The 340B Drug Pricing Program is not exactly new – the legislation creating the program was originally penned by Congress in 1990 and signed into law by the first President George Bush in 1992. However, the program has become significantly more important in recent years, impacting the health care sector to a major degree. Many industry leaders and observers see great progress and potential here, but there are also noteworthy obstacles and controversies that need to be addressed if the 340B drug program is to deliver the positive impact expected of it.
In light of this, it’s worth taking a closer look at exactly what the 340B Drug Pricing Program is and does, and what kind of an impact it is having on the health care sector today.
The 340B Drug Pricing Program is designed to enable select hospitals and other care providers to receive discounted prices from drug manufacturers, as a recent report to Congress from the Medicare Payment Advisory Commission explained. These drug manufacturers are encouraged to take part in this program by tying Medicaid drug coverage to 340B participation: Any manufacturer that disregards 340B will not have its medication covered through Medicaid.
“More than 14,000 hospitals and affiliated sites participated in the 340B Drug Pricing Program last year.”
This allows care providers to use federal resources more effectively, treating a greater number of patients than would otherwise be possible. All told, the program is available to six types of hospitals and 10 types of clinics receiving federal grants.
The program has seen tremendous growth since its initial conception. According to the Medicare Payment Advisory Commission report, this expansion has been particularly pronounced since 2005, during which time the number of 340B hospitals tripled. There were more than 14,000 hospitals and affiliated sites participating in the 340B Drug Pricing Program last year and twice that number are eligible. Additionally, the Health Resources and Services Administration estimated that covered entities saved nearly $4 billion in outpatient drug costs in 2013 alone thanks to the 340B Drug Pricing Program.
In an interview with the Houston Chronicle, Dr. Hagop Kantarjian, Baker Institute nonresident Fellow in health policy and Chair of the Department of Leukemia at The University of Texas MD Anderson Cancer Center, and Dr. Robert Chapman, Medical Director of the Josephine Ford Cancer Institute at the Henry Ford Health System, discussed the progress that 340B has made over the years. They stated with confidence that the program is helping more patients and enabling more comprehensive services. As evidence, the experts noted that:
- 340B participating hospitals serve twice as many low-income patients as non-participating hospitals.
- 340B participating hospitals represent one-third of all disproportionate share hospitals (DSH) but deliver 60 percent of uncompensated care.
- A greater number of 340B DSH hospitals offer specialized services than non-340B hospitals.
In light of these statistics, it is easy to see why so many health care industry leaders view the program as an unmitigated success. However, the 340B Drug Pricing Program has recently come under greater scrutiny as the result of recently proposed changes, which take the form of new 340B Drug Pricing Program Omnibus Guidelines.
Among the most controversial changes contained in these guidelines is a potential ban on patients receiving prescription medication via 340B following their discharge from a participating hospital, Modern Healthcare contributor Steven Ross Johnson explained.
Speaking to the source, CEO Ted Slafsky of advocacy group 340B Health noted that his firm conducted a survey of 1,100 of its members and found that 29 percent would likely drop out of the 340B program entirely if the Omnibus Guidelines in their current form were to become finalized.
Regardless of the controversies surrounding these new rules, though, it seems all but certain that the 340B Drug Pricing Program will remain a powerful and positive force in the years to come. Consequently, hospitals participating in this program need to focus heavily on implementation. This is a complex process with many components, with implications and requirements for Pharmacy IT, hospital-wide IT systems and beyond.
This requires extensive expertise and experience to ensure that the deployment is conducted smoothly, quickly and without any risk of compliance violations or other complications. Those health care providers that can excel in this area will be in prime position to enjoy the complete benefits of the 340B Drug Pricing Program, and to pass those advantages on to their patients.