The 340B program needs reform, as hospitals profit from drug discounts intended to help low-income patients, BIO said in comments to the Senate’s 340B Bipartisan Working Group—Bio.News has the story.
Catch me up—what’s 340B? The 340B program is meant to help low-income and uninsured patients by letting participating covered entities, including Disproportionate Share Hospitals (DSH), take discounts from drug manufacturers. DSH hospitals are supposed to use savings to help patients, but many appear to be abusing the program.
How badly is it abused? Increasingly DSH hospitals and their outpatient clinics tend to be in higher income communities. These wealthier areas have a larger population of fully insured patients (which increases the hospital profits on 340B discounted drugs), exacerbating health inequities and contradicting the program’s original purpose of assisting safety-net providers and medically underserved patients.The program has ballooned to the point where more than 14% of total U.S. brand-name pharmaceutical sales are obtained with 340B discounts, BIO notes.
How we got here: Federal changes to 340B guidance allow any covered entity contracting with an eligible pharmacy to demand discounts from drug manufacturers. Contract pharmacy arrangements grew by 4,228%, from 2,321 in 2010 to 101,469 in 2020, and as of today this number has increased to 194,016, BIO explains.
Drugs become a source of profit: DSH hospitals benefitting from 340B (and sometimes other discounts) charge 4.9 times the acquisition cost of top oncology drugs, says a study cited by BIO. Meanwhile, only 1.4% of patients receive discounts on 340B drugs at contract pharmacies, per another study.
BIO’s recommendations:
- Manufacturers should be able to access claims-level data, to safeguard program integrity and prevent duplicate discounts.
- Only true safety-net hospitals should be eligible for 340B.
- Audit capabilities need to be strengthened.
- Transparency should be required for covered entities.
Read full coverage in Bio.News.
