340B drug discount program under scrutiny: Are hospitals using funds for other purposes?
Hospitals are not required to share how they use revenue from the federal program and researchers have uncovered funds that were used for purposes “seeming unrelated” to patient care, in a JAMA review.
“Covered entities used revenue from the 340B program to expand health-care services and programming, open specialty clinics, provide medications at reduced costs to patients and subsidize uncompensated care and staff salaries,” according to a study reported by JAMA Network. “Patients of covered entities received greater access to health-care services, but there was mixed evidence as to lower medication costs.
“However, covered entities — notably disproportionate-share hospitals — also used 340B revenue for purposes seemingly unrelated to underserved patient care, including opening sites in higher-income neighborhoods and acquiring outpatient physician practices.”
The 340B program was created in 1992 to support safety-net hospitals and clinics caring for low-income and underserved populations by discounting the cost of outpatient drugs. The revenue from dispensing these discounted drugs allows these entities to reach more patients, provide more health-care services and programs, and subsidize uncompensated care. These discounts can be between 20% and 50% off the list price of a drug.
Pharmaceutical companies strongly oppose the program, which cuts into their bottom lines. In criticizing 340B, drugmakers say they are raising critical questions of whether hospitals are responsible stewards of the program’s funds, especially as the program grows. Drugmakers and some lawmakers have called for more guidelines to require hospitals to account for their savings. About 20 major manufacturers also have tried to limit the scope of the program by halting 340B discounts to providers that use community and specialty pharmacies, sparking several lawsuits.
Related: CMS to send $9B to 340B hospitals for underpayments, following court loss
Researchers emphasized that 340B offers value to providers and patients but cited the need for more regulatory oversight, especially in the area of transparency. For example, the government could require covered entities to report data on 340B revenue and their spending to the Health Resources and Services Administration (HRSA), the agency that oversees 340B.
“In this scoping review of the 340B program, we found evidence that the 340B program benefited hospitals, clinics, pharmacies and patients, with notable costs to pharmaceutical manufacturers,” the report concluded. “Increased transparency regarding the use of 340B program revenue and strengthened rulemaking and enforcement authority for the HRSA would support compliance and help ensure the 340B program achieves its intended purposes.”