- Safety net hospitals participating in the 340B drug discount program are reimbursed for physician-administered drugs three times more than the amount they paid for the drugs, according to a new Milliman report funded by powerful drug lobby PhRMA.
- On average, 340B hospitals pay $1,591 per claim for brand drugs and receive $4,673 as reimbursement, according to the consulting and actuarial firm's analysis of claims data. In comparison, non-340B hospitals receive reimbursement at about 1.7 times the acquisition cost of the drugs.
- The hospital industry pushed back on the findings, the latest salvo in an ongoing battle over the program, which provider trade groups like the American Hospital Association and America's Essential Hospitals argue is essential to preserving the financial stability of safety net facilities and their access to affordable prescription drugs.
The 340B Drug Pricing Program is heralded by providers and hated by big pharma, which has initiated a spate of regulatory and legal fights in an attempt to pare it down. The Trump administration instituted a 30% payment cut for 2019, but a federal court struck down the rate adjustment in May in a win for hospitals.
Hospitals in the drug discount program receive on average a 25% to 50% discount on medicines for providing care to low-income Americans, many of whom are under- or uninsured. Last year, 340B saved eligible hospitals $11.8 million nationwide.
Milliman looked at claims data to estimate the difference between a hospital's acquisition cost for the drugs purchased with the 340B discount and the reimbursement they received from commercial payers. In a statement, PhRMA CEO Stephen Ubl slammed the program as one of the "misaligned incentives" inflating hospitals profits.
AHA pushed back on the report's findings, with the lobby's executive vice president Tom Nickels calling it the pharmaceutical industry's "obvious attempt to divert attention away from a problem of their own making: skyrocketing drug prices" in a statement sent to Healthcare Dive.
Total U.S. spending on prescription drugs was $333 billion in 2017, up 41% over a decade from $236 billion in 2007.
"It is time for drug companies to stop attacking others and come to the table with solutions on how to rein-in their out-of-control prices," Nickels said.
Advocates for the 340B program contend many hospitals, especially those that serve a disproportionate amount of vulnerable and uninsured Americans, lean heavily on the drug discount scheme just in order to stay afloat. But the pharmaceutical industry, which funds the program in the form of discounted medications, and some lawmakers say there isn't enough oversight of 340B, and it's unclear what hospitals are doing with the savings.
Maureen Testoni, president and CEO of 340B hospital coalition 340B Health, told Healthcare Dive those savings are used to serve low-income patients and those in rural areas. "This always has been the congressional intent of the program," she said via email.
The paper is the latest in a series of PhRMA attempts to change public opinion on 340B through reports and studies. Previous PhRMA-backed findings that drug spend at 340B hospitals is about one-third higher than at non-340B facilities.