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September 27, 2018

American Hospital Association Announces New 340B Good Stewardship Principles

In the flurry of calls for increased transparency and clarification regarding the 340B Drug Discount Program, the American Hospital Association (AHA) and individual 340B hospitals have issued a set of stewardship principles. In a press release, Rick Pollack, President and CEO of the AHA, said these “340B stewardship principles will help hospitals better tell their story of how this crucial program is delivering a variety of important benefits to patients and communities.”

The three principles released by the AHA to “serve as the foundation for every 340B hospital’s good stewardship” are:

  • Communicate the value of the 340B program
  • Disclose the hospital’s estimated savings
  • Continue rigorous internal oversight

There has been a ton of discussion regarding how 340B hospitals use their savings because the program has continued to markedly grow. According to Drug Channels, discounted sales under the 340B program reached $19.3B in 2017 and on average, purchases under the program have grown approximately 30 percent. In addition, uncompensated care among hospitals declined by $7.6B between 2012 and 2016. This finding is one critics often point to as evidence that the 340B program is not being used as intended. However, it is not explicitly stated in statute that the 340B program was created to help provide charity care. The 340B program was implemented to help “stretch scarce federal resources.” Some hospitals have used their savings to directly provide services to the uninsured and underinsured while others have not.

Under the AHA’s good stewardship principles, 340B hospitals will annually publish how they use their 340B savings to benefit the community. They will also publicly disclose annually the estimated savings they accrue from the program using a standardized methodology that compares the 340B acquisition price to that of a group purchasing organization. Lastly, 340B hospitals will conduct regular internal reviews to ensure the program complies with federal guidelines.

In sum, the 340B stewardship principles outlined by the AHA are aimed at articulating the program’s benefit, increasing transparency about how covered entities use their savings, and strengthening oversight of the program. If every 340B hospital and covered entity commits to following the principles, some of the scrutiny around the 340B program should be alleviated. However, if this increased transparency provides evidence that savings accrued from the program have been misused, the controversy surrounding 340B will only get worse.

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About Brittany McCullough

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