Safety net providers and clinics that participate in the 340B Drug Pricing Program will meet next month to address backlash from critics who feel the rising number of participants is a way to game the system.
Drugmakers and some lawmakers have called for greater oversight of the program in light of complaints that some hospitals are receiving discounted drug benefits despite serving a small number of low-income patients.
Established in 1992, 340B requires drug companies to discount outpatient medications by as much as 50% for hospitals and clinics to provide to low-income patients.
Provisions under the Affordable Care Act allowed more hospitals to become eligible and the number of participants taking advantage of the discounts has risen.
Supporters of 340B have defended the expansion of the program, saying it has been vital for many facilities' efforts to provide the most vulnerable patients medications even as prices for even some cheap medications have in some cases doubled and tripled.
“There's been a focused campaign by the pharmaceutical industry to discredit the 340B hospitals,” said Randy Barrett, spokesman for 340B Health, and advocacy group representing more than 1,000 hospitals that participate in the program. “There's a lot of awareness now that hospitals really need to start standing up and talk about how they use the program to help the poor in their communities.”
An analysis conducted in May by healthcare policy consulting firm, Dobson DaVanzo & Associates found 340B hospitals provided nearly twice as much care to Medicaid and low-income Medicare beneficiaries compared with hospitals not participating in the program.
The findings contradict an earlier analysis released last year conducted by Avalere Health and sponsored by the pharmaceutical industry-backed advocacy group, Alliance for Integrity and Reform that found roughly two-thirds of hospitals participating in 340B provide less charity care than the average U.S. hospital, with charity care making up 1% or less of total costs at a quarter of those facilities.
The Health Resources Services Administration, the federal agency that regulates 340B, estimated the program saved providers about $3.8 billion in drug costs in 2013. Drug companies, meanwhile, want the government to require participants to demonstrate those savings go toward patient care.
Meanwhile, 340B drug sales have grown. An analysis conducted by the Berkeley Research Group found that drug purchases made at the 340B price rose from $1.1 billion in 1997 to more than $7 billion by 2013, with projections of reaching more than $16 billion by 2020.
Barrett said rhetoric regarding the increase in the number of hospitals that have participated in 340B in recent years fails to take into account the huge drive for the program's growth since 2010 has been facilities with 25 beds or less located in rural areas, which currently make up 53% of all 340B hospitals.
More than half of the hospitals in the 340B drug discount program are small rural and cancer facilities that joined after 2010. These providers represent only 3% of 340B annual spending. Meanwhile, the number of DSH hospitals has actually declined 4% since 2012.
One of the key topics expected to be covered at the upcoming 340B conference is the much-awaited release of HRSA's “mega” guidance on the program that is intended to clarify issues like eligibility.
Last week, regulators issued their first piece of that guidance when they released proposed regulations establishing a new method for drugmakers to calculate “ceiling prices” for covered outpatient drugs, and set fines for manufacturers who intentionally overcharge hospitals for medications.
The 19th annual conference of the 340B Coalition is scheduled July 13-15 in Washington, D.C.
