Minn. 340B report finds hundreds of millions in net revenue; authors call for more data

Stefan Gildemeister, director of the Health Economics Program, told the Senate Health and Human Services Committee that Minnesota’s first statutory 340B report finds substantial net revenue flowing to covered entities but that estimates are likely understated because most entities did not report office‑administered specialty drugs.

Gildemeister said the report was requested after 2023 policy debates about changing how the Medicaid prescription drug benefit is delivered. The statute required MDH to collect data on 340B revenue by entity and payer and produce a legislative report; the first report focuses on 2023 flows. He emphasized the work’s purpose was transparency to inform future policy decisions.

Selected findings presented to the committee: covered entities purchased roughly $734 million in 340B drugs and paid about $120 million to contract pharmacies and third‑party administrators, and reimbursements for those drugs were about $1.5 billion; the department’s arithmetic yields roughly $630 million in net 340B revenue in 2023 for reporting entities. Gildemeister warned that because many entities did not report office‑administered drugs (infusions, injected specialty drugs), the first report likely underestimates total net revenue by a substantial margin; MDH staff estimated the missing component could be on the order of one‑third to one‑half of actual revenue and said a more complete estimate will appear in the November follow‑up report.

The report found most net revenue accrues to hospital entities and that much 340B revenue is associated with commercial payers and Medicare Advantage rather than state health‑care programs; MDH reported that Minnesota health‑care programs accounted for about 14% of reported 340B revenue in 2023. The department also identified the top facilities that together account for the majority of reported revenue and a short list of specialty drugs that generate disproportionate revenue—brand specialty drugs such as Humira were singled out, with Humira accounting for about 13% of reported net revenue in the dataset used.

Gildemeister told senators the report does not analyze how providers use net revenue or the program’s downstream effects on patient costs, nor does the first report resolve incentives that involve manufacturers, PBMs, contract pharmacies or insurers. He and committee members called for follow‑up analysis on patient impact, state Medicaid rebate interactions, and whether program flows drive consolidation or competitive differences among providers.

Several committee members said the report was a useful first step and requested additional stakeholder briefings; hospital and provider groups had submitted critical commentary about the report’s framing and metrics and MDH said it will continue data collection and engagement ahead of the next report.