Dive Brief:
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The American Hospital Association released 340B stewardship principles Tuesday in an effort to improve transparency and highlight the program’s value as the industry faces contentious legal and political headwinds.
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Amid calls for more sunlight into how hospitals use the savings from discounted drugs, the AHA 340B Task Force is recommending hospitals publish an annual narrative on how they use program savings for community benefit, disclose the savings in a standardized method and continue internal training and oversight to ensure they meet government rules. In lieu of a universal standard for calculating 340B savings, AHA suggests comparing the 340B acquisition price to group purchasing organization (GPO) pricing.
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The move comes as the industry is embroiled in two lawsuits against the Trump administration. The first is over the government's ongoing delay in implementing 340B regulations requiring pricing transparency for pharmaceutical companies and penalties for upcharging covered hospitals (in June, HHS delayed putting in place said ceiling prices for the fifth time, which the lawsuit urges the court to declare unlawful). The second is a $1.6 billion suit is over Medicare Part B cuts to 340B hospitals.
Dive Insight:
The principles amount to AHA's riposte to calls for increased oversight and lack of program transparency by watchdogs and lawmakers in both parties.
The hospital industry argues that the discounts are vital to provide outpatient and community services for low-income populations, especially in the face of ongoing federal cuts to the program.
"The 340B stewardship principles will help hospitals better tell their story of how this crucial program is delivering a variety of important benefits to patients" in an era of "skyrocketing" drug prices, AHA CEO Rick Pollack told reporters at a Tuesday briefing.
AHA acknowledged that implementing the principles would come at little to no additional cost for hospitals beyond the internal compliance and auditing measures they already undergo within 340B.
Still, hospital officials stressed their "skinny" operating margins, especially those in rural areas.
"We will be posting a 0.2% operating margin this year. That represents about $3.7 million on a $1.7 billion integrated healthcare delivery system," said Michelle Hood, CEO of Eastern Maine Healthcare Systems and panelist at the AHA event. "That's how skinny the margins are in our part of the world."
Hood also said that her system gave up a calculated $5.2 million in additional discounts in their current fiscal year due to the delay of the price ceiling implementation — savings that, if collected, would have doubled Eastern Maine Healthcare Systems' bottom line.
"We would be very happy to retract our lawsuit if they would publish those final rules," AHA general counsel Melinda Hatton added.
Earlier this year, Ann Maxwell, assistant inspector general for evaluation and inspections at the HHS Office of Inspector General, told the Senate that OIG has evidence that drugmakers have overcharged 340B entities, but no offenders have been penalized. If the AHA-led coalition wins its suit, the federal government could levy fines on such companies to keep them accountable.
Yet currently, under 340B, hospitals are not required to directly transmit any savings to low-income patients, a sticking point for pharmaceutical advocates.
"Encouraging participating 340B hospitals to follow guiding principles without any concrete requirements to use program savings to help vulnerable patients does not translate into the action needed to fix 340B," argued Nicole Longo, a PhRMA representative, in an email to Healthcare Dive.
Thus far, AHA's new principles have been endorsed by The Association of American Medical Colleges, The Children's Hospital Association, the 340B Health Coalition, America's Essential Hospitals and the Catholic Health Association of the United States.