Dive Brief:
- The controversial 340B drug discount program, which was expanded to encompass more providers under the Affordable Care Act, is receiving new scrutiny after a recent study concluded the program is being used by hospitals to increase profits instead of help low-income patients.
- Established in 1992, the program provides reduced-price drugs to nonprofit hospitals, community health centers and other providers that treat a high proportion of under- or uninsured patients. The drugs are supposed to be for those patients that cannot afford full-priced medication. But the authors of the new Health Affairs study found that hospitals that registered for the program in 2004 or later serve wealthier communities with higher levels of insurance coverage than those in the program at an earlier date.
- The researchers claim that these findings support the fact that hospitals may be purchasing the medication at a low rate and reselling it at higher rates to increase profits. Hospitals and provider associations vigorously deny this scenario and say the study reaches incorrect conclusions. The survey looked at nearly 1,000 hospitals and almost 4,000 clinics registered for the program during 2012 and compared demographic information on the communities served by the institutions.
Dive Insight:
This isn't the first time the program has come under fire. The pharmaceutical industry has critiqued the program in the past and this past March, a coalition of patient advocacy groups, healthcare providers and pharmaceutical organizations published an analysis showing that more than two-thirds of the hospitals in the 340B program provide less charity care than the national average of 3.3%.
In May, US District Judge Rudolph Contreras ruled that the Department of Health & Human Services doesn't have the authority to expand the program to allow rural and cancer hospitals, as recommended in the ACA. The judge ruled that highly expensive "orphan" drugs should be excluded from these organizations. In July the Health Resources and Services Administration issued a ruling allowing the providers to use orphan medications through the program as long as the drugs are not being used for the rare conditions for which they received the designation.
There has been some industry pushback to the study. Senior vice president and 340B compliance officer at Sentry Data Systems, Lidia A. Rodriguez-Hupp, flatly contradicts the results: "The main assertion of the report, that recently-added clinics serve wealthier communities, is unproven by the Census income data," said Rodriguez-Hupp. "Real growth in the number of hospital-based clinics participating in 340B is fueled partly by changes that resulted from the Affordable Care Act in 2010 and partly from trends affecting healthcare overall."