Fix 340B drug discount program if we want to improve care for those who need It most

The Senate Committee on Health, Education, Labor, and Pensions held a hearing called the “Perspectives on the 340B Drug Pricing Program.” This hearing featured testimony from policy and industry experts who offered perspectives on what modifications are needed to fix the 340B program so that it achieves Congress’ intended goals and benefits the patients who need it most.

While the 340B drug discount program may not be part of regular conversations around health care reform and payment incentives, this government initiative is helping to shape the United States drug market behind the scenes. 

{mosads}As intended, the 340B drug discount program subsidizes the cost of medicines for participating hospitals so that they may provide discounted drugs to vulnerable populations. In turn, participating entities are then tasked with using savings generated by the program to provide charity care for their local needy patient communities.

However, evidence shows that the program isn’t working, and many hospitals are using program savings to pad their bottom lines instead of increasing access for patients in need. Hospital charity care rates have decreased in recent years while hospital revenues have continued to climb.

 For the nation’s top seven ranked hospitals, charity care fell by 35 percent between 2013 and 2015 while hospital revenue increased by $4.5 billion, with more than half of those hospitals being 340B facilities. An analysis by Avalere Health found that 64 percent of 340B hospitals have charity care rates below the national average for all hospitals.

Reforms are needed to get this important program aligned with its intended mission. As a longtime patient advocate, I’m encouraged by recent developments in Congress to modernize the program that have the potential to make a much-needed difference in how prescription drugs get into the hands of those who need them most.

Legislation from both House and Senate lawmakers has been introduced with the intention of returning the 340B program back to its original intent of helping vulnerable patients. The HELP ACT (Helping Ensure Low-income Patients have Access to Care and Treatment) was introduced in the Senate and the 340B PAUSE Act (340B Protecting Access for the Underserved and Safety-Net Entities Act) was introduced in the House. I believe both of these bills would bring integrity and value back into the drug discount program.

Both bills address one of the main abuses undermining the 340B program: provider consolidation. Hospitals acquire physician practices, often in wealthier areas, with no requirement to treat uninsured, underserved, or low-income patients. Instead, hospitals are then able to maximize their profits through billing fully insured patients at the full rate, keeping the difference from the discounted 340B price.

As hospitals acquire 340B-participating physician practices, medicines prescribed by the physicians in the acquired practice may become eligible for the 340B discount following the acquisition. This allows the hospital to capture the difference between the 340B discounted price and the price paid by the patient or his or her insurer.

This means that hospitals are buying up smaller practices and clinics, maximizing the “spread” off them, and pocketing the money saved — with no accountability to make them increase care for those who need it most. The HELP ACT and 340B PAUSE Act both tackle the need for greater scrutiny by temporarily freezing the number of disproportionate share hospitals (DSH) participating in the program, many of which have been misusing 340B to buy up smaller competitors and generate profits to pad their bottom lines.

Local clinics simply cannot compete with the discounts large hospital systems are able to secure. A 2016 Community Oncology Alliance Impact Report shows a 121 percent increase in community cancer clinic closings and a 172 percent increase in consolidation into hospitals since 2008 — an 87 percent increase in oncology practice closures since their previous report.

This trend is unacceptable and must end, and by freezing the amount of hospitals participating in the program, the HELP ACT and 340B PAUSE Act will help to keep these vital community practices running.

Both of these bills intend to help patients by holding hospitals accountable for making sure patients see savings on their prescriptions, while simultaneously allowing truly vulnerable rural hospitals and grantees to continue participating in the program as they always have.

For the many cancer patients that rely on rural hospitals and community clinics for their oncology care, these allowances are crucial to ensuring they can access and pay for their treatment in convenient settings. 

To actually help those in need, we need to address the root causes of abuse within the 340B drug discount program and restore it to its original goal of serving those who are often left behind in our health care system — vulnerable and uninsured patients.

Michael Sapienza is CEO of the Colorectal Cancer Alliance.