The 340B Drug Pricing Program has turn into some of the controversial applications within the U.S. healthcare system. This system was established in 1992 to assist security internet suppliers stretch federal sources and higher serve susceptible populations by permitting eligible hospitals and clinics to buy outpatient medicine at steeply discounted costs. Nevertheless, disputes over this system’s cash circulate, oversight and misuse have fueled many years of battle amongst suppliers, pharmaceutical producers and lawmakers.
Some argue that 340B is a lifeline for struggling hospitals and clinics, and others painting it as a loophole that enables well being programs to revenue from reductions meant for folks with little to no earnings.
Over time, the 340B program has grown to incorporate many giant well being programs — a lot of them well-capitalized nonprofits. For instance, well being programs together with Ascension, CommonSpirit Well being, Geisinger, Penn Medication and Windfall take part in 340B.
There’s additionally stress across the program’s opacity — hospitals aren’t required to indicate how they use 340B financial savings, which additional leads critics to query whether or not these reductions really profit sufferers. Beneath 340B, hospitals should purchase discounted medicine after which invoice insurers on the full price. Pharmaceutical corporations accuse hospitals of retaining the distinction as revenue, with no authorized requirement to move alongside financial savings to sufferers.
Information reveals that enormous, tax-exempt suppliers buy tens of billions of {dollars}’ value of medicine by means of the 340B program — however there is no such thing as a information displaying that the typical American is paying much less on the pharmacy counter.
This system additionally is a large driver of the nation’s drug spending. Whereas the medicine are offered at a closely discounted price, this system can nonetheless contribute to increased total drug spending as a result of suppliers are sometimes reimbursed at or close to full value. The full worth of medicine flowing by means of 340B now surpasses Medicare Half B and Medicaid, and virtually surpasses Medicare Half D.
Now, reform has lastly come — nevertheless it doesn’t seem to be the brand new mannequin will handle this subject or ship actual change.
In January, HHS’ Well being Assets and Providers Administration (HRSA), will start a pilot program permitting drugmakers to take part voluntarily in a rebate-based low cost system. As a substitute of the supplier receiving a reduction upfront at buy, the 340B low cost can be utilized after buy through rebate — and topic to information submission necessities.
The pilot goals to spice up transparency and stop duplicate reductions, nevertheless it additionally introduces monetary challenges and added administrative burdens that may doubtless disproportionately have an effect on the smaller, security internet suppliers that the 340B program was initially designed to help.
Rebate mannequin means money circulate woes & extra administrative work
The brand new rebate mannequin will create new money circulate issues, significantly for smaller clinics, mentioned Invoice Keeton. He’s chief advocacy officer at Vivent Well being, a nationwide supplier of HIV take care of low-income sufferers, in addition to a key determine inside Ryan White Clinics for 340B Entry, a bunch that advocates for 340B program entry.
Keeton famous that cash circulate points can be particularly acute for organizations like his which have to purchase HIV medicines, that are extremely costly. As an example, Biktary, the most well-liked treatment used to deal with HIV, prices about $4,200 per thirty days.
Beneath 340B, clinics pay about half of that, however the rebate mannequin may drive clinics to entrance the complete value quickly, Keeton mentioned.
“For plenty of smaller clinics which can be working on a lot tighter margins — and dealing with reducing alternatives to generate any kind of income, whether or not it’s by means of grants or reimbursement — that potential to buy these medicines goes to be horribly difficult,” he remarked.
He additionally identified that contract pharmacies might not be capable to provide reductions upfront to cash-pay sufferers, which shifts monetary danger onto sufferers and clinics.
The added administrative burden can be powerful to cope with too, Keeton added.
HRSA’s new mannequin requires suppliers to submit detailed patient- and prescription-level information for each eligible 340B drug, which he mentioned provides one other layer of administrative work that might put pressure on care groups which can be already burnt out.
Clinics would want to rent and practice employees to navigate Beacon, the platform HRSA is utilizing to course of rebate transactions, which diverts funds away from direct care or addressing sufferers’ social determinants of well being, Keeton defined.
The American Hospital Affiliation has additionally expressed concern in regards to the administrative duties related to the brand new rebate program, contending that the burden can be far larger than what has been estimated by HRSA.
In a September 30 letter to the company, the AHA famous that HRSA estimated 1.5 million hours of added labor per yr for hospitals. HRSA based mostly this on the belief that every hospital would solely want about 2 hours per week to submit the required information — however AHA’s member hospitals mentioned it is a very low assumption.
They mission needing as much as two full‑time equal employees per hospital, which equals roughly 4,160 hours per hospital per yr — which the AHA famous is way increased than HRSA acknowledged.
The AHA additionally argued that hospitals’ compliance prices may vary from $150,000 to greater than $500,000 per hospital.
“And these prices don’t embrace the thousands and thousands of {dollars} 340B hospitals can be offering to drug corporations as interest-free loans by means of the rebate mannequin. Additionally they don’t embrace the nonmonetary burdens that sufferers and communities will endure, and hospitals will then must deal with, as a result of 340B lined entities could have fewer sources for well being care providers,” the group wrote in its letter.
The AHA mentioned that when calculated precisely, “there is no such thing as a approach” the advantages of HRSA’ new pilot program may outweigh the burden it’s going to inflict on suppliers.
Pharmaceutical assist for the rebate mannequin
The pharmaceutical trade views the brand new pilot as a approach to enhance transparency and accountability within the 340B program. Extremely influential lobbying group Pharmaceutical Analysis and Producers of America PhRMA has been a serious proponent of the brand new mannequin.
“We encourage HRSA to maneuver swiftly to broaden use of the rebate throughout all 340B lined outpatient medicine, enabling wider use of rebates inside the program. Increasing this pilot would assist strengthen program integrity whereas preserving crucial assist for true security internet suppliers and the sufferers they serve,” PhRMA mentioned in an announcement despatched to MedCity Information.
Thus far, eight drugmakers have agreed to take part in HRSA’s 340B rebate pilot program: AbbVie, Amgen, AstraZeneca, Boehringer Ingelheim, Bristol Myers Squibb, Merck, Novo Nordisk and Johnson & Johnson.
Basically, they appear to view the rebate mannequin as a approach to strengthen 340B oversight and compliance.
In an emailed assertion, AstraZeneca mentioned that the pilot will assist pharmaceutical corporations adjust to the Inflation Discount Act’s 340B de-duplication necessities, that are guidelines designed to forestall drugmakers from giving duplicate reductions on the identical treatment.
“We imagine this pilot program strikes the suitable stability between effectivity and oversight, in the end making certain that producers can perform the statutory de-duplication requirement in a dependable and clear method,” the corporate acknowledged.
A Bristol Myers Squibb spokesperson mentioned the pilot will assist advance “a extra accountable and sustainable 340B program” by means of integrity safeguards and higher information sharing.
Is that this the fitting repair for 340B?
The nation’s main professional on 340B — Sayeh Nikpay, a professor on the College of Minnesota — didn’t label the rebate mannequin as strictly good or unhealthy.
On one hand, she sees the way it may enhance program integrity, which might profit drugmakers and payers.
“The issue is that principally all the opposite value concessions that producers give out — whether or not these are Medicaid drug rebates or producer rebates that undergo PBMs — these are all post-transaction rebates,” Nikpay mentioned.
She defined that this will create “stacked low cost” points — the place drug producers might inadvertently give out a number of reductions on the identical drug.
Nikpay identified one other integrity downside with the 340B program: because it’s grown, giant hospitals and non-safety internet suppliers have dominated program participation. Initially, Congress meant 340B reductions to assist solely the suppliers that had been serving primarily low-income populations, however now, participation usually extends to any nonprofit hospital, whatever the affected person inhabitants they serve.
Two-thirds of nonprofit hospitals participate in this system, Nikpay acknowledged.
How the brand new rebate system will have an effect on 340B-covered entities boils relies on the supplier sort, she declared. Basically, suppliers which can be smaller, rural or take care of a primarily uninsured inhabitants are more likely to wrestle with money circulate, however well being programs with extra monetary sources will most likely soak up the shift with minimal disruption.
The 340B program is important to assist some suppliers guarantee they’ll ship care to sufferers who in any other case wouldn’t obtain it. However to others, it’s a little bit of a money cow.
For instance, information reveals that in 2023, Minnesota suppliers collaborating in 340B garnered a minimum of $630 million in earnings, with the overwhelming majority of that income going to bigger well being programs. And that is only for disbursed 340B medicine — not even counting these administered in an workplace, which account for about half of all 340B medicines.
Total, Nikpay thinks there are trade-offs and unintended penalties of the 340B program because it exists at the moment. She illustrated this with a private instance.
She will not be a security internet affected person, however her hospital participates in 340B and will get the 340B low cost on her medicine. Nevertheless, as a result of that low cost was utilized, her employer’s PBM can not declare a rebate on that very same drug — which reduces the financial savings that might have gone towards decreasing her insurance coverage premiums.
“In that case, I’m form of aggravated, proper? My employer paid a PBM to deliver my drug prices down, and now I’m not benefiting from it as a result of a 340B low cost bought utilized first — on me, who will not be a security internet affected person in any respect,” Nikpay defined.
So it’s comprehensible why lawmakers would need to foster higher program integrity and guarantee 340B reductions are reaching sufferers. Nevertheless it’s unclear if the brand new rebate mannequin is one of the best ways to repair this system.
Nikpay thinks the 340B has broader points than simply stacked reductions.
“Producers contribute to excessive drug prices. They’re behaving like a monopolist. But additionally — there’s virtually no market self-discipline on what suppliers cost sufferers and their insurers. And that’s additionally an issue,” she remarked.
Photograph: REB Pictures, Getty Pictures
