Critics of the federal government's 340B drug discount program for hospitals have some new evidence in the debate over healthcare subsidies.
Are hospitals exploiting the 340B program? Depending on one’s perspective, that could be appear to be the case in some places, according to a new study published in Health Affairs, by Rena Conti of the University of Chicago and Peter Bach of Memorial Sloan Kettering Cancer Center.
Conti and Bach examined financial data on 960 hospitals and 3,964 clinics registered with the 340B program and matched it with Census Bureau socioeconomic data on the providers’ localities.
Hospital-affiliated clinics that registered for the program after 2004 — after Congress broadened eligibility — tend to serve “wealthier, better-insured communities than those registered prior to 2004,” the original intended beneficiaries, Conti and Bach found.
[See also: Assessing the new 340B interpretive rule.]
The 340B discount program was created in 1992 to guarantee affordable drug prices for some safety net outpatient providers, via the Medicaid program. In 2003, 2005 and 2010, Congress made more types of providers eligible for the program, including those that receive disproportionate share payments, children’s hospitals, sole community hospitals, rural referral centers and critical access hospitals.
All the while, provider enrollment has more than doubled to the point where more than one-third of hospitals participate — and where skeptics are wondering if the discounts are now too generous for too many providers.
In the Health Affairs study, 340B hospitals and clinics that joined the program after 2004 serve communities with median household income of between $41,000 and $45,000, while communities served by providers that joined prior to 2004 have median incomes of under $40,000 and a large share of the population living under poverty.
The difference is not huge, but its enough to leave researchers Conti and Bach with the conclusion that policymakers should reconsider the cost and benefits of the drug discount program.
“In general, hospitals that registered in 2003 or before had clinics that served significantly poorer communities than their parent institutions, compared to facilities that registered after 2004,” Conti and Bach wrote.
“Our findings are consistent with recent complaints by stakeholders and media reports suggesting that the 340B program is being converted from one that serves vulnerable communities to one that enriches participating hospitals and the clinics affiliated with them. Other recent analyses have suggested that hospitals receiving DSH payments are shifting some specialty care from the inpatient to the outpatient setting, where drug discounts gained from participation in the 340B program may generate increased profits.”
More broadly, they argue, the research suggests that access to 340B drug discounts “may act as one motivating rationale” for the wave of mergers and affiliations across the U.S.
Meanwhile, the pharmaceutical industry is waging a campaign for changes to the program through the Alliance for Integrity and Reform of 340B, a coalition including AbbiVie and Eli Lilly. The group recently called into question just how much uncompensated care 340B organizations are providing, sponsoring research that found only that 22 percent of $340B hospitals provide 80 percent of all the charity care delivered by 340B DSH hospitals.
Hospitals have mounted a defense campaign, though, with the group Safety Net Hospitals for Pharmaceutical Access. sponsoring the website 340bfacts.com. Recently, “pharmaceutical manufacturers have become less willing to share their profits with those in need, and now they want to do away with the program entirely,” wrote Bob Henkel, CEO of Ascension Health, in a St. Louis Post-Dispatch op-ed.
In reponse to the Health Affairs study, the American Hospital Association also weighed in. Linda Fishman, AHA senior vice president of public policy, argues that the study iover-emphasizes "the very small differences in socioeconomic factors of communities served by Disproportionate Share Hospitals and by hospital-affiliated clinics that registered for the 340B program prior to and after 2004."