Hospitals defend 340B drug program amid scrutiny
- Among the trend of decreasing charity care throughout U.S. hospitals, disproportionate share hospitals (DSH) that participated in the 340B drug prescription program showed more of a decline that non-340B DSH facilities, according a new report that has been disputed by many in the industry.
- The American Hospital Association criticized the analysis, saying it “attempts to mislead the debate.” The hospital group said the report doesn't take into account the community benefits other than charity care and leaves out relevant information.
- The House Energy & Commerce Committee held a hearing Wednesday on how covered entities use the 340B program. Several hospital and health system executives testified the 340B program is critical to their ability to provide care for vulnerable populations.
Lawmakers looking to root out misspent government funds have recently turned their attention to the drug program, citing a 2014 report from the Office of Inspector General that found some covered entities “do not offer the discounted 340B price to uninsured patients in their contract pharmacy arrangements.”
The idea of 340B is to allow DSH hospitals to better serve indigent populations, but currently there are no requirements for how the savings are used and no mechanism to track spending. The pharmaceutical industry is asking for stricter definitions within the regulations, as well as more oversight, but doesn't oppose the program itself.
These discussions are amongst potential changes for the 340B program. The CMS has proposed a significant cut for 340B payments to hospitals, from the average sales price of the drug plus 6% to 22.5% less than the average sales price. Providers have been vocal in their opposition to the proposal, citing how hospitals that use the program have given back to their communities. Also, the CMS recently delayed (not for the first time) a final rule establishing ceiling prices and civil monetary penalties for pharmaceutical manufacturers that don’t comply with the program.
The new report raises some questions about 340B, but the hospital executives appearing before Congress detailed how their organizations self-regulate use of the program and said the savings allow them to provide an array of benefits to surrounding communities. Still, the program does lack comprehensive federal oversight, and fiscal watchdogs take issue with that.
The research, conducted by Avalere at the request of the Alliance for Integrity and Reform of 340B (AIR340B), suggests more guidance is needed to ensure 340B hospitals are using savings generated through the program to treat vulnerable populations.
Shahid Zaman, senior policy analyst for America's Essential Hospitals, said the report is flawed for several reasons, including a small sample size. It doesn't consider that 2014 was the first year of Medicaid expansion and doesn't include Medicaid underpayments in its calculation of charity care. "It's troubling to us an unsupported claim like this could enter the policy debate on 340B," he said.
AIR340B describes itself as “a coalition of patient advocacy groups, clinical care providers and biopharmaceutical innovators,” but AHA characterized it as a “group financed and backed by the pharmaceutical industry.”
In a statement accompanying the report, the alliance said the research points to a lack or requirements that allows hospitals to “use the revenue to expand their bottom lines instead of providing additional charity care to needy patients.”
The AHA blog post, authored by Tom Nickels, EVP of government relations and public policy, countered that the report’s small sample size and narrow focus make its conclusions dubious.
“First, at its core the purpose of the 340B program is to allow hospitals to expand access to and the type of services available in their communities,” he wrote. “Charity care — free or discounted care — is only part of the story of how savings from this program underwrite participating hospitals’ total community benefit.”
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