Safety net hospitals say pharma's 340B drug restrictions already endangering future services

A late 2021 survey of hospitals participating in the 340B drug pricing program suggests pharma industry leaders’ recent restrictions on drug discounts are costing safety net hospitals hundreds of thousands to millions of dollars in savings.

340B Health, an industry group representing these hospitals, said critical access hospitals (CAHs) report losing an average of 39% of the contract pharmacy savings they would have seen from the program, or $220,000 dollars per CAH. Ten percent of those smaller rural hospitals told the group they had lost at least $700,000 due to the drugmakers’ new policies.

Other, larger 340B hospitals such as disproportionate share hospitals, sole community hospitals and rural referral centers reported missing out on 23% of their community pharmacy savings, according to 340B Health’s survey. These facilities’ median reported loss landed at $1 million, with the top 10% tallying losses of $9 million or more.

“With losses such as these, hospital administrators could be forced to reduce or eliminate health care programs, services and support that are vital to the health of patients and communities,” 340B Health President and CEO Maureen Testoni said in a statement. “For rural hospitals, a loss of 340B savings can lead to the closure of facilities that are often the only source of care for broad areas of our country.”

340B’s poll was distributed in November and December and includes responses from 510 hospitals participating in the 340B program.

RELATED: Bristol Myers Squibb becomes 12th drugmaker to announce 340B contract pharmacy restrictions

Covered 340B entities such as safety net hospitals and community health centers rely on contract pharmacies to dispense discounted products to patients. However, drugmakers and other opponents of the program have argued that the use of such facilities has exploded and that the discounts aren't benefiting patients.

The companies’ decisions to restrict their sales of discounted drugs have drawn the ire of the Department of Health and Human Services (HHS), which has announced plans to fine drugmakers for what they view as illegal restrictions.

Court arguments over whether the federal government has the authority to penalize the drugmakers initially favored HHS’ interpretation of the program, although a recent ruling questioned whether the drug manufacturers are required to provide discounts at all. The administration has since filed an appeal against those decisions.

At the time of the 340B Health survey, eight major drug manufacturers had announced policy changes limiting 340B pricing. That number has since increased to 12 with Bristol Myers Squibb’s mid-January announcement suggesting safety net hospitals are likely to see their losses escalate in the coming months.

“The impact presented in this report underestimates the financial impact currently facing 340B providers,” 340B Health wrote.