Commentary: Guidance on 340B drug program delivers mismatch of policy, priorities from HHS

The Obama administration and HHS Secretary Sylvia Mathews Burwell have admirable goals for our nation's healthcare system: greater provider collaboration; prevention and keeping people well after a hospital visit; payments that reward quality and care coordination; broad access to equitable care for the vulnerable.

But in working toward these goals, Burwell might be fighting a headwind of her department's own making.

That challenge comes in 25 Federal Register pages of proposed omnibus guidance for the 340B Drug Pricing Program published last August by the department's Health Resources and Services Administration. This dark cloud of regulatory guidance not only hangs over the 340B program, but could undermine administration initiatives to reduce hospital readmissions, expand access to care, and tackle social determinants of health that plague vulnerable populations.

The 340B program, created by a bipartisan Congress nearly a generation ago, is a precursor to headline efforts today to rein in the excesses of the pharmaceutical industry. The wonky name belies the program's simple function: It requires drugmakers to give eligible providers discounts on outpatient drugs as a condition of receiving Medicaid and Medicare Part B payments. Eligible providers include hospitals, community health centers, AIDS clinics and others that care for the most disadvantaged and underserved patients.

The program works well, complies with existing regulations, meets Congress' explicit original intent to help providers “stretch scarce federal resources,” and, in Washington budget terms, costs taxpayers nearly nothing.

But in responding to calls for greater transparency and accountability for 340B, HRSA took an unnecessarily onerous tack. Rather than a measured approach to strengthen an otherwise properly functioning program, the agency proposed a fundamental reshaping of 340B by rewriting how it defines eligible patients and facilities.

What might seem like technical changes would, in fact, significantly narrow the program's scope and leave many vulnerable people without lifesaving drugs. They also squarely conflict with administration goals for system transformation.

Under HRSA's proposal, for example, hospitals could not provide 340B medications to inpatients when they are discharged. Why? Because HRSA would require an outpatient encounter for eligibility. It's a frustrating act of hair-splitting that almost guarantees indigent patients will return to the hospital for lack of affordable drugs to stay well. It also reverses existing HRSA policy allowing discharge prescriptions for outpatient use. All this would occur under an administration that has made reducing readmissions a centerpiece of its agenda for quality and value.

The story is the same for a proposal that off-site clinics have “associated Medicare costs and charges” to qualify as part of the parent 340B entity. This odd wrinkle could leave low-income children and mothers out in the cold—Medicare costs don't happen at pediatric and maternal clinics for the indigent.

HRSA also would strip 340B eligibility from infusion therapy patients at hospital clinics if the order for therapy comes from outside the clinic. So, in such a case, a cancer patient at a hospital clinic receiving infusion drugs from the hospital and administered by hospital employees would not be a patient of the hospital. Particularly damaging will be the likelihood that this policy drives vulnerable patients away from hospital clinics, which offer support not available at other clinics to help patients overcome social and economic barriers to care and good health: transportation and interpretation services, for example—even food pantries, in some cases. The administration has committed to attacking the socio-economic factors that contribute to poor health and suboptimal healthcare outcomes. HRSA isn't making that job any easier.

The nation's essential hospitals—those that fill a safety net role in their communities, caring for the most disadvantaged among us—support the administration's desire for transparency and integrity in federal healthcare programs. But the 340B omnibus guidance will serve only to reduce access to care and undercut progress toward meaningful and lasting improvements.