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Fighting back against 340B criticisms


In this commentary, three pharmacy experts explain why they believe the 340B Drug Program is a needed safety net for safety net hospitals.

Like many federally funded programs, the 340B Discount Drug program has become an easy target for those seeking to score political points, or for those lacking a full understanding of the purpose and merits of the program. Rising criticism from opponents has led to the possibility of the program being weakened or eliminated, compromising the healthcare of our country’s most vulnerable patients, the viability of the hospitals that serve them, and a healthcare system that is struggling to reign in costs, improve care and outcomes. 

Read: 340B drug program causing controversy - program for needy patients not always used as intended

The 340B Program: A snapshot

The 340B discount drug program, designed for the nation’s safety-net hospitals, has three goals:

• Lower the cost of pharmaceuticals;

• Increase healthcare services; and

• Improve access to care through additional sites and more convenient locations.

Bruce ThompsonIntended to stretch scarce federal resources as far as possible by expanding access to eligible patients and providing more comprehensive services, the program allows  participating, government-owned and private non-profit hospitals to purchase drugs at discounted prices from manufacturers and pass some of those savings along to low-income or no-income patients.

The savings generated by the program, in turn, allows hospitals to fund care transition programs such as discharge clinics, enhanced pharmacy services, and medication management programs, all of which work to stem the tide of adverse medication events that drive unnecessary readmissions and repeat emergency department visits. 

According to Apexus, the non-profit contractor to Health Resources and Services Administration (HRSA), the 340B drug program represents $7.5 billion-or just 2.3%-of approximately $326 billion in annual prescription drug sales. While it’s a relatively small percentage,, the value to the 340B hospitals and communities they serve is immeasurable. For a community with a 340B hospital, the program can mean the difference between having access to essential and specialized care and a shuttered hospital.

Andrew LoweHospitals that participate in the 340B program shoulder a tremendous responsibility. They must demonstrate eligibility; be registered; comply with the tracking and reporting requirements; and recertify every year. They are subject to random annual audits conducted by the HRSA, which has taken a more aggressive approach to program integrity. HRSA completed 99 audits in 2014 and expects to complete twice as many by September 2015, its fiscal year-end. Failure to comply with the 340B regulations jeopardizes the hospital’s ability to participate in the program, putting at risk millions of dollars in essential prescription drug cost savings.

A pharmaceutical manufacturer can also trigger an audit. Should a question arise about the purchases being made by a 340B hospital, a manufacturer can present a complaint to HRSA. If the HRSA has any reason to believe that the hospital may be in violation of 340B regulations, it will authorize the manufacturer to launch an independent audit of that hospital’s program.

With the high risk of an audit, millions of dollars at stake and the hospital’s ability to continue to serve its community at risk, 340B hospitals have every reason to ensure they are living up to the rules and intent of the program.

Next:  Reinvesting savings to stretch resources



Reinvesting savings to stretch resources

While the needs of the communities vary, 340B hospitals provide care to the neediest and most vulnerable patients regardless of their ability to pay, availability of insurance, or health condition. No-one in need of healthcare is turned away.

Reid TodaLiving up to this commitment poses tremendous financial challenges for 340B hospitals. They care for more than twice as many low-income patients and provide nearly two times as much uncompensated care as their non-340B program counterparts, according to a 2015 report by Dobson DaVanzo & Associates, LLC, a health economics and policy consulting firm.

In addition, the rising cost of prescriptions drugs is a major concern for all hospitals, and places an even greater burden on 340B hospitals and their patients. The uninsured and underinsured are more acutely affected by higher drug prices, which impose a barrier to the care they need to get and stay well. And go-to generics no longer provide the financial benefit they once did: While all prescription drug prices increased last year by 10.9% compared to 2013, generic drug prices increased by 4.9%, and they are expected to post comparable price increase in 2015.

Low-income andno-income patients respond to rising drug prices by employing strategies that may benefit their pocketbooks but compromise their care. A survey conducted by the Centers for Disease Control and Prevention found that over 50% of low-income patients take steps to extend their medications, ranging from not refilling prescriptions in a timely manner and skipping doses to not taking medications at all. These strategies not only drive repeat visits and readmissions, they have a detrimental effect on the health of patients, and impede their ability to fully recover from an illness or surgery or effectively manage a chronic condition.

A survey conducted by Safety Net Hospitals for Pharmaceutical Access (SNHPA), now known as 340B Health, of its member hospitals, all of which participate in 340B, found that its members used their 340B savings to reduce drug prices paid by patients, support medication therapy management programs, provide uncompensated care and maintain broader hospital operations.

The savings derived from the 340B program benefit patients and their communities in other ways, too. The HRSA estimates that covered entities saved $3.8 billion in 2013 on an outpatient drug spend of $7.5 billion through the 340B program. These savings have been and continue to be reinvested back into local communities in new facilities, community and discharge clinics, expanded and enhanced pharmacy services, medication management services and specialized care that would have been impossible without the 340B drug savings.

Next: Reality v. Rhetoric



Reality v. Rhetoric

The benefits of the program to patients, hospitals, communities and even the drug companies are clear. Yet 340B continues to be subject to intense criticism from opponents who contend that it is costly to taxpayers, unmanageable, and generates profits for hospitals rather than provide benefits directly to patients.

The facts tell a much different story. 

• The 340B program saves taxpayers money. The program is self-funding, where savings generated in the 340B program are used by hospitals to deliver a wider array of care services to a greater number of patients at little to no cost to taxpayers. Funding for the program comes from the savings in drug costs, which hospitals reinvest to provide greater care, which reduces the need for increased federal dollars.

• Savings are reinvested in facilities, expanded services and educational programs that improve the quality and effectiveness of care for the most vulnerable and the insured. Through 340B, hospitals are able to expand access to care through a more robust array of healthcare programs, greater access to services and specialized care that might not otherwise have been available in the community.  Not all hospitals realize savings from the program.  A 2011 Government Accountability Office sampling of 29 covered entities, selected to represent five types of hospitals in five different states, found that only half generated revenue that exceeded their drug costs.

• Oversight and safeguards are in place to ensure that eligible hospitals comply with 340B regulations and adhere to the intent of the program. As part of this oversight, 340B hospitals must be able to demonstrate that there are no duplicate discounts or diversion of drugs to ineligible patients, two of the primary concerns of pharmaceutical companies.

For those for whom healthcare would otherwise be financially out of reach, the 340B program provides access to lower cost drugs and a level of care that would otherwise be unavailable. For the hospitals that participate, the value of the 340B program is unassailable. Without the 340B program, the financial viability of the hospital would be tenuous at best, and door-closing at worst.

Bruce Thompson is senior consultant at Comprehensive Pharmacy Services. 

Andrew Lowe, Pharm.D., is a regional clinical director at Comprehensive Pharmacy Services.

Reid Toda has been with comprehensive pharmacy services for over 16 years and currently serves as division vice president, 340B.


Opinions expressed by guest bloggers are their own, and do not necessarily reflect the views of Managed Healthcare Executive, its staff or editors.

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