Not only are many hospitals getting sizable federal drug discounts, some may be over-prescribing, according to the Government Accountability Office.
The Government Accountability Office is urging federal policymakers to remove financial incentives paid to hospitals who qualify for the 340B drug discount program, after discovering that the "disproportionate share hospitals," which comprise 80 percent of the program, are prescribing more than other facilities.
A GAO study found that in both 2008 and 2012, per beneficiary Medicare Part B drug spending--including for oncology medicines--was quite a bit more at 340B disproportionate share hospitals than at non-340B hospitals.
Among the hospitals that provided outpatient services and with 340B status in 2008 and 2012, on average, per beneficiary Medicare Part B drug spending was substantially higher than at non-340B hospitals, the GAO found. In 2012, average per beneficiary spending at 340B hospitals was $144, compared to $60 and $62 at non-340B DSH and other non-340B hospitals.
Average per-beneficiary cancer drug spending at 340B DSH hospitals was at $7,800 in 2012, compared to $5,900 at non-340B hospitals. (Non-DSH 340B hospitals were lower than that, at $5,400, although they account for only 20 percent of the 340B program.)
"The financial incentive to maximize Medicare revenues through the prescribing of more or more expensive drugs at 340B hospitals also raises concerns," the GAO wrote. "Our work suggests that 340B DSH hospitals may be responding to this incentive to maximize Medicare revenues."
The relatively higher Part B drug spending at 340B DSH hospitals "potentially could, in part, reflect a tendency for some beneficiaries to receive all of their Part B drugs in a hospital outpatient department instead of a physician's office," the GAO wrote. "However, we found that, in 2012, among patients who received Part B drugs in hospital outpatient departments, the percentage of patients who only received drugs in that setting--meaning that they did not receive any Part B drugs at a physician's office--was only slightly higher at 340B DSH hospitals (59 percent) compared to non-340B DSH hospitals (54 percent), and other non-340B hospitals (54 percent)."
The 340B program dates back to 1992, created as a way to help hospitals with disproportionate shares of low income and uninsured patients. These days, almost 40 percent of U.S. hospitals qualify for the program, and almost all of the $7 billion in 340B drug sales is to hospitals and their outpatient settings. Not all of those hospitals are large charity care or public providers; about 12 percent have very little charity care, the GAO found.
Hospitals in the 340B program took issue with the GAO's findings and conclusions. "We are particularly troubled by the GAO's unfounded conclusion that hospitals that serve our nation's most vulnerable patients inappropriately prescribe medications to Medicare beneficiaries for financial gain," said Bruce Siegel, MD, CEO and president of America's Essential Hospitals.
In long-awaited guidance for the 340B program, the Health Resources and Services Administration is proposing to cap the prices drug manufacturers can charge participating hospitals.
The proposed regulations, which were called for the Affordable Care Act, would allow HRSA to assess penalties of up to $5,000 on manufacturers "knowingly and intentionally" charges a covered entity more than the ceiling price for a 340B drug.
Pressure to reign in the program has been mounting, from physicians, drug makers and Congress, which had considered more stringent eligibility standards for hospitals in a version of the 21st Century Cures Act.
"To the extent that the 340B Drug Pricing Program exists to benefit vulnerable patient populations, there is insufficient evidence to ensure that the program is achieving these objectives to the fullest extent possible," said the American Society of Clinical Oncology in a policy statement calling for reforms to the program.
"The 340B program could be modified and better targeted to truly needy patients by appropriately identifying any entities that serve such patients," the ASCO wrote. "Integral to any such change is the need for more thoughtful qualification standards based on the characteristics of the outpatient population, standards that would accurately capture the demographics of the patient population being served."