April 25, 2018

340 B Drug Pricing Scrutiny Continues

Along with following the Congressional and regulatory activity on the 340B drug pricing program, it is also important to keep abreast of recent analyses of the program in the peer-reviewed literature.

The New England Journal of Medicine article, “Consequences of the 340B Drug Pricing Discount Program” examines concerns about the 340B discount program, specifically those related to hospital-physician consolidation and the outpatient administration of parenteral drugs by hospital-owned facilities.

The study results indicate that hospital eligibility for the 340B program was associated with 2.3 more hematologist-oncologists practicing in hospital owned facilities, 0.9 more ophthalmologists per hospital, and 0.1 more rheumatologist per hospital. The higher number of specialists practicing in 340B hospitals suggests that financial incentives likely helped secure their employment. This is a concern because of the scrutiny the 340B program has been under regarding the misuse of funds. In addition, the study found no significant difference in the provision of safety-net inpatient care or mortality among low-income residents of the hospitals’ local service area. This echoes critics’ claims that the 340B program is not operating as intended. These findings suggest that the recent decision by the Department of Health and Human Services to lower drug reimbursement to 340B hospitals could slow hospital-physician consolidation while not adversely affecting care for low-income patients.

The American Hospital Association (AHA) criticized the NEJM article and asserted that questionable methodology led to inappropriate conclusions. Many hospitals view the 340B drug pricing program as a necessary resource that enables them to provide more care to more patients and help fulfill their charitable mission. Any reduction to the program, or restrictions on how the generated revenue can be used, is viewed as a threat to nonprofit and public hospitals’ ability to care for vulnerable and uninsured patients.

The 340B drug pricing program continues to generate strong assertions by both proponents and critics.  We can expect to see activity such as Congressional hearings, legislation and additional regulatory activity throughout 2018 and beyond.

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