The U.S. Government Accountability Office (GAO) recently completed a review of the federal 340B Drug Pricing Program.

gaoThe program, which requires pharmaceutical companies to provide drug discounts to qualified hospitals that serve especially large proportions of low-income patients, has come under fire recently because approximately 40 percent of U.S. hospitals now participate in the program and there have been questions about how hospitals use the program and its drug discounts.

The GAO found that Medicare Part B spending on drugs was much higher at participating 340B hospitals than it was at non-participating hospitals, suggesting that participating hospitals prescribe more drugs and more expensive drugs. It found that

The Centers for Medicare & Medicaid Services (CMS), which administers the Medicare program, uses a statutorily defined formula to pay hospitals for drugs at set rates regardless of hospitals’ costs for acquiring the drugs. Therefore, there is a financial incentive at hospitals participating in the 340B program to prescribe more drugs or more expensive drugs to Medicare beneficiaries.

In the review, GAO recommended that

Congress should consider eliminating the incentive to prescribe more drugs or more expensive drugs than necessary to treat Medicare Part B beneficiaries at 340B hospitals.

Go here to find the GAO report Action Needed to Reduce Financial Incentives to Prescribe 340B Drugs at Participating Hospitals.

A number of groups have criticized GAO’s findings. Learn about their perspective in articles in Healthcare Finance News and Becker’s Hospital Review.