Drugmakers’ Reputation on the Line in the 340B Donnybrook: 2022 Asembia Specialty Pharmacy Summit

Drug manufacturers are challenging the discounted drug program, but if they are blamed for the closing of rural hospitals that depend on 340B funds, the challenge may have a serious downside, warned an expert on the program.

The 340B program is nothing if not controversial. But Timothy Paine doesn’t think any of the stakeholders — hospitals, drug manufacturers and patient groups — fighting over the future of the program need worry about it ending.

“It is not going anywhere any time soon,” said Paine, principal consultant at Blue Fin Group, a management consulting firm.

But Paine told a standing-room-only audience at the 2022 Asembia Specialty Pharmacy Summit on Monday that as lawsuits about the program proliferate and the lobbying ramps up, negative publicity and perception is likely to shape the future of the program.

And, said Paine, “there is a “great deal of risk there” for drug manufacturers, partly because of preexisting public opinion.

“The unfortunate thing is that the populace of our country, especially the media and the legislature, is primed to seeing manufacturers in jaundiced light,” Paine said.

The 340B Program started in 1992 as a way to offer financial assistance to hospitals that serve disadvantaged populations. The programs requires manufacturers to sell their drugs at a discount to hospitals that meet the criteria for the program. Drugmakers aren’t forced to participate, but if they don’t, they aren’t allowed to sell their products to Medicare and Medicaid.

Critics of the program say that it has strayed from its original purpose as hospitals have set up networks of contract pharmacies for 340B purposes. Defenders, which include some patient groups, say it helps keep expensive drugs more affordable and accessible and remains an important source of financial support for hospitals with patient populations are disadvantaged.

Starting two years ago, manufacturers started pushing back on 340B pricing for drugs ordered by the 340B contract pharmacies. Some drugmakers cut off discounts. Other added some data requirements as a condition for getting the discounted prices. The Health Resources and Services Administration responded by issuing enforcement letters and referring some cases to the HHS Office of the Inspector General for possible civil monetary penalties. The manufacturers have filed lawsuits challenging the enforcement letters.

While not taking sides, Paine said that some hospitals, particularly those in rural areas, that depend on 340B funds: “There are some rural hospitals that can only offer extra hours or operate certain clinics because of the dollars they get from this program,” Paine said. “Imagine what it looks like to the lay public when their hospital closes.”

“There are some rural hospitals that can only offer extra hours or certain clinics because of the dollars they get from this program,” Paine said. “Imagine what it looks like to the lay public when their hospital closes.”

But Paine ended his talk with a plea for entities involved to find common ground.