April 25, 2018

The Ongoing Debate of the 340B Drug Pricing Program

The 340B program has grown beyond its original intent and the lack of transparency about how hospitals are using their savings is of growing concern. In November 2017, CMS issued their Medicare Hospital Outpatient Prospective Payment System (OPPS) Final Rule for CY 2018 (82 FR 59216) which implemented a payment reduction for most covered outpatient drugs billed to Medicare by 340B participating hospitals. With this change, the Trump Administration made it clear that modifying the current 340B program was a priority. However, the Administration’s general views on the 340B program were not widely known until the White House Council of Economic Advisers (CEA) issued its February 2018 report.

In this report, the CEA identified two key problems with the 340B program: inaccurate eligibility criteria and significant profits that are not used for their intended purpose – providing care for low-income patients.

The CEA offers two recommendations to improve the 340B program

  1. Having a more precise eligibility criteria to help meet the primary goals of the program
  2. Having a single agency to set prices at which eligible providers can buy drugs

Upon the CEA releasing their report, the American Hospital Association (AHA) quickly responded pushing back against many of the CEA’s commentary. They noted that the 340B program is only available to public and non-profit hospitals, yet the CEA reports hospital shareholders profiting from the program. AHA seems to suggest that the authors of the report do not understand how the 340B drug pricing program operates and how it is intended to provide savings for 340B hospitals. By reducing their reimbursement, AHA argues that 340B hospitals can’t continue to increase access to comprehensive services, reduce the cost of pharmacy services to low-income patients, fund community outreach programs, provide free vaccines or expand access to oncology services for cancer patients.

Although it is unclear what action is forthcoming from the Trump Administration and Congress regarding the 340B program, it is essential for all stakeholders to remain informed. Hospital leaders should be prepared to demonstrate how 340B program savings contribute to improved patient care.

About Brittany McCullough

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