340B hospitals may not invest drug discount savings in improving care, study finds

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The 340B drug discount program has made plenty of headlines in recent weeks. (Pixabay)

Hospitals that save money through 340B program discounts often don't use those savings to improve care for low-income and underserved patients, according to a new study. 

Researchers at Harvard Medical School and NYU School of Medicine examined data on Medicare beneficiaries from hospitals with 50 or more beds that were just above or below the 340B program's 11.75% disproportionate share hospital threshold.  

They found that hospitals eligible for 340B discounts administered more drugs, and also increased their ability to administer more drugs by absorbing physician practices, particularly in oncology. The study, which was published in the New England Journal of Medicine, found that 340B participation was linked to an increased number of hematologist–oncologists, ophthalmologists or rheumatologists working in the hospital. 

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The study also analyzed the impact of the program on quality improvements and mortality rates for low-income patients and found little evidence that hospitals were investing the 340B savings in these areas.  

The findings suggest that some 340B-eligible hospitals are taking advantage of opportunities to expand their use of the discounts without spending more on charity care in tandem, the researchers said. 

"We found evidence of hospitals behaving in ways that would generate profits, by building their outpatient capacity to administer drugs," Sunita Desai, Ph.D., an assistant professor in the Department of Public Health at NYU School of Medicine and the study's senior author, said in an announcement. "But we did not see any evidence that hospitals are investing those profits in safety-net clinics, expanding access to care for low-income Medicare patients or improving mortality in their local communities as the program intends." 

RELATED: Under the Affordable Care Act, hospital revenues up, charity care spending down—report 

The researchers say that the findings show flaws in how the 340B program was designed, and that a lack of oversight hampers its effectiveness. The programs' advocates, however, argue that a flawed study design fails to paint a full picture of how hospitals use the program. 

340B Health, a group that includes 1,300 hospitals enrolled in the drug discount program, wrote a blog post in response to the study and said that because the research excluded about one-third of 340B disproportionate share hospitals, in particular those that treat extremely high volumes of low-income patients, the findings are misleading. 

The study also fails to account for other trends that push for increased consolidation in the healthcare industry, according to the blog post. 

"340B hospitals continue to use their program savings to support their low-income and rural patient populations, just as Congress intended when it created the program," the group wrote. "As policymakers evaluate the 340B program, it is important to recognize the many, diverse ways hospitals use the 340B benefit to support patient care." 

RELATED: 340B program doesn't cause drug price increases, study finds 

The debate over the 340B program has come to a head in recent weeks, as the Centers for Medicare & Medicaid Services announced that it would change the payment rate in the program from up to 6% more than the average sales price to 22.5% less than the average sales price. The change would cut $1.6 billion in discount payments. 

Hospitals have challenged the measure in court, but pharmaceutical companies have applauded CMS' decision, as they fear the program has grown too large, allowing providers to take advantage of it. 

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