340B program may hinder access to costly drugs as hospitals exploit discounts: CRE

Hospital finance
A new report suggests that the 340B program may actually hinder patient access to costly drugs. (Getty/utah778)

Despite its intentions to improve the affordability of prescription drugs, the 340B drug discount program may have actually hurt patient access to costly drugs as a growing number of hospitals take advantage of the program, according to a report from the Center for Regulatory Effectiveness.

Specifically, CRE—an independent regulatory watchdog group—found the number of uninsured, impoverished patients without access to medical care and dental care grew between 2009 and 2015, even as the overall number of 340B hospitals more than tripled.

The 340B program mandates that drug manufacturers provide discounts for outpatient Medicaid drugs for low-income hospitals. While hospitals praise the program for making certain drugs affordable in safety-net areas, the drug industry says it leads to higher drug spending

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CRE’s Bruce Levinson says the report shows maximizing 340B revenues has come at the expense of healthcare access or quality. 

"The program started with good intent, so I don’t want to trash it," Levinson told FierceHealthcare. "But from what I saw, it really creates huge financial incentives that just invite abuse."

And as long as there continues to be no requirement for 340B hospitals to use the money for public service projects, Levinson suspects the abuse will continue. 

RELATED: Lawmakers eye increased transparency, oversight in 340B drug discount program

For example, 340B qualifying patients were prescribed more medication and more expensive drugs than patients being cared for by non-340B providers, according to CRE's review. The report found that 340B hospitals charge at least twice as much for outpatient oncology care as non-340B providers. 

Research also suggests that providers are not reinvesting the savings from 340B discounts in lowering the cost of care. Republicans have long argued that the program has grown too large, and concerns like these have led the Government Accountability Office and lawmakers to pursue greater oversight in the program

Amid the ongoing debate over drug prices, it's unlikely that the back-and-forth over the 340B program is likely to go away any time soon. Providers are still engaged in a legal battle with the federal government over significant payment cuts to the program, though they earned a win when the Health Resources and Services Administration rolled out the program's long-awaited final rule that sets pricing caps in the program.

Providers in the 340B program have hit back at accusations that they're taking advantage of it, arguing the program works as intended: to provide costly medications to the most vulnerable patients. 

340B Health, a group that represents 1,300 hospitals in the program, wrote in a blog post that some 340B providers, particularly safety-net and rural hospitals, would be forced to slash services without the discounts they earn in the program.

"Few places demonstrate the importance of the 340B drug pricing program more clearly than a safety-net hospital whose 340B savings are greater than their operational bottom line," the group wrote.

RELATED: HRSA rolls out drug pricing site for 340B hospitals

CRE's report pushes back on that assertion, however.

The group concludes that the 340B program is responsible for three negative outcomes: increased inequality in the healthcare system, changed treatment protocols to maximize hospital’s drug profits and worsened medical outcomes for the impoverished and uninsured.

"What really struck me is that the medically underserved communities are the ones that are failing," Levinson added. "The bottom is really falling away from the middle."

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