July 16, 2013

Hospitals, drugmakers debate 340b drug discounts

Daily Briefing

    Safety Net Hospitals for Pharmaceutical Access (SNHPA) last week issued recommendations to reform a drug discount program for hospitals by requiring greater price transparency and scrutiny of how hospitals use program savings.

    The 340b program was created to help facilities provide deeply discounted medications to low-income and uninsured patients. Participating hospitals buy medications from pharmaceutical companies that are required to sell the drugs at a minimum 50% discount. About one-third of U.S. hospitals have joined the program, according to Modern Healthcare.

    Calls for 340b reform

    Participating hospitals and pharmaceutical companies have called for reforms to the decades-old program, Modern Healthcare reports.

    Critics have alleged that some hospitals have misused the program, which allows them to buy outpatient drugs for all eligible patients, not only those who are poor or uninsured, and then use the savings in other areas. Others allege that hospitals are upselling the discounted drugs to privately insured patients and Medicare beneficiaries.

    One critic of the program—Iowa Sen. Charles Grassley (R)—told Modern Healthcare that "[n]othing that I know of requires 340B hospitals to report how they use program savings and revenue. They could use the money for uninsured patients or they could use the money toward building a new wing."

    The Alliance of Integrity and Reform—which is composed of drugmakers and drug associations, oncology groups, and a pharmacy benefit manager—argues that hospitals should be required to use the 340b savings to boost medication access for low-income and uninsured patients.

    • The Advisory Board conducted a brief survey of Oncology Roundtable members to gain a deeper understanding of the impact of the 340B program on hospital-based cancer programs’ physician alignment and regionalization strategies. Log in to read more.

    SNHPA's new report calls for reform

    The new SNHPA report finds that, although the 340b program is operating as Congress intended it to, greater transparency could prevent fraud and misuse of the system.

    The report's recommendations include increasing transparency of 340b drug prices, collecting data on how hospitals use 340b savings, implementing drug manufacturer audits, and conducting closer examination of contract pharmacies that participate in the program.

    According to SNHPA President and CEO Ted Slafsky, the program "strengthens the health care safety net, allowing vulnerable patients to access medicine and health care services they need to stay out of the hospital." He added that without the program, "many safety net hospitals would have to limit services or even close their pharmacy doors. As a result, patients would lose access to health care and communities would suffer" (Lee, Modern Healthcare, 7/9 [subscription required]).

    More from today's Daily Briefing
    1. Current ArticleHospitals, drugmakers debate 340b drug discounts

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