340B drug program was created to help patients, not boost hospital profits

By | October 28, 2018

Enacted more than 25 years ago with bipartisan support, the 340B program was designed to help healthcare safety net providers deliver more affordable outpatient prescription drugs to vulnerable or uninsured patients.

These safety net providers include certain hospitals, such as disproportionate share hospitals, or DSH hospitals, and children’s hospitals, as well as federal grantees, such as federally qualified health centers and Ryan White HIV/AIDS clinics. Drug manufacturers provide lifesaving medicines at steep discounts to participating safety net healthcare providers, who are then expected to improve or increase care for vulnerable or uninsured patients. While federal grantees are held to a high standard and are required to report how they are using 340B to help patients, hospitals are not held to that same requirement.

The 340B program was created with good intentions, but it has spiraled out of control. Growth in the program driven by DSH hospitals has exploded, while the level of care provided to needy patients has not seen commensurate growth. The program has expanded at an average annual rate of more than 20 percent since 2010, growing 114 percent just from 2015 to 2017. Today, drug sales at the 340B discounted price have increased to over $ 19 billion in 2017, representing over 10 percent of the U.S. branded outpatient drug market.

In theory, this growth sounds like a good thing for patients. But overall hospital uncompensated care in the United States fell nearly 17 percent from 2012 to 2016 — a historic low when measured as a percentage of hospital expenses.

As charity care and uncompensated care rates fall, evidence shows 340B has simultaneously driven up the cost of medication for all Americans. In 2013, healthcare policy experts and economists Rena M. Conti, Ph.D. and Peter B. Bach, MD MAPP found that in response to 340B “drug manufacturers will likely seek to increase list prices even further to offset revenue losses incurred as a large number of drug sales become eligible for 340B discounts [and thus fewer drugs are sold at full price].” At the same time, they also found that, “For oncologists practicing in 340B-affiliated outpatient clinics, prescribing may shift toward more expensive drugs because profit margins will in general be larger.”

The bottom line: Lax 340B program requirements have enabled the program to become a profit stream for DSH hospitals, with patients paying the price.

Further compounding the 340B landscape are actions taken by 340B hospitals to acquire additional clinics and bring them into the 340B program. As a recent study in the New England Journal of Medicine notes, the 340B program has been associated with hospital-physician consolidation, And the accompanying financial gains for hospitals have not been associated with clear evidence of expanded care or even lower mortality among low-income patients.

Here at the National Infusion Center Association, we have seen the adverse effects firsthand of 340B-driven medical consolidation. Infusion providers deliver vital treatment to patients and, like many independent practices, are often more accessible and more economical alternatives to hospitals. Office-based infusion providers offer convenient locations for patients and competitive pricing for the most effective drugs on the market, but they are increasingly being forced out of the market by larger hospitals buying up physician practices. This limits treatment options, often pushing patients to less convenient, more expensive care, but it means that 340B hospitals are able to increase their profits by pocketing the savings from the program.

This dynamic creates an uneven playing field for infusion centers and ultimately hurts vulnerable or uninsured patients.

These trends are unacceptable, and leaders in Washington should work to bring the program back on track. Members from both sides of the aisle have called for fixes to 340B, and two bills in particular stand out as important first steps. Reps. Larry Bucshon, R-Ind., and Scott Peters, D-Calif., introduced H.R. 4710, the “340B Protecting Access for the Underserved and Safety-Net Entities Act,” or the 340B PAUSE Act, and Sen. Bill Cassidy, R-La. introduced S.2312, the “Helping Ensure Low-income Patients have Access to Care and Treatment,” or the HELP ACT.

As we look to improve our healthcare system to help vulnerable or uninsured patients, one thing is clear: The 340B program must be fixed to work for those it was meant to serve.

Brian Nyquist is the executive director of the National Infusion Center Association.

Healthcare