Safety net hospitals that participate in the 340B drug discount program generated $64.3 billion in total benefits to community programs and services tailored to help low-income patient populations, a new analysis finds.
The analysis, published Thursday (PDF) from the American Hospital Association (AHA), comes as hospitals wage a war with drug companies that have begun restricting sales of discounted products to 340B contract pharmacies. AHA charges the 340B program enables safety net hospitals to help patients in vulnerable communities, but drug companies argue the program has gotten too large and hospitals are not helping patients with the savings.
“Hospitals and health systems of all kinds, sizes and forms of ownership deliver a wide variety of benefits designed to meet the unique needs of their communities,” said AHA President and CEO Rick Pollack in a statement.
AHA looked at the community benefits that tax-exempt hospitals are required to report to the IRS for 2017, the latest data available.
The analysis found that hospitals gave out $64.3 billion in benefits to patients that year, an increase compared to the $56 billion provided in 2016. The large majority of funding ($31 billion) was in the form of financial assistance and unreimbursed Medicaid and other costs.
Another $20 billion was given out as benefits for health profession education, medical research and contributions to community groups.
AHA also found $13 billion went toward community building activities, bad debt and Medicare shortfalls.
Some examples of community benefits include tailored programs to address access to prescription drugs for low-income patients, free vaccinations and transportation services to mental health and doctor appointments.The program requires manufacturers to provide discounts to safety net hospitals in exchange for participating in Medicaid.
A majority of 340B hospitals use a third-party contract pharmacy to dispense the drugs to patients.
But drug companies have started to question the role of contract pharmacies and making moves to discourage their use. Drugmakers Novartis, Sanofi and Merck announced a few months ago that they want contract pharmacies to submit claims data to ensure they aren’t getting duplicate discounts for 340B and Medicaid drugs.
Eli Lilly and AstraZeneca took things further last month by announcing they will halt sales of all of their discounted drugs to contract pharmacies.
AstraZeneca previously told Fierce Healthcare that the products will still be available to all covered entities at or below “applicable statutory ceiling prices.”
A group of more than 1,000 hospitals wrote (PDF) to the Health Resources and Services Administration (HRSA), which oversees 340B, earlier this week to ask the agency to stop the manufacturers’ moves, saying they are in violation of the federal 340B statute.
HRSA told Fierce Healthcare last month that it is considering whether the moves violate the statute. But legal experts say the agency may not have regulatory authority to go after them.