The 340B Issue Explained

The section 340B prescription drug discount program has grown increasingly controversial in recent years.

The program, established in the 1990s to help hospitals with the cost of the prescription drugs they provide to low-income patients on an outpatient basis, has grown considerably since its inception.  Pharmaceutical companies argue that it is too large, that it contributes to the growing cost of prescription drugs, and that hospitals are not using the savings they reap from the program to serve more low-income patients, as was envisioned when Congress created the program.

Eligible providers, on the other hand, note that much of the program’s growth was mandated by Congress and that 340B continues to serve its original purpose of helping hospitals serve low-income outpatients while using the savings the program generates to provide even further assistance to low-income patients.

Recent federal efforts to address some of these issues have satisfied neither side.

Most private safety-net hospitals participate in the 340B program and consider it to be a vital tool in helping them serve their communities.

The Vox news web site has published an article that describes the program and outlines both sides of the argument.  Find it here.

HHS Unveils Spring Regulatory Agenda

The U.S. Department of Health and Human Services has published a comprehensive list of the regulatory actions it plans to take in the coming months.

Included on the list are regulations that have been proposed, that are being finalized, and that are currently under development.  They address Medicare, Medicaid, Food and Drug Administration endeavors, medical devices, the 340B prescription drug discount program, and more.

Among the policy changes contemplated through future regulations are measures to reduce regulatory burdens for hospitals, address the opioid problem, facilitate the use of non-Affordable Care Act-compliant health insurance plans, and more.

Go here to see a complete list of the areas for proposed regulatory action by HHS and for links to brief statements about the contemplated actions.

New 340B Bill Proposed

A new bill introduced in the House seeks to bring greater transparency to the controversial 340B prescription drug discount program.

Under H.R.5598, proposed by Rep. Earl “Buddy” Carter (R-GA), hospitals would be required to report the outpatient care they provide to low-income patients in both their main hospital and at pediatric care sites.  Hospitals already separately report the inpatient care they provide to such patients.

According to Representative Carter,

I introduced this legislation today because I believe the 340B program is very important, but it needs to be improved.  340B is an outpatient program and currently hospitals do not have to report low-income utilization in outpatient settings. This legislation adds an additional layer of transparency to allow us to better understand the patient makeup of DSH hospitals to improve the program and ensure it is truly being used in the most effective way for our nation’s most vulnerable patients.

The 340B program provides discounts to qualified hospitals when they dispense drugs on an outpatient basis to low-income patients.  All Medicare disproportionate share (Medicare DSH) hospitals, along with other providers that meet formal criteria, qualify to participate in the program.  All NAUH members participate in the 340B program.

Learn more about the bill from this news release from Representative Carter or see the bill itself.


340B Program Getting the Job Done

The oft-scrutinized section 340B prescription drug discount program is doing what the program is supposed to do, according to a new analysis published on the Health Affairs Blog.

According to the report,

340B DSHs treat significantly more low-income patients than non-340B hospitals, provide a disproportionate amount of the nation’s uncompensated and unreimbursed care, and are more likely to provide specialized services that are critical to low-income patients but which are often underpaid.

In addition, 340B

…has saved billions in drug costs while providing free or discounted care to millions of patients who might otherwise be unable to get needed care. This is accomplished at no cost to taxpayers.

In addition, the report concludes that 340B-eligible hospitals:

  • care for significantly more low-income patients
  • provide the majority of uncompensated care unreimbursed care
  • are more likely to offer specialized and community services

NAUH has long been a staunch supporter of the 340B program, including in this January 2018 letter to members of Congress and this fall 2017 letter to the administration expressing opposition to proposed changes in the program.

Learn more about the facts and the data underlying these assertions in the Health Affairs Blog post “The 340B Drug Discount Program Is Fulfilling Its Original Purpose,” which can be found here.

Senate Committee Looks at 340B Program

The Senate Health, Education, Labor, and Pensions Committee (HELP) held a hearing last week on the 340B prescription drug discount program.

The hearing was prompted by complaints from pharmaceutical companies about the discounts they are required to provide to eligible providers and by concern that hospitals are insufficiently accountable for how they use the savings they derive from those discounts to serve their low-income patients.  In addition, the Centers for Medicare & Medicaid Services recently reduced its Medicare payments to participating hospitals.

During the hearing, Senate Republicans expressed support for the program but spoke of the need for greater transparency in the use of the savings the 340B program generates for hospitals and a clearer sense of how those savings benefit low-income payments.  Committee Democrats expressed similar concern but with less urgency.

Hospital industry representatives expressed concern that any new requirements could weaken the program and rejected the idea that savings are misused.  Committee members pushed back against these contentions.

Most private safety-net hospitals participate in the 340B program and it is a vital tool in their efforts to serve their low-income communities.

The Senate HELP Committee intends to hold additional hearings about the 340B program.

Learn more about the 340B hearing and the concerns that led to in this Healthcare Dive article.

New Bill Proposes Greater 340B Accountability

A new bill proposed last week by Senator Chuck Grassley (R-IA) seeks to foster greater accountability among participants in the federal government’s section 340B prescription drug discount program.

The three-page bill is called the Ensuring the Value of the 340B Program Act of 2018, and according to a news release from the senator, its purpose is to require

…participating hospitals to report the total acquisition costs for drugs collected through the 340B program, as well as revenues received from all third party papers for those same drugs.

The 340B program provides discounts on prescription drugs dispensed on an outpatient basis to hospitals that qualify for participation based on how many low-income patients they serve.

Grassley’s proposal is the fourth 340B bill introduced in Congress in recent months as the program continues to draw attention from lawmakers.

Virtually all private safety-net hospitals participate in the 340B program and consider it an essential tool in serving the large numbers of low-income patients in the communities in which they are located.

Go here to see Grassley’s news release about his proposal and here to see the bill itself.

E&C Calls for Action on 340B

The section 340B prescription drug program has flaws and needs change, a report by the House Energy and Commerce Committee has concluded.

The program, which requires pharmaceutical companies to provide discounts on prescription drugs to be dispensed on an outpatient basis to qualified providers that serve large numbers of low-income patients, has been controversial in recent years.  As the number of providers eligible for the program has grown, pharmaceutical companies have claimed that the program is expensive, is being abused, and is responsible for driving up prescription drug costs while providers insist that 340B is a vital tool in helping them serve low-income patients.  Congress, meanwhile, has questioned the program’s growth and sought accountability for how providers use the savings the program generates to serve their low-income patients.

The controversy moved into a new area in the fall when the Centers for Medicare & Medicaid Services adopted a regulation greatly reducing 340B payments to providers – even though the federal government does not pay for the drug discounts – and seeking to move savings elsewhere in the federal budget.  A coalition of providers sued unsuccessfully to delay implementation of the regulation.

Now, the House Energy and Commerce Committee has issued a report on the program.  The following findings are taken directly from the committee’s report:

  • Congress did not clearly identify the intent of the program, nor its parameters.
  • HRSA lacks sufficient regulatory authority to adequately oversee the program and clarify requirements.
  • HRSA has started but still has not completed the process to issue and enforce regulations in the areas in which it has regulatory authority.
  • Although HRSA has increased the number of covered entity audits it conducts each year, the audit process still needs improvement.
  • The 340B statute does not require covered entities to report program savings or how they are used. As a result, there is a lack of reliable data on how program savings are used, and covered entities may use these savings in a variety of ways.

While asserting strong bipartisan support for the program among committee members, the 79-page report offers the following recommendations (again, taken directly from the report):

  • HRSA [the Health Resources and Services Administration] should finalize and begin enforcing regulations in the three areas in which it currently has regulatory authority.
  • Congress should give HRSA sufficient regulatory authority and resources to adequately administer and oversee the 340B program.
  • Congress should clarify the intent of the 340B program to ensure that HRSA administers and oversees the 340B program in a way that is consistent with that intent.
  • Congress, or HRSA where HRSA already has authority to make such changes, should promote transparency in the 340B program, including ensuring that covered entities and other relevant stakeholders have access to ceiling prices, and requiring covered entities to disclose information about annual 340B program savings and/or revenue.
  • Congress should establish a mechanism to monitor the level of charity care provided by covered entities.

The committee is expected to pursue legislation implementing its regulations in the near future.

Most private safety-net hospitals qualify to participate in the 340B program, consider it a vital tool in serving their communities, and support the program’s preservation.  NAUH has conveyed its position on the program, and the recent changes in program, in separate letters to the administration and Congress.

Go here to see the full House Energy and Commerce Committee report on the 340B program.

Bill Seeks to Block 340B Cut

Legislation introduced in Congress would block the attempt by the Centers for Medicare & Medicaid Services to slash $1.6 billion in annual payments to hospitals for prescription drugs for outpatients prescribed through the federal section 340B prescription drug discount program.

Earlier this month CMS finalized its plan to reduce controversial 340B payments and shift $1.6 billion in savings into Medicare provider payments.  If adopted, the bipartisan legislation co-sponsored by Representatives David McKinley (R-WV) and Mike Thompson (D-CA) would prevent the reduction of 340B payments, which are made to hospitals that care for especially large proportions of low-income patients.

The 340B program is an essential source of resources for the nation’s private safety-net hospitals and many stand to lose hundreds of thousands of dollars, or even millions of dollars a year, if the payment cut is not reversed.

Go here to see Rep. McKinley’s news release on the bill and here to see the bill itself, which is H.R. 4392, “To provide that the provision of the Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs final regulation relating to changes in the payment amount for certain drugs and biologicals purchased under the 340B drug discount program shall have no force or effect, and for other purposes.”

House Committee to Hold 340B Hearing

The House Energy and Commerce Committee’s oversight subcommittee will hold a hearing on Wednesday about the 340B Drug Pricing Program.

At the hearing, titled “Examining How Covered Entities Utilize the 340B Drug Pricing Program,” the subcommittee hopes

…to hear directly from entities participating in the program to get a better understanding of how the program is used, including how much money is saved, the types of drugs purchased and prescribed within the program, how entities track their savings, and how those savings are used to improve patient care.

Most private safety-net hospitals participate in the 340B program.

Learn more about the hearing and the witness list from the subcommittee’s news release on the subject.

House Members to CMS: Don’t Cut 340B Payments

More than half of the members of the House of Representatives have written to CMS administrator Seema Verma asking her to withdraw a controversial proposal that would greatly reduce Medicare reimbursement for prescription drugs for urban safety-net hospitals and other safety-net providers that serve large numbers of low-income patients..

At issue are proposed changes in the federal section 340B prescription drug discount program – changes that would drastically reduce payments to participating hospitals for the prescription drugs they provide to low-income outpatients.  Savings from the program help underwrite services and outreach for low-income patients.

The letter to CMS administrator Verma expresses concern that

…this misguided policy will directly limit the ability of hospitals to offer necessary services to vulnerable patients and their communities, especially low-income individuals and rural communities.

The letter goes on to point out that the proposed change in 340B program policy does not address the high cost of prescription drugs and “…would not benefit many Medicare beneficiaries, including dually eligible Medicare beneficiaries.”

A majority of the members of the House – 228 of them – signed the letter.  NAUH recently sent a message to all House members asking them to sign.  Most safety-net hospitals participate in the 340B program.

Go here to see the congressional letter to Administrator Verma and go here to see NAUH’s letter to House members asking them to sign the letter.