch your stomach, stretch your mind with some fresh food for thought from across the drug channel. In this issue:

• Employers finally claim to want a PBM revolution

• Mark Cuban accelerates the Stelara biosimilar price war

• How Express Scripts’ private labels inflate generic drug prices

• U.S. drug spending: still middle of the pack

Plus: Has the day of reckoning arrived for shady alternative funding vendors?

P.S. Join my more than 66,000 LinkedIn followers for daily links to neat stuff, along with sharp and thoughtful commentary from the DCI community.

What else should you expect for 2026? Find out during my upcoming live video webinar, Drug Channels Outlook 2026, on December 12, 2025, from 12:00 p.m. to 1:30 p.m. ET. Click here to learn more and sign up. As always, we are offering special discounts if you want to bring your whole team.