340B hospital drug spending higher than at non-340B facilities, report says
Patients at 340B hospitals had an average total drug spending increase of 32.4% in the year following enrollment, according to a Berkeley Research Group study funded by the drugmaker lobby PhRMA. The control group in non-340B hospitals’ drug spend per patient increased by only 13.4% — about one-third less.
Researchers also found that per-patient, per-date-of-service drug spend increased by 20.6% for 340B hospitals in the first year compared to the previous year. Meanwhile, the control groups’s per-patient, per-date-of-service drug spend decreased by 4.7%.
The report is the latest in an ongoing battle between hospitals and drugmakers over the 340B program. The latest skirmish came late last month when HHS finalized a rule to impose a ceiling price to limit how much drug manufacturers can charge hospitals participating in the 340B drug discount program for their products, as well as civil monetary penalties for manufacturers charging above the ceiling.
The 340B Drug Discount Program, which mandates that drugmakers provide outpatient drugs to eligible facilities at much lower prices, has grown exponentially in recent years. In 2017, covered entities purchased more than $19 billion in drugs — a 114% increase since 2014.
In its new study, consultants BRG benchmarked changes in spending at 340B hospitals compared to a control group of non-340B hospitals. The report examined 379 Disproportionate Share Hospitals (DSH) hospitals in the 340B program between January 2009 and January 2016. There were a total of 1.9 million patients involved.
The researchers found that not all 340B DSH hospitals saw higher drug spends, but faster growth was present in the majority of hospitals analyzed.
In fact, 63% of 340B DSH hospitals studied had a growth rate at least two percentage points higher than non-DSH hospitals. However, researchers didn’t find any trends beyond the differences between DSH and non-DSH. For instance, both groups had a similar percentage of teaching hospitals and facilities located in an urban setting.
The report concluded the reason for the difference is that 340B hospitals go through a “behavior change in the prescribing of physician-administered drugs” after they enroll in the program. The program incentivizes more expensive treatments, which lead to higher Medicare costs.
More money flowing into 340B has put a spotlight on the program this year. HHS finalized a rule in November that will create a ceiling price to limit how much drug manufacturers can charge hospitals in the 340B program. The rule goes into effect on Jan. 1.
A 2015 study by the Government Accountability Office found that per-beneficiary spending at 340B DSH was more than non-340B hospitals. GAO said in its report that the 340B program leads hospitals in the program to prescribe more drugs, including more expensive drugs.
Also, Milliman reported earlier this year that 340B hospitals per-patient pharmacy spending exceeded non-340B hospitals in the commercially insured.
- Berkeley Research Group Increases in Part B Drug Utilization at Enrolling 340B Hospitals