Hospitals' 340B participation tied to reduced biosimilar uptake, study finds

Hospitals’ participation in the 340B Drug Pricing Program appears to be associated with increased overall use of biologic medications but reduced adoption of lower-cost biosimilar drugs, a trend researchers described as a potential “distortion of incentives” that could warrant reform.

The findings, published Monday in Health Affairs, come from a study of 340B hospitals’ 2017-2019 Medicare claims data for two often-used drugs with biosimilars: the bone marrow stimulant filgrastim and the immunosuppressive monoclonal antibody infliximab.

About a third of the nation’s hospitals participate in the 340B program, which requires manufacturer discounts on most drugs administered in the outpatient setting to help sustain safety-net providers.

The discounted products are still reimbursed by Medicare at the same rate, prompting researchers to investigate when hospitals are incentivized to “administer medications that are more expensive for Medicare (and therefore more profitable for 340B hospitals),” they wrote in the study.  

When comparing hospitals just barely making the threshold for 340B program eligibility against those that fell slightly below, the researchers found a 66% relative reduction in biosimilar use (34.7% versus 11.8% adjusted biosimilar use) among facilities participating in the program.

340B program participation was also associated with an average 13.3 additional biologic administrations per hospital compared to use at facilities just below the eligibility threshold, they wrote. This drove a 77% relative increase in average Medicare biologic administration revenues, from about $23,400 among the non-participating hospitals to $41,300 for those just barely qualifying for the program, according to the data.

“Our findings point to the 340B program as one driver of provider variation in uptake of biosimilars,” researchers wrote. “Given the large proportion of hospitals participating in the 340B program, it could be a factor that has meaningfully reduced overall biosimilar use in the U.S. … Our work is among the first to show that the 340B program may affect treatment choice by favoring drugs with higher Medicare reimbursement.”

Supplementary analyses conducted by the team supported the link and found that program eligibility “was associated with substantially more drug administrations among high-volume hospitals.”

A 22.5% reduction in 340B reimbursement rolled out by the government in 2018 was also found not to have an impact on the different hospitals’ biosimilar use, though the researchers noted that the cut’s quick industry opposition and the eventual court-ordered reversal could have kept hospitals from making changes.

A district judge gave the Centers for Medicare and Medicaid Services the lead in recouping years of underpayments resulting from the cut. Hospitals are still waiting for the federal government to make good.

Any critique of the 340B program is likely to be welcomed by the pharmaceutical industry, which has been in a protracted legal battle with the government and hospitals over how many 340B hospitals’ contract pharmacies they’re required to offer discounts.

Drugmakers have argued that hospitals are abusing the program beyond Congress’ intent and more than 20 have been willing to risk federal fines as they restrict sales of the discounted products to contract pharmacies.