The 340B Drug Pricing Program doesn't create strong incentives for participating hospitals to use more expensive drugs, according to new federal research.
Hospitals that participate in the 340B program spend about $300 more on drugs for prostate and lung cancers, but not breast, colorectal or leukemia-lymphoma cancers, the Medicare Payment Advisory Commission's staff said at a meeting on Thursday. The higher spending at 340B hospitals seems to be driven by the type of cancer that people are treated for rather than 340B's financial incentives.
"These results are surprising because they're not that strong," said MedPAC commissioner Dr. Lawrence Casalino, chief of the division of healthcare policy and economics in Weill Cornell's department of healthcare policy and research.
Participating hospitals, including many academic medical centers, are more likely than non-340B hospitals to care for younger patients that are candidates for more aggressive cancer treatments. They're also more likely to use more advanced and expensive therapies than hospitals that don't participate in 340B.
Both factors could account for the differences in cancer drug spending between the hospitals.
But differences in patients' social determinants of health could also be at play. Hospitals in 340B serve 43% more Medicare-Medicaid dual-eligible patients—an indirect measure for low socioeconomic status—than non-participating hospitals.
Since poorer people tend to be sicker and more likely to delay care, hospitals might be spending more on certain types of cancer drugs because their patients need more treatment.
"I think it's very likely that the sickest patients ... are more likely to be treated at academic medical centers," Casalino said.
The MedPAC staff didn't have access to detailed information on patients' disease progression, so they couldn't tease out any potential differences between 340B and non-340B providers.
The study analyzed data from 2013 to 2017, which means that the analysis predates a 2018 change in 340B payments that could greatly impact providers' incentives.
Before 2018, Medicare paid both 340B and non-340B providers the average sales price of a drug plus 6% under Part B. But since 2018, it has paid 340B hospitals the average sales price minus 22.5% for some Part B drugs, and 340B hospitals are fighting the change in court. That could affect how doctors and hospitals behave.
Congress had asked MedPAC to study whether 340B led participating hospitals to use more expensive drugs as part of its broader inquiry on healthcare provider consolidation.
The results of the study are "inconclusive," according to MedPAC commissioner Warner Thomas, president and CEO of Ochsner Health System. The commission will likely take up the issue again later this year.
