The
340B
Drug
Pricing
Program
has
become
one
of
the
most
controversial
programs
in
the
U.S.
healthcare
system.
The
program
was
established
in
1992
to
help
safety
net
providers
stretch
federal
resources
and
better
serve
vulnerable
populations
by
allowing
eligible
hospitals
and
clinics
to
purchase
outpatient
drugs
at
steeply
discounted
prices.
However,
disputes
over
the
program’s
money
flow,
oversight
and
misuse
have
fueled
decades
of
conflict
among
providers,
pharmaceutical
manufacturers
and
lawmakers.
Some
argue
that
340B
is
a
lifeline
for
struggling
hospitals
and
clinics,
and
others
portray
it
as
a
loophole
that
allows
health
systems
to
profit
from
discounts
intended
for
people
with
little
to
no
income.
Over
time,
the
340B
program
has
grown
to
include
many
large
health
systems
—
many
of
them
well-capitalized
nonprofits.
For
example,
health
systems
including
Ascension,
CommonSpirit
Health,
Geisinger,
Penn
Medicine
and
Providence
participate
in
340B.
There
is
also
tension
around
the
program’s
opacity
—
hospitals
aren’t
required
to
show
how
they
use
340B
savings,
which
further
leads
critics
to
question
whether
those
discounts
truly
benefit
patients.
Under
340B,
hospitals
can
buy
discounted
drugs
and
then
bill
insurers
at
the
full
rate.
Pharmaceutical
companies
accuse
hospitals
of
keeping
the
difference
as
profit,
with
no
legal
requirement
to
pass
along
savings
to
patients.
Data
shows
that
large,
tax-exempt
providers
purchase
tens
of
billions
of
dollars’
worth
of
drugs
through
the
340B
program
—
but
there
is
no
data
showing
that
the
average
American
is
paying
less
at
the
pharmacy
counter.
The
program
also
is
a
huge
driver
of
the
country’s
drug
spending.
While
the
drugs
are
sold
at
a
heavily
discounted
rate,
the
program
can
still
contribute
to
higher
overall
drug
spending
because
providers
are
often
reimbursed
at
or
near
full
price.
The
total
value
of
drugs
flowing
through
340B
now
surpasses
Medicare
Part
B
and
Medicaid,
and
almost
surpasses
Medicare
Part
D.
Now,
reform
has
finally
come
—
but
it
doesn’t
seem
like
the
new
model
will
address
this
issue
or
deliver
real
change.
In
January,
HHS’
Health
Resources
and
Services
Administration
(HRSA),
will
begin
a
pilot
program
allowing
drugmakers
to
participate
voluntarily
in
a
rebate-based
discount
system.
Instead
of
the
provider
receiving
a
discount
upfront
at
purchase,
the
340B
discount
would
be
applied
after
purchase
via
rebate
—
and
subject
to
data
submission
requirements.
The
pilot
aims
to
boost
transparency
and
prevent
duplicate
discounts,
but
it
also
introduces
financial
challenges
and
added
administrative
burdens
that
will
likely
disproportionately
affect
the
smaller,
safety
net
providers
that
the
340B
program
was
initially
designed
to
assist.
Rebate
model
means
cash
flow
woes
&
more
administrative
work
The
new
rebate
model
will
create
new
cash
flow
problems,
particularly
for
smaller
clinics,
said
Bill
Keeton.
He
is
chief
advocacy
officer
at
Vivent
Health,
a
nationwide
provider
of
HIV
care
for
low-income
patients,
as
well
as
a
key
figure
within
Ryan
White
Clinics
for
340B
Access,
a
group
that
advocates
for
340B
program
access.
Keeton
noted
that
money
flow
issues
will
be
especially
acute
for
organizations
like
his
that
have
to
buy
HIV
medications,
which
are
incredibly
expensive.
For
instance,
Biktary,
the
most
popular
medication
used
to
treat
HIV,
costs
about
$4,200
per
month.
Under
340B,
clinics
pay
about
half
of
that,
but
the
rebate
model
could
force
clinics
to
front
the
full
cost
temporarily,
Keeton
said.
“For
a
number
of
smaller
clinics
that
are
operating
on
much
tighter
margins
—
and
facing
decreasing
opportunities
to
generate
any
sort
of
revenue,
whether
it
be
through
grants
or
reimbursement
—
that
ability
to
purchase
those
medications
is
going
to
be
horribly
challenging,”
he
remarked.
He
also
pointed
out
that
contract
pharmacies
may
not
be
able
to
offer
discounts
upfront
to
cash-pay
patients,
which
shifts
financial
risk
onto
patients
and
clinics.
The
added
administrative
burden
will
be
tough
to
deal
with
too,
Keeton
added.
HRSA’s
new
model
requires
providers
to
submit
detailed
patient-
and
prescription-level
data
for
every
eligible
340B
drug,
which
he
said
adds
another
layer
of
administrative
work
that
could
put
strain
on
care
teams
that
are
already
burnt
out.
Clinics
would
need
to
hire
and
train
staff
to
navigate
Beacon,
the
platform
HRSA
is
using
to
process
rebate
transactions,
which
diverts
funds
away
from
direct
care
or
addressing
patients’
social
determinants
of
health,
Keeton
explained.
The
American
Hospital
Association
(AHA)
has
also
expressed
concern
about
the
administrative
tasks
associated
with
the
new
rebate
program,
contending
that
the
burden
will
be
far
greater
than
what
has
been
estimated
by
HRSA.
In
a
September
30
letter
to
the
agency,
the
AHA
noted
that
HRSA
estimated
1.5 million
hours
of
added
labor
per
year
for
hospitals.
HRSA
based
this
on
the
assumption
that
each
hospital
would
only
need
about
2
hours
per
week
to
submit
the
required
data
—
but
AHA’s
member
hospitals
said
this
is
a
very
low
assumption.
They
project
needing
up
to
two
full‑time
equivalent
staff
per
hospital,
which
equals
roughly
4,160
hours
per
hospital
per
year
—
which
the
AHA
noted
is
much
higher
than
HRSA
stated.
The
AHA
also
argued
that
hospitals’
compliance
costs
could
range
from
$150,000
to
more
than
$500,000
per
hospital.
“And
these
costs
don’t
include
the
millions
of
dollars
340B
hospitals
would
be
providing
to
drug
companies
as
interest-free
loans
through
the
rebate
model.
They
also
do
not
include
the
nonmonetary
burdens
that
patients
and
communities
will
suffer,
and
hospitals
will
then
need
to
treat,
because
340B
covered
entities
will
have
fewer
resources
for
health
care
services,”
the
organization
wrote
in
its
letter.
The
AHA
said
that
when
calculated
accurately,
“there
is
no
way”
the
benefits
of
HRSA’s
new
pilot
program
could
outweigh
the
burden
it
will
inflict
on
providers.
Pharmaceutical
support
for
the
rebate
model
The
pharmaceutical
industry
views
the
new
pilot
as
a
way
to
increase
transparency
and
accountability
in
the
340B
program.
Highly
influential
lobbying
group
Pharmaceutical
Research
and
Manufacturers
of
America
PhRMA
has
been
a
major
proponent
of
the
new
model.
“We
encourage
HRSA
to
move
swiftly
to
broaden
use
of
the
rebate
across
all
340B
covered
outpatient
drugs,
enabling
wider
use
of
rebates
within
the
program.
Expanding
this
pilot
would
help
strengthen
program
integrity
while
preserving
critical
support
for
true
safety
net
providers
and
the
patients
they
serve,”
PhRMA
said
in
a
statement
sent
to
MedCity
News.
So
far,
eight
drugmakers
have
agreed
to
participate
in
HRSA’s
340B
rebate
pilot
program:
AbbVie,
Amgen,
AstraZeneca,
Boehringer
Ingelheim,
Bristol
Myers
Squibb,
Merck,
Novo
Nordisk
and
Johnson & Johnson.
In
general,
they
seem
to
view
the
rebate
model
as
a
way
to
strengthen
340B
oversight
and
compliance.
In
an
emailed
statement,
AstraZeneca
said
that
the
pilot
will
help
pharmaceutical
companies
comply
with
the
Inflation
Reduction
Act’s
340B
de-duplication
requirements,
which
are
rules
designed
to
prevent
drugmakers
from
giving
duplicate
discounts
on
the
same
medication.
“We
believe
this
pilot
program
strikes
the
appropriate
balance
between
efficiency
and
oversight,
ultimately
ensuring
that
manufacturers
can
carry
out
the
statutory
de-duplication
requirement
in
a
reliable
and
transparent
manner,”
the
company
stated.
A
Bristol
Myers
Squibb
spokesperson
said
the
pilot
will
help
advance
“a
more
accountable
and
sustainable
340B
program”
through
integrity
safeguards
and
better
data
sharing.
Is
this
the
right
fix
for
340B?
The
nation’s
leading
expert
on
340B
—
Sayeh
Nikpay,
a
professor
at
the
University
of
Minnesota
—
didn’t
label
the
rebate
model
as
strictly
good
or
bad.
On
one
hand,
she
sees
how
it
could
increase
program
integrity,
which
would
benefit
drugmakers
and
payers.
“The
problem
is
that
basically
all
the
other
price
concessions
that
manufacturers
give
out
—
whether
those
are
Medicaid
drug
rebates
or
manufacturer
rebates
that
go
through
PBMs
—
those
are
all
post-transaction
rebates,”
Nikpay
said.
She
explained
that
this
can
create
“stacked
discount”
issues
—
where
drug
manufacturers
may
inadvertently
give
out
multiple
discounts
on
the
same
drug.
Nikpay
pointed
out
another
integrity
problem
with
the
340B
program:
as
it’s
grown,
large
hospitals
and
non-safety
net
providers
have
dominated
program
participation.
Originally,
Congress
intended
340B
discounts
to
support
only
the
providers
that
were
serving
primarily
low-income
populations,
but
now,
participation
often
extends
to
any
nonprofit
hospital,
regardless
of
the
patient
population
they
serve.
Two-thirds
of
nonprofit
hospitals
take
part
in
the
program,
Nikpay
stated.
How
the
new
rebate
system
will
affect
340B-covered
entities
depends
on
the
provider
type,
she
declared.
Essentially,
providers
that
are
smaller,
rural
or
care
for
a
primarily
uninsured
population
are
likely
to
struggle
with
cash
flow,
but
health
systems
with
more
financial
resources
will
probably
absorb
the
shift
with
minimal
disruption.
The
340B
program
is
vital
to
help
some
providers
ensure
they
can
deliver
care
to
patients
who
otherwise
wouldn’t
receive
it.
But
to
others,
it’s
a
bit
of
a
cash
cow.
For
example,
data
shows
that
in
2023,
Minnesota
providers
participating
in
340B
garnered
at
least
$630
million
in
profits,
with
the
vast
majority
of
that
revenue
going
to
larger
health
systems.
And
this
is
just
for
dispensed
340B
drugs
—
not
even
counting
those
administered
in
an
office,
which
account
for
about
half
of
all
340B
medications.
Overall,
Nikpay
thinks
there
are
trade-offs
and
unintended
consequences
of
the
340B
program
as
it
exists
today.
She
illustrated
this
with
a
personal
example.
She
is
not
a
safety
net
patient,
but
her
hospital
participates
in
340B
and
gets
the
340B
discount
on
her
drugs.
However,
because
that
discount
was
applied,
her
employer’s
PBM
cannot
claim
a
rebate
on
that
same
drug
—
which
reduces
the
savings
that
could
have
gone
toward
lowering
her
insurance
premiums.
“In
that
case,
I’m
kind
of
annoyed,
right?
My
employer
paid
a
PBM
to
bring
my
drug
costs
down,
and
now
I’m
not
benefiting
from
it
because
a
340B
discount
got
applied
first
—
on
me,
who
is
not
a
safety
net
patient
at
all,”
Nikpay
explained.
So
it’s
understandable
why
lawmakers
would
want
to
foster
better
program
integrity
and
ensure
340B
discounts
are
reaching
patients.
But
it’s
unclear
if
the
new
rebate
model
is
the
best
way
to
fix
the
program.
Nikpay
thinks
the
340B
has
broader
issues
than
just
stacked
discounts.
“Manufacturers
contribute
to
high
drug
costs.
They’re
behaving
like
a
monopolist.
But
also
—
there
is
almost
no
market
discipline
on
what
providers
charge
patients
and
their
insurers.
And
that’s
also
a
problem,”
she
remarked.
Photo:
REB
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